Low-income earners are being squeezed out of Melbourne in a bid to find affordable housing, the latest Rental Affordability Index has found.
A new rental affordability report has found that single parents are paying a whopping 56 per cent of their income on rent, while low-income earners are being pushed out of Melbourne's city centre to find affordable housing.
According the latest Rental Affordability Index (RAI), a typical Melbourne household pocketing nearly $90,000 annual income would still struggle to find an affordable home to rent within 15kms of Melbourne's CBD.
The index found the median rental household in the greater Melbourne area earned $88,400 annually.
But a typical household wouldn't be likely to find an affordable three-bedroom rental until they hit outer areas like Braybrook, Ringwood East, Springvale, and Reservoir.
In the past 12 months, rents shifted from acceptable to unaffordable in the northwest suburb of Keilor and as far as Gisborne in the Macedon Ranges. A similar trend is evident in the north east in Diamond Creek and Warrandyte.
Pictured: The map shows how affordable rental properties across Melbourne are for a single parent working part-time. Source: RAI
Inner areas such as Collingwood have also moved from moderately unaffordable to unaffordable for an average rental household in the last quarter.
The south east of Greater Melbourne remains moderately to severely unaffordable. All top five least affordable postcodes for this quarter are in the south east, which include not only suburbs such as Albert Park and Brighton but also ones as far out as Beaumaris.
According to the index, rentals in 67 postcodes were unaffordable, defined as costing more than 30 per cent of household income.
Pensioners and millennials are among the hardest hit. Students with a part-time job and living in a share house are close to the stress threshold - paying 28 per cent of their income on rent.
Pictured: The map shows how affordable rental properties across Melbourne are for a student living in a sharehouse. Source: RAI
Pensioners are paying 44 percent of their income, and singles an untenable 68 percent for a new lease - leaving very little for any medical costs or other fundamental needs.
Single income families with children are paying 25 per cent of their income for a new rental, making funding the cost childcare and education difficult.
“Part-time working single parents on benefits are especially exposed to rental stress. In greater Melbourne, a single mother would be paying more than 50 percent of income on rent. Housing costs are further topped up with child care and maintenance costs.
"The median household seeking to rent in geater Melbourne faces housing costs at around 24 per cent of its total income," index author and Partner at SGS Economics and Planning, Ellen Witte said.
Pictured: The map shows how affordable rental properties across Melbourne are for pensioners. Source: RAI
Malcolm Gunning, President of the Real Estate Institute of Australia says the real issue is the cost of living has gone up for everything except rent, and there has been no wages growth.
"This is where the hardship is coming through," Mr Gunning told WILLIAMS MEDIA.
The reports "grim" findings reveal there is a "housing crisis in Australia".
"This report starkly shows those who can least afford to pay are paying the highest price," Conny Lenneberg, Executive Director of the Brotherhood of St Laurence said.
“High rents are pushing unemployed people on very low Newstart payments into deeper poverty. Jobseekers are forced out to the urban fringes of our cities to find suitable accommodation but that places them far from jobs and public transport connections. Housing costs pressure means some renters on Centrelink are being pushed into homelessness. We need to raise Newstart and its very modest rental supplement as a priority.”
Ms Lenneberg said there was also an urgent need to increase subsidised social housing.
“The cost of renting in the private market puts many low-income single parents, usually women, under extreme pressure. Many parents forgo basics such as food and paying household bills to keep a roof over their family."
Executive Officer of National Shelter, Adrian Pisarski says a National Housing Strategy should be implemented.
"The situation facing the nation’s renters remains poor with little or no improvement for low and moderate income renters in our capitals and poor affordability in our regions.”
“It is clear to National Shelter we need a National Housing Strategy to help improve the dire situation far too many renters across Australia experience,” Mr Pisarski said.
“Compared to improvement in purchase affordability, renters are doing it tough. While we have many housing markets in Australia, none of them are positive for renters. We need a multi-party commitment to improve rental affordability over the long term.”
Read the Rental Affordability Index here.
Related reading:
Aussies feeling mortgage stress
Australians should be earning six-figures to avoid being under housing stress, says report
Fears Melbourne's housing shortage could spark affordability crisis