Rents remain unaffordable for lower income households, the latest release of the Rental Affordability Index (RAI) reveals. Released biannually, the Rental Affordability Index is an indicator of the price of rents relative to household incomes, based on new rental agreements.
The index shows that a single person on Newstart allowance faces an untenable rental situation. To find an affordable rental property, they would need to spend all their income on rent. This means Newstart recipients are making difficult decisions about having a place to call home, or the basic necessities of living.
“As a society we have created an awful reality for many people,” said Michelle Mackenzie CEO of Shelter WA. “The lack of social and affordable housing in Western Australia means many Newstart recipients are often marginally housed, or in unsafe and unsuitable housing, often without the basic facilities that many of us take for granted. We have a created a society where people, just because they are poor, are at risk of risk of hunger, stress and poorer health. The lack of affordable housing is creating homelessness.”
It is not only people on Newstart who are doing it tough in the rental market. Perth is extremely unaffordable for pensioners, with single pensioner households paying 65 per cent of their income on rent.
“We know that the majority of older people at risk of homelessness are people on income support and that live alone; and from the Census data that the risk of homelessness in older people is increasing rapidly,” said Michelle. “Paying such a large proportion of income each week just to pay for rent means that money is not available for other necessities such as utilities, medicine, food or transport. The lack of secure housing impacts on older people’s health and well-being.”
Perth is also extremely unaffordable for a single parent with a child under five years of age, who is working part time and on income support. Childcare, healthcare and general living costs compound the financial stress of this household. They are spending on average 46 per cent of their income on rent.
The index showed that even households with an average income of $85,900, that rent in Perth, are spending over 21 per cent of their total income on rent. This can expose them to rental stress, which is triggered when you spend 30 per cent or more of your income on rent.
“While Perth rents remain stable overall, for those living on very low or low incomes this is a tough time,” said Michelle Mackenzie CEO of Shelter WA.
“These figures remind decision makers that we need system change. The development of the next WA Housing Strategy 2020-2030 must address rental affordability and housing choice.
“The Federal Government must address the widening gap between household income and fundamental housing costs. Having a stable home enables people to actively participate and contribute to the economy and our community.”
Shelter WA is recommending governments implement the following initiatives:
- Increase investment in more diverse social and affordable housing supply, including increasing initiatives such as rental Assisted Rental Pathways program;
- Harness the strengths of the community housing sector to facilitate new Commonwealth and institutional investment into more diverse, affordable housing products;
- Reform the planning system to require new developments to include a minimum of 30 per cent affordable and social housing;
- Reform the West Australian Residential Tenancies Act to make renting a more safe, secure and affordable housing choice;
- Increase Newstart and Commonwealth Rent Assistance; and
- Reform social housing to maximise independence and transition opportunities while retaining a safety net for those in need.
The report is released by National Shelter, Community Sector Banking, SGS Economics & Planning and the Brotherhood of St Laurence. Read the full report here.
Media Contact: Michelle Mackenzie, CEO: (08) 9325 6660
- Rent is described as unaffordable when households on very low and low incomes spend more than 30 per cent of their income on rent.
- RAI scores between 0 and 100 indicate households would pay over 30 per cent of their income on rent – with rents unaffordable, severely unaffordable or extremely unaffordable.
- Newstart recipients need to spend 100 per cent of on rent to find a home in the private rental market – a RAI score of 30.
- Single Pensioner households are paying 65 per cent of their income on rent – a RAI score of 46.
- A single parent, with a child under five years of age, who is working part time and on income support in Perth, finds renting extremely unaffordable for– a RAI score of 66.
- The interactive RAI map can be found here.