Tenants are forgoing nearly a third of their income to secure a new lease as prices continue to rise.
The share of income that goes to rent has reached its highest level since 2014, according to a new analysis from ANZ and real estate data company CoreLogic.
The report found that middle-income households would have to forgo 30.8 percent of their income to get a new lease.
The picture is much bleaker for lower-income households, with those in the 25th percentile income level doling out 51.6 percent of their income.
This places this cohort firmly in housing stress as commonly defined by the “30/40” rule, with the lowest 40 percent of income earners spending more than 30 percent on housing.
Tenants pay more than a third of their income to get a new lease (stock image)
The report noted that there has always been a big difference in the affordability of housing for middle-income and low-income renters, but this gap widened, suggesting that poorer households have been hit much harder by rising rents.
Eliza Owen, head of research at CoreLogic Australia, said there had been some “extraordinary shifts” driving demand for rental housing, including that there were now fewer people per house and overseas migration had returned with a bang.
On the other side of the ledger, conditions for investors had not been ideal, inhibiting the flow of new rental offerings.
“As rents have risen sharply, rising cash rates and pressure in the construction industry have slowed the pace of housing completion,” she explained.
However, Ms Owen said an increase in investor borrowing suggests more rental properties are on the way, but it will take some time to materialize.
At 1.1 percent nationally, the rental vacancy rate is well below the ten-year average of three percent.
New quotations also remain well below average.
ANZ senior economist Felicity Emmett said the period of economic uncertainty also weighed on the private market and left more people in the rental market.
“Combined with a decline in social housing, the pressure on rental demand is being felt across all income levels,” said Ms Emmett.
At 1.1 percent nationally, the rental vacancy rate is well below the three percent average for the decade (stock image)
The Albanian government has been trying to get the future $10 billion housing fund through parliament, which will be used to build 30,000 new social and affordable homes over five years (stock image)
The federal government is under pressure to alleviate rental market pain points, but the key component of its plan, a $10 billion housing fund, is struggling to get through parliament.
The Greens have blocked the fund, which would generate revenue to build 30,000 social and affordable homes over five years, hoping to squeeze more ambition out of the government.
Liberal MP Jason Falinski said planning regulation and community opposition held back the supply of new private housing.
In Sydney, he said the city council had prevented more apartments from being built in the inner city.
“The biggest driver of housing affordability in Australia is not taxation, not immigrants, not foreign investors,” he told Sky News on Monday.
“It is (Sydney City Mayor) Clover Moore who is refusing to build more houses and apartments in areas where people want to live.”
Assistant Prime Minister Patrick Gorman said the federal government wanted to solve some of the land supply and planning control issues raised by the Liberal MP through the National Housing Affordability Supply Council.
“I advocate good quality medium density,” he told Sky News.
“I want more social housing for my constituents, that’s why I’m voting for the Housing Australia Future Fund.”