Insights

New report shows JobSeeker recipients continue to face severe rental stress; Hobart remains least affordable city

Posted December 01, 2020

Author(s):

Ellen Witte, Kishan Ratnam, Fran Wiseman, Andrea Ingham, Joseph Giang

Sectors:

Housing

The JobSeeker supplement has improved rental affordability for Newstart households across the country, but recipients are still facing moderate to extreme rental stress nationwide according to the latest release of the Rental Affordability Index.

The Rental Affordability Index (RAI) is an indicator of the price of rents relative to household incomes based on new rental agreements. This report provides an indication on the impact of early COVID-19 responses and supplement payments, measuring rental affordability for households until the June quarter 2020.

The RAI also found that Hobart remains the least affordable city to rent in Australia, followed by Adelaide. Rental affordability has improved in Sydney, Melbourne, Brisbane, Adelaide, Hobart and Perth over the past year due to the downward pressure that the COVID-19 pandemic has placed on rents in metropolitan areas. Conversely, regional hubs have tightened as households move away from cities.

The JobSeeker supplement has improved rental affordability for those households that were already on Newstart (approximately 689,000 recipients), but rental affordability has decreased substantially for most new JobSeeker recipients who lost their jobs (approximately 755,000 recipients). However, the situation is untenable for people on JobSeeker, with rent costing at 42 to 69 per cent of their income in every capital city, said SGS Principal & Partner Ellen Witte.

JobSeeker was a welcome boost to many low-income renters, but it was not enough to lift them out of rental stress. There is not one capital city in Australia where a JobSeeker recipient can rent affordably. With the Australian Government now reducing JobSeeker allowances dramatically, and the economy not recreating jobs, many households are being trapped in a poverty cycle, seeking affordable rents in areas further away from jobs and services.
— SGS Principal & Partner, Ellen Witte

Young people and pensioners hardest hit

To better illustrate the situation for vulnerable groups, the RAI assesses the rental affordability situation for 10 Australian household types. Australia’s youth and pensioners are hit hardest according to this year's report.

A score of 100 and below on the RAI shows that households would be required to spend at least 30 per cent of their income on rent. While a score of 100-120 indicates households are facing moderately unaffordable rents.

Young people (25-34) have increased from 185,000 to 515,000 JobSeeker recipients due to the pandemic. They have been most severely affected by job losses due to COVID-19.

Young people who lost their jobs would often have been hospitality workers, paying about 35 per cent of income on rent in Sydney. Then, on JobSeeker, this became 69 per cent. And now the fortnightly payments are being reduced. Without the jobs to back it up, this policy is unjust.
— SGS Principal & Partner, Ellen Witte

Pensioners continue to face extremely and severely unaffordable rents, despite the improvement in rental prices due to the pandemic. In Greater Sydney and ACT, single pensioners may need to spend 74 per cent to 79 per cent of their income to enter into a rental agreement. For couple pensioners this is 52 per cent to 53 per cent.

Explore the interactive map

Explore rental affordability by location, household income or household profile:

Rental affordability by state

Tasmania

Hobart’s rental affordability has improved over the past year - but with a RAI score of 96, remains the only capital city in Australia where rental affordability for the average income household is below the critical threshold of 100. The average rental household in Greater Hobart is paying around 31 per cent of its total income on rent. However, lower-income households living in Hobart have to fork out a much higher proportion of their income to afford a roof over their heads:

Single person on JobSeeker: 43 per cent of income (severely unaffordable)
Single pensioner: 50 per cent of income (severely unaffordable)
Pensioner couple: 40 per cent of income (severely unaffordable)
Single part-time worker parent on benefits: 35 per cent of income (severely unaffordable)
Full-time hospitality worker: 24 per cent of income on rent (moderately unaffordable)

Victoria

Renters on low-incomes, such as pensioners and people on JobSeeker, are facing severe to extreme rental stress despite Melbourne’s improving affordability. Over the past year, affordability has improved across Greater Melbourne by 8.9 per cent – which has almost entirely been driven by the decline in rents caused by the onset of the COVID-19 pandemic. Rents remain unaffordable for lower income households in Melbourne, for example:

Single person on JobSeeker: 56 per cent of income (severely unaffordable)
Single pensioner: 65 per cent of income (extremely unaffordable)
Pensioner couple: 45 per cent of income (severely unaffordable)
Single part-time worker parent on benefits: 40 per cent of income (severely unaffordable)
Full-time hospitality worker: 31 per cent of income (unaffordable)

Affordability in regional Victoria has marginally improved during the last 12 months, with rents remaining just within acceptable levels. The average household seeking to rent in regional Victoria faces spending about 24 per cent of their total income on rented property. Fringe area commuter cities and towns such as Woodend, Torquay and Ocean Grove are moderately unaffordable to unaffordable. Regional centres such as Geelong, Bendigo, Ballarat and Shepparton have experienced a gradual decrease in affordability.

New South Wales

Despite rental affordability across Sydney improving in the past year, the NSW capital remains critically unaffordable to significant a proportions of the renting population, especially very low and low-income households. Greater Sydney’s affordability is the highest recorded over the past eight years, improving by 5.7 per cent in the past 12 months – which has almost entirely been driven by the decline in rents caused by the onset of the COVID-19 pandemic. It is the only city which has shifted from moderately unaffordable to acceptable rents. Despite the lower rental rates, the difference for very low-income households is negligible, as they still face severely unaffordable rents across Sydney.

Lower-income households have to fork out a high proportion of their income to afford a roof over their heads in Greater Sydney:

Single person on JobSeeker: 69 per cent of income (extremely unaffordable)
Single pensioner: 79 per cent of income (extremely unaffordable)
Pensioner couple: 53 per cent of income (severely unaffordable)
Single part-time worker parent on benefits: 47 per cent of income (severely unaffordable)
Full-time hospitality worker: 35 per cent of income (unaffordable)

Regional NSW is the second least affordable rest of state area, with an RAI score of 124, behind regional Tasmania (114). The average household seeking to rent in regional NSW would face rent levels at 24 per cent of its total income. Rents, therefore, remain acceptable to affordable across regional NSW. Households moving from the city to regional centres may adversely impact affordability.

Australian Capital Territory

Canberra’s rental affordability has stabilised in recent years. However, low-income households still face particularly unaffordable rents. Many areas across the central city and inner suburbs have improved moving from unaffordable to moderately unaffordable over the last 12 months. However, this has made very little difference to low-income households who still face severely unaffordable rents across Canberra. For those on higher incomes, the ACT offers acceptable rents, but for those on low incomes, it’s a different story. For example, renting would cost the following groups:

Single person on JobSeeker: 64 per cent of income (extremely unaffordable)
Single pensioner: 74 per cent of income (extremely unaffordable)
Pensioner couple: 52 per cent of income (severely unaffordable)
Single part-time worker parent on benefits: 45 per cent of income (severely unaffordable)
Full-time hospitality worker: 37 per cent of income (unaffordable)

The COVID-19 pandemic, and subsequent restrictions, did not impact the ACT as heavily as Victoria and NSW. It has therefore not experienced the same downward pressure on rents as Melbourne and Sydney.

Queensland

The cost of renting in many parts of Brisbane continues to ease. With an RAI score of 129, Brisbane is considered acceptable, with the average household paying 23 per cent of its total income if renting at the median rate. However, lower-income households have to fork out a much higher proportion of their income to afford a roof over their heads:

Single person on JobSeeker: 53 per cent of income (severely unaffordable)
Single pensioner: 61 per cent of income (extremely unaffordable)
Pensioner couple: 42 per cent of income (severely unaffordable)
Single part-time worker parent on benefits: 37 per cent of income (unaffordable)
Full-time hospitality worker: 31 per cent of income (unaffordable)

Affordability has fluctuated in regional Queensland over the past 12 months, seeing a slight improvement during the second quarter of 2020. With an RAI score of 123, its level of rental affordability is less than its metropolitan counterpart. The average rental household is facing rents at 24 per cent of its total income.

Western Australia

Rental affordability in Perth has remained stable but rents are not affordable across the board and renting remains unaffordable for lower-income households. With an RAI score of 145, the average rental household in Greater Perth faces rents costing about 21 per cent of their total income. While this is considered acceptable, rental property remains much less affordable for lower-income households:

Single pensioner: 65 per cent of income (extremely unaffordable)
Single person on JobSeeker: 56 per cent of income (severely unaffordable)
Pensioner couple: 38 per cent of income (unaffordable to severely unaffordable)
Single part-time worker parent on benefits: 33 per cent of income (unaffordable)
Full-time hospitality worker: 30 per cent of income (unaffordable)

The geographic spread of affordability across greater Perth remains uneven. While most areas in the city have acceptable of better affordability, coastal and south western suburbs remain moderately unaffordable to unaffordable. Regional Western Australia has also recorded a slight decrease in affordability from an RAI of 157 to 155. Following rapidly improving affordability between 2014 and 2017, the trend of the past three years suggest that affordability has stabilised.

Download report

The RAI is released annually by SGS Economics and Planning, National Shelter, Bendigo and Adelaide Bank, and the Brotherhood of St Laurence. Click the button below to download the RAI 2020 report.

DOWNLOAD RAI 2020 REPORT