Rent affordability is falling with warnings it will only get worse

Rental housing affordability is collapsing across the country and is now at an all-time low in several capitals and many regional centers as stagnant wages combined with low vacancy rates and rising interest rates drive people out of their homes.

The rent affordability index, released on Tuesday by SGS Economics and National Shelter, shows that affordability in some parts of the country has fallen by as much as 14 percent over the past 12 months.

On Monday, Reserve Bank Governor Philip Lowe said rents are likely to rise next year because of the country's tight rental market.

On Monday, Reserve Bank Governor Philip Lowe said rents are likely to rise next year because of the country’s tight rental market.Credit:Peter Rae

The annual index, which compares rents to household incomes, shows that Hobart is the country’s least affordable capital. Affordability is at an all-time low in Brisbane after falling 11 percent over the past year, and at the lowest point in Perth since 2016. In both Melbourne and Sydney, National Shelter expects affordability to fall after a brief improvement during the COVID-19 crisis. 19 pandemic .

Emma Greenhalgh, CEO of National Shelter, said the federal government should consider reforms such as limiting rent increases and increases in Commonwealth Rent Assistance, given the social damage caused by falling affordability.

“Rental hikes mean individuals and families are forced to move away from family and friends, disconnecting while at the same time struggling to find money to pay for essentials such as food, utilities and health care,” she said.

“Key workers, including nurses and teachers, often cannot afford to live in the communities they serve.”

In Melbourne, Brighton, Albert Park, Middle Park and Canterbury are the least affordable suburbs for renters. Outside the city, the area stretching from Barwon Heads to Torquay, Woodend and Kyneton is the least affordable.

The most affordable areas are in Melbourne’s suburbs, including Melton, Werribee, Reservoir, Glenroy and Fawkner.

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