A new report, released today by Compass Housing Services, shows housing stress was a major problem for many typical Australian renters, long before COVID-19 lockdowns began to hit household budgets.

The Affordable Housing Income Gap Report found that, prior to the Covid-19 pandemic, typical renting households in Sydney, Melbourne, Adelaide, Brisbane, Hobart and some other regional centres earned thousands of dollars a year less than the amount required to avoid housing stress on an average home.

The Report measures housing affordability for renters by establishing the amount of additional income a typical renting household needs to avoid housing stress on various types of dwellings in NSW, Victoria, Queensland, South Australia and Tasmania.

Report author, Martin Kennedy, said the report shows that housing stress isn’t just something experienced by people on low incomes.

“Even before the current crisis working families with average incomes often struggled to rent suitable properties close to jobs,” he said.

“Throw in the possibility of reduced hours or a job loss due to COVID-19 and things can become very tough indeed.

“Although rents are expected to fall in the short term due to more stock coming on to the market, they may not fall far enough to become affordable for typical renting households.

“In some areas, rents would need to drop by up to 50% to become genuinely affordable, and that’s only if people manage to sustain their current levels of income.

“More to the point, it shouldn’t take a global pandemic, closed borders and widespread lockdowns to bring median rents more in line with median incomes.”

Mr Kennedy said the existence of the affordable housing income gap is part of a broader housing crisis.

“The problems facing renters are largely due to purchase prices being too high and social housing supply being too low.”

“Unfortunately, people who can’t afford to buy, and don’t qualify for social housing, have no option but to cut back elsewhere and try to manage as best they can.”

The Report’s recommendations include:

• the construction of 500,000 social and affordable housing dwellings in the next 10 years
• stricter controls on residential mortgage lending to keep borrowings to realistic multiples of household income
• repealing stamp duty in favour of a broad-based land tax
• relaxing urban growth boundaries which artificially ration the supply of land
• scrapping first home buyer grants and stamp duty exemptions
• giving renters more protection under state and territory tenancy laws
• alternative allocation models for social housing.

Compass Housing is a not-for-profit, community housing provider with almost 7000 properties in NSW, Queensland and New Zealand.

Report Key findings

Hobart had some of the least affordable rental housing in Australia. There were no local government areas (LGAs) in the Greater Hobart area that were affordable for typical renting households seeking detached housing. Detached homes in the regional centres of Launceston, Burnie and Devonport are also unaffordable for typical renting households.

Median rents in some areas of Brisbane had fallen sharply, including desirable inner suburbs such as St Lucia, Highgate Hill and Yeronga. Rents rose strongly in other areas with approximately a third of postcodes experiencing rental increases above inflation.

There were no inner or middle Melbourne suburbs where the median rent on a detached three or four bedroom house was affordable for a typical renting household.

While the overall median rent in Adelaide’s LGAs is affordable for typical renting households in approximately 85% of cases, the median rent for detached three-bedroom homes is unaffordable in 70% of cases. All LGAs are affordable for typical renting households seeking a two-bedroom unit.

There was nowhere in Sydney’s inner or middle suburbs where the median rent of a 4-bedroom home was affordable for a typical renting household, and just three LGAs (Canterbury-Bankstown, Cumberland and Ryde) where median rents for a 3-bedroom home were affordable.