The eighth annual rental affordability snapshot released by Anglicare on Wednesday reveals that, for those on welfare payments and the minimum wage, rental affordability remains at crisis point. While much of the talk in the run-up to the budget has been about the affordability of buying a house, the snapshot is a strong reminder of the inadequacy of welfare payments such as Newstart and the desperation many low-income families face just trying to find a roof to live under.
On Tuesday the latest consumer price figures showed that while inflation growth jumped a little bit to 2.1%, rental price growth at 0.6% remains the lowest it has been for more than 20 years.
This slowing of rental price growth is the main driver behind the findings of the latest Anglicare rental affordability snapshot, which show that rental affordability for couples on the minimum wage has improved ever so slightly over the past year.
Since the middle of 2014 rental prices across Australia have on average been rising slower than the minimum wage and, since the end of 2015, they have been rising slower than overall inflation:
But while this does help low-income families, it has done little to undo the massive rent price increases of 2007 to 2012.
Over the past decade, while the minimum wage has risen 31%, and inflation has gone up 27%, rents have soared 48%. It is much less affordable to rent now than it was a decade ago:
But one problem with looking at rental prices across the nation is that rents – perhaps even more so than house prices – are greatly affected by local conditions.
The best example is the difference between Sydney and Perth over the past 15 years. During the boom periods, Perth and Sydney both saw rents zoom upwards but the prices in Perth were much greater.
But the end of the mining boom has seen rent prices in Perth collapse over the past two years. In the past 12 months, while the price of rents in Sydney rose by a still historically low rate of just 2.5%, in Perth rents on average have fallen 7.3%. So drastically have rents fallen in Perth that they are back at the level paid in December 2011, whereas in Sydney they are now 17% higher than then:
The other issue for rental affordability is availability.
The snapshot assumes that a family with two children would require a three-bedroom property and that “share accommodation” is also not suitable for couples or families except for couples on an aged pension.
The report also assumes that, for a property to be affordable, the rent should be less than 30% of household income.
Across the nation, Anglicare found that of the 67,651 dwellings that were available for rent on the weekend of 1-2 April, only 6% were are suitable for households on government benefits. This was slightly down on the 7% in 2016. The story is better for households on the minimum wage (either singles or couples), with 30% suitable for any of those four types of households – but again slightly down from 31% in 2016. But these figures – as bad as they are – hide the crisis for many types of households.
For example, across Australia, there were just 21 dwellings that were affordable for a single person on Newstart and just 1.5% of dwellings were suitable and affordable for a single parent subsisting on the parenting payment. Even for a single person on minimum wage, just 1.6% of dwellings were affordable:
Across the capital cites, the picture of affordability improved most for couples on the minimum wage but has actually slightly worsened for single people on minimum wage.
The deteriorating situation for single people on minimum wage is driven mostly by the big fall in affordability in Melbourne, where there the snapshot notes there is a “dearth of appropriate and affordable rentals for most categories of low-income earners”:
But changes can also disguise the picture.
One reason for small changes in affordability for households dependent upon welfare is because no dwellings are available at all. The situation has not become worse only because it was already at rock bottom.
For example, out of 13,447 properties in the greater Sydney and Illawarra areas, not one was affordable for a person on Newstart, the parenting payment, youth allowance or disability support pension, and just 23 were affordable for a single person on the minimum wage: