Australians sinking into poverty as rents chew up incomes

The second release of Australia’s first ever Rental Affordability Index (RAI) reveals the lowest-income households in Australia are paying up to 85 per cent of their income on rent, while rental unaffordability is extending to professionals.

Under current market conditions, the RAI reveals low-income households typically need to pay 50 to 85 per cent of their income on rent. It’s generally accepted that a household is in housing stress if it pays more than 30 per cent of its income on rent.

Adrian Pisarski, executive officer of National Shelter, says the latest index highlights many rental households are falling into poverty and are being pushed to suburban fringes due to high rents.

“Australia’s lowest income households – those on around $500 a week – are paying up to 85 per cent of their income on rents. Middle-income households are also falling into housing stress as high rents chew up incomes that aren’t keeping pace with rising housing costs. It’s clear that rental unaffordability is dividing Australia,” Pisarski says.

City-by-city breakdown

Under the capital city data, low-income households continue to experience severe unaffordability:


  • Greater Sydney is the least affordable metropolitan area in Australia in recent years, with an RAI of 109 in the last two quarters of 2015.
  • However, affordability levels have stabilised in Sydney in recent years.
  • Near the city centre, there has been no relief for the average household in meeting housing costs, though some areas in the west have experienced slight improvements in affordability.


  • With an RAI of 116, rental affordability in Greater Brisbane has decreased over the past two years; it’s the only city to have recorded such a trend of the metro areas studied. This is due to a declining income growth rate in Brisbane. Over the past two years, household income has declined by 0.2 per cent, while rents have increased overall by 2.5 per cent. Median household rents have fluctuated between $390 and $406 per week.
  • Some areas in the inner city, south of the Brisbane River (i.e. West End, South Brisbane and East Brisbane) have experienced improvements in rental affordability, probably as a result of localised growth in apartment supply.


  • Greater Perth has an RAI of 126, meaning rents are acceptable. With a score of 108 (moderately unaffordable) in December 2013, affordability has increased significantly over the past two years.
  • The increase in affordability has been more significant in regional WA compared to the metro area, away from moderately unaffordable rents to acceptable rents, possibly in part due to the mining downturn.


  • Greater Adelaide has an RAI of 117, meaning rents are moderately unaffordable. There has been a moderately positive trend in rental affordability over the last two years. Since the November 2015 release, the RAI score has risen by three points.
  • This is a result of household incomes rising faster than rents in recent years. Over the past three years, household income rose 7.5 per cent while rents rose 1.7 per cent.


  • Greater Hobart has an RAI of 111, meaning the city remains moderately unaffordable.
  • After Sydney, Greater Hobart is the least affordable city, due to relatively lower incomes and high rental yields.
  • Unaffordability has increased slightly, as the RAI score dropped by one point.
  • Pockets at the fringes of Greater Hobart have become more affordable.

Economist Saul Eslake notes that in 1991-92, first homebuyers each accounted for about 17 per cent of the total housing market, with the remainder going to “repeat buyers”.

“By the current financial year, however, the share of total housing lending going to first-time buyers is just 11 per cent, while the share going to investors rose to 46 per cent,” Eslake says.

The index includes data from the September and December 2015 quarters as well as historical data dating back to 1996. Data was not available for Victoria.

About the Rental Affordability Index

The RAI has been created by National Shelter, Community Sector Banking and SGS Economics Planning, which undertook the research. The report gives an account of rental affordability in Australia’s capital cities. The higher the number of the RAI, the greater the affordability.

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