The soaring cost of rent in Australia has put increased pressure on low- to middle-income households, especially in the major cities.
As of this month, more than 640,000 Aussie households are under housing stress or are homeless, with that number expected to rise to 1 million by 2041, according to a new report by SGS Economics and Planning.
The report found 42 per cent of all low-income households were paying more than 30 per cent of their income on housing. Severe rental stress is defined as spending 38 per cent or more of your income on rent.
The report determined a low-income household would need 117 per cent of their income to keep up with the rising cost of renting.
“It is clear that tenants are still grappling with unsustainable rent increases. Rental hikes are outpacing wages, leaving no realistic prospect of renting or buying for many individuals,” the report said.
“Unaffordable prices are driven by a combination of factors, including population growth, increased demand and a limited supply of rental housing. Additionally, rising property prices and stagnant wages have made it difficult for many people to enter the property market, leading to a growing reliance on rentals.”
The report said, compared to a decade ago, there were now less social and affordable housing options available on the market.
“This is making many low-income earners very reliant on the private rental market, where they are forced to pay unaffordable rents,” the report said.
The report points the finger at property investors, both local and offshore, for putting greater pressure on Australia's housing market.
“Homeowners are competing with investors for available property. Overseas investors are also buying more in Australia. Whether it’s new apartments off the plan waiting to get leased or investors who plan to keep it as a holiday apartment,” it said.
“In Perth alone, one in five houses is sitting empty despite almost 19,000 applicants on a public housing waitlist.
“Investors, local or abroad, have pushed out would-be homeowners, leaving more middle- to higher-income households renting for longer than anticipated. This creates a snowball effect on lower-income renters who, as a result, face higher rent rises.”