LESS than 300 of the 45,000 rental listings currently advertised across Australia are affordable for a person earning a full-time minimum wage, analysis shows, and affordable rentals are yet more scarce for those on the pension or JobSeeker, sparking calls for fixes beyond more housing supply.
Anglicare’s 2024 Rental Affordability Snapshot 2024 showed that as rents surge and vacancies hover around historic lows, affordability continued to slide backwards for minimum wage workers for another year, despite the Fair Work Commission’s 5.2% increase in the base rate of the minimum wage. A single person on the minimum wage could afford 0.6% of properties – just 289 of the 45,115 listed in March nationally – while a couple with two children would be able be able to afford 13.4% of properties, down 2.5%from last year.
“The housing crisis is slowly climbing the income ladder, crushing the lowest paid at the bottom,” the report said.
In its analysis, Anglicare used the internationally accepted benchmark of rent needing to be no more than 30% of a household budget for it not to cause financial stress and difficult choices.
Anglicare said it doesn’t measure for the millions of Australians working casually or part-time in minimum-wage jobs.
The scenario is grim for millions of others.
“With nearly one million Australians underemployed, the story is likely much worse than the Snapshot shows,” the report said.
Meanwhile, for a single person out of work and on the JobSeeker payment, the only affordable properties they would be able to find were two rooms in a sharehouse, or a single unit in rural NSW. Nothing is affordable for a young person on the Youth Allowance.
Just 1% of properties are affordable for a couple on the age pension, and a mere 0.2% – 89 in all – for a single person, and 58 of those were a room in a sharehouse.
“The reality is that older Australians will find themselves in rental stress.”
Only 31 rentals (0.1%) were affordable for a person on the disability support pension.
“This situation is entirely avoidable.
“While housing costs have risen faster than wages for decades, they’ve risen even faster than social security payments. Current rates of income support are so low they trap people in poverty, especially for people on payments that come with significant strings attached. There has been little to no action by governments to ensure that social security payments have kept pace with the cost of living, let alone housing costs.
“The simple truth is that the federal government could eliminate poverty for people on social security altogether, simply by raising payments that allow people to afford the basics.”
Not as simple as supply
“One of the common answers to the housing crisis is that we are in a supply shortage.
“This year, the number of rental listings in Tasmania increased by nearly 20% compared
to the 2023 Snapshot. Yet despite this increase in the rental supply, there is no notable increase in affordability. In fact, affordability continued its decline for a single minimum wage worker. Other regions, such as Western Australia, saw smaller increases in rental listings with similarly no improvement in affordability,” the report said.
“Simply increasing supply is not a silver bullet to solving this crisis.”
The crisis has prompted major government programs seeking to boost supply. National cabinet’s National Housing Accord kicks off in July, aiming to deliver 1.2 million “well-located” homes over five years, alongside the $10 billion Housing Australia Future Fund, which has the aim of 30,000 social and affordable homes to be delivered concurrently, National Housing Accord Facility to deliver another 10,000 affordable homes. The up-and-running Social Housing Accelerator is targeting 4,000 new social homes. This is in addition to state government programs.
However, the targets are considered farfetched by analysts amid a severe labour shortage, current low approval rates and planning red tape.
The ANZ suggested last week that new supply is unlikely to make a dent in prices any time soon and that policy should rather focus on existing stock.
Public housing stock has not kept pace with population growth, and the shortfall in public and community housing has climbed to 640,000 homes, according University of NSW research. To simply maintain the current ratio of public and community housing stock specifically, Australia would need to add 15,000 new homes to supply every year. On the current rate of construction, the nation is only managing to add 3,000 new homes to supply.
The report also said the private rental market is “not designed or set up to help Australians, especially those on low incomes, to find affordable housing”.
“Tax and transfer settings are designed in such a way that the private rental market’s primary purpose is to maximise return on investment for landlords and property investors. While the law of supply and demand may lead to a drop in prices over time, Australians struggling to make ends meet today don’t have the time or money to wait for the theory of trickle-down housing to work.”
Anglicare proposed that the capital gains discount would be phased out over a period of 10 years, ensuring that the housing market has time to adjust, and guards against objections from those with vested interests. Additionally, negative gearing deductions would be phased out for new investors in the private market.
