Australians remain in the grip of rental stress, but there are stark differences emerging across the country.
The latest Rental Pain Index (RPI) report by property research and analysis firm Suburbtrends found signs of easing pain in some states and “promising” improvements in Tasmania. However, Queensland and South Australia remain stuck above the 80 per cent RPI mark, exceeding critical levels.
Suburbtrends analyst and founder Kent Lardner says the monthly report reveals a complex picture of Australia’s rental market, with significant challenges across the board.
“While we are seeing early signs of easing rental pressures in some areas, the broader picture remains challenging,” he said.
A Nation of Renters in ‘Extreme Pain’
About one-third of Australians are renters, and right now, 72.9 per cent of suburb areas nationally are experiencing extreme rental pain, according to the report. The RPI provides a monthly analysis of suburb areas across the country, giving them a score based on five key factors: rent change, advertised rentals, vacancy rates, vacancy change, and rent affordability. A score higher than 75 is considered an “extreme” or “critical” level of rental stress.
National annual rent growth has risen from 7.96 per cent to 10.29 per cent, according to the report. The proportion of income spent on rent has also climbed, from 29.96 to 30.81 per cent.
State-by-State Breakdown
While the RPI for New South Wales (NSW) declined slightly from 79.91 to 76.16, and Victoria also saw a modest drop, Tasmania was the standout with a decrease in RPI from 64.86 to 59.95. Mr. Lardner attributes reductions in Tasmania and other areas to a trend of rising vacancy rates, although this has not balanced out rent hikes.
“The slight improvements in states like Tasmania are promising, but we cannot overlook the fact that high rents are still a burden for many households,” Mr. Lardner said.
Overall, July 2024 highlights increasing rental pressures, with most states witnessing heightened rental increases and deteriorating affordability.
Percentage of States in Extreme Rental Pain
The worst suburbs for renters have emerged, with a handful across the country reaching a maximum 100 per cent RPI score. Queensland dominates this list, with residents in suburbs such as Daintree, Emu Park, and Mount Morgan paying upwards of 39 per cent of their income on rent.
Population Growth and Rental Stress
Elin Charles-Edwards, associate professor in human geography at the University of Queensland, noted that population growth has significantly impacted Queensland and Western Australia (WA). Both states experienced the largest population growth in the past year, according to the latest figures from the Australian Bureau of Statistics (ABS), partly due to interstate migration during the COVID pandemic.
“We’ve seen this real resurgence in some people coming to Queensland, so the cumulative effect of that demand is really being seen in the housing system,” Professor Charles-Edwards told the ABC.
Household Income and Rental Stress
Mr. Lardner emphasized the importance of considering how much household income is being allocated to rent. While some areas have seen rents leveling out or vacancies increasing, rents remain consistently high relative to income.
“The impact of high rents on household budgets is profound,” he said. “Many families are forced to allocate a substantial portion of their income to housing, leaving little room for other essential expenses.”
The ABS defines rental stress as spending more than one-third, or 30 per cent, of gross income on rent. Using Census 2021 data, the report identified suburb areas where low-income earners may be struggling the most. Queensland suburbs took the majority of spots when examining the remaining weekly income balance after rent, though Tweed Heads South in the NSW Northern Rivers region topped the list, with a rental median of $700 and an estimated income of $1,057, leaving a balance of $357.
Mr. Lardner cautioned that median income figures could be skewed in places like Tweed Heads due to a higher proportion of residents on social security rather than typical wages. The average household earnings may have changed since the 2021 Census, but concerns remain for people in lower income brackets who are “stuck” in areas with skyrocketing rents.
The Need for More Housing
“Housing is obviously a human right, and the instability and stress it causes when people can’t find suitable housing is pretty immense and a big cost for society,” Mr. Lardner said. He called for more housing as the main solution but acknowledged that the country is in a desperate state of catch-up.
Professor Charles-Edwards added that the demographic shifts during the pandemic meant “we took our eye off the ball a little bit.” She suggested that, had there been better foresight, there might have been a greater emp
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