Perth Rental Affordability

Perth rental affordability stabilises but low-income families and pensioners are still struggling; Affordability in regional WA shows signs of plateauing

Rental affordability in Perth has stabilised but rents are not affordable across the board and renting in Perth remains unaffordable for lower-income households.

The RAI is an indicator of the price of rents relative to household incomes based on new rental agreements. It is released biannually by National Shelter, Community Sector Banking, SGS Economics & Planning and the Brotherhood of St Laurence.

A RAI of 100 and below shows that low-income households are suffering rental stress, spending at least 30 per cent of their income on housing. They may experience difficulty paying for primary needs such as food, medicine and transport. A RAI of 100-150 shows that low-income households are facing unaffordable rents.

With a RAI of 144, rental affordability in Greater Perth has remained stable. The median rental household in Greater Perth faces rents costing about 21 per cent of their total income. This is considered acceptable. Despite this, rental property remains much less affordable for lower-income households.

Ellen Witte, Partner at SGS Economics & Planning said: “The geographic spread of affordability across greater Perth remains uneven and relatively unchanged since the last release, with some inner-city areas moderately unaffordable to unaffordable. Part-time working single parents on benefits are especially exposed to rental stress. In Greater Perth, a single mother would be paying more than 46 percent of income on rent. Housing costs are further topped up with child care and maintenance costs.”

Andrew Cairns, Chief Executive Officer, Community Sector Banking, said: “Looking beneath the headline figures, rental stress is affecting the majority of very low-income households in Australia. Pensioners and single parents are hit particularly hard. For example, in Perth, a single part-time worker parent on benefits would have to pay 46 per cent of their income on rent, which is severely unaffordable.”

Perth rents extremely unaffordable for pensioners, young people suffering

Perth is unaffordable for pensioners, with pensioner couples paying 35 per cent of their income on rent and single pensioners forking out 64 per cent. Singles in particular could be forced to go without medical care or other fundamental needs to make ends meet. This is well over the stress threshold of 30 per cent, when people experience difficulty paying for primary needs, such as food, medicine and transport.

Students working part-time earning the maximum allowable wage and living in a share house pay 22 per cent of income on rent.

Higher incomes help in country WA

In most states, people living in the capital city and renting earn more than their country counterparts. But not so in WA. The median rental household in Greater Perth has a gross income of $84,200 per annum while the median rental household in regional Western Australia has a gross income of $90,000 per annum.

In terms of rental affordability, regional WA has a RAI of 157. Affordability in regional WA has grown steadily in recent years but fluctuated from 2017-2018, suggesting the growth in affordability may be plateauing.

While relatively minor, the March quarter of 2018 saw the second decline in rental affordability in regional WA since the same quarter three years prior.

The average household seeking to rent in regional WA would be facing rent levels at around 19 per cent of its income, which is considered to be acceptable.

Shelter WA Chief Executive Officer Michelle Mackenzie said: “While rental affordability has improved for median-income households, when we look at low-income tenants renting in Perth they continue to face a general lack of affordability – especially single pensioners, women in private rental and other low-income households. There is a critical need to look at rental subsidy options, such as Commonwealth Rental Assistance, as a response along with increasing more diverse, affordable rental housing options."

Conny Lenneberg, Executive Director of the Brotherhood of St Laurence, said: “There is a housing crisis in Australia and this report starkly shows those who can least afford to pay are paying the highest price.

“High rents are pushing unemployed people on very low Newstart payments into deeper poverty. Jobseekers are forced out to the urban fringes of our cities to find suitable accommodation but that places them far from jobs and public transport connections. Housing costs pressure means some renters on Centrelink are being pushed into homelessness. We need to raise Newstart and its very modest rental supplement as a priority.”

Ms Lenneberg said there was also an urgent need to increase subsidised social housing. “The cost of renting in the private market puts many low-income single parents, usually women, under extreme pressure. Many parents forgo basics such as food and paying household bills to keep a roof over their family.”

MEDIA: For further information and interviews please contact
Frankie Harrington on 0410 409 281 or frankie@fiftyacres.com

Interview opportunities are available with:
● James Barron, Head of Relations, Community Sector Banking
● Ellen Witte, Partner at SGS Economics & Planning
● Michelle Mackenzie, Chief Executive Officer of Shelter WA
● Conny Lenneberg, Executive Director of the Brotherhood of St Laurence

Link to interactive map:
http://www.sgsep.com.au/maps/thirdspace/australia-rental-affordability-index/

About the Rental Affordability Index

National Shelter, Community Sector Banking, SGS Economics & Planning and the Brotherhood of St Lairemce have released the Rental Affordability Index (RAI) biannually since 2015. The RAI is an easy to understand indicator of rental affordability relative to household incomes, and is intended to complement the Housing Affordability Index (HAI) which is a price index for the purchase of houses.

About Community Sector Banking

Community Sector Banking is the not-for-profit banking specialist for more than 15,000 organisations; it’s a joint venture between Bendigo Bank and the Community 21 consortium of not-for-profit organisations.

About National Shelter

National Shelter is a peak advocacy group whose mission is to create a "more just housing system, particularly for low-income Australian households".

About SGS Economics & Planning

SGS Economics & Planning is a leading planning and economics firm whose purpose is to shape policy and investment decisions to achieve sustainable places, communities and economies.

About Brotherhood of St Laurence

The Brotherhood of St Laurence is a community organisation that works to prevent and alleviate poverty across Australia.