2021 Rental Affordability Index Confirms Continuing Rental Crisis

Media release – Shelter Tas, 24 November 2021

2021 Rental Affordability Index confirms Tasmania’s continuing rental crisis

Shelter Tas, Tasmania’s peak body for housing and homelessness is concerned by the growing gap between income and rents. The Rental Affordability Index (RAI) is produced by SGS Economics & Planning, National Shelter, Beyond Bank and the Brotherhood of St Laurence. The latest report confirms worsening conditions for Tasmanian renters.

“Since 2015, the RAI has shown deepening hardship for Tasmanian renters, and this trend is continuing. The report released today shows that Hobart is still the least affordable capital in Australia. Hobart’s affordability has fallen to an all-time low of 83 points on the Index,” Shelter Tas CEO, Pattie Chugg said.

The RAI compares household incomes with the cost of renting, and shows that Tasmanians are facing a trend of worsening rental stress, where households on the lowest 40% of incomes pay more than 30% of their income in rent. Tasmanian incomes are failing to keep pace with private rents in all regions of the state, and even households on average incomes are now in rental stress.

“Unaffordability has spread from Hobart to the entire state. For the fifth year in a row, the RAI shows declining affordability in Tasmania’s regional areas, where Tasmania remains the least affordable of the ‘rest of the state’ areas nationally. This is confirmed by housing and homelessness services across Tasmania, reporting that rising rents and low income growth are creating unprecedented hardship for many people seeking to find an affordable home,” Ms Chugg said.

In the North, affordability in Launceston and Kings Meadows has dropped significantly since last year’s RAI. In North West towns such as Burnie, and on the East Coast, a similar decline in affordability can be seen.

“As the state government encourages population growth and tourism, they also need to manage the impact this has on the availability of affordable rental homes for all Tasmanians.

“We are seeing the loss of long-term accommodation to short stay tourism, such as Airbnb. We recognise that short stay visitor accommodation is not the only driver of our current shortage of rental properties, but it is a key factor that needs to be carefully managed,” Ms Chugg said.

“Shelter Tas would like to see a re-assessment of housing demand across Tasmania to reflect the reality of the housing crisis in 2021. We calculate that Tasmania needs a level of at least 10% of dwellings to be affordable social rentals (currently 6.2%), and we call on the state government to support this revised target in the new 20 year Tasmanian Housing Strategy.

“The Covid crisis is not over yet. When our borders re-open, successful management of any cases will depend on everyone having a safe and secure home, where they can recover and self-isolate if needed. Safe homes for all Tasmanians will protect both individual and community health, and boost our economy. Homes will remain essential even when the pandemic has passed,” Ms Chugg said.

The lack of affordable housing puts people at increased risk of housing stress and experiencing homelessness. In the worst cases, when people cannot find an affordable home to rent, they will end up homeless. On any given day in Tasmania, 36 requests for help from homelessness services go unassisted. One third of requests involve family or domestic violence. Most times, requests for help are unassisted because the people need accommodation and it can’t be found.

The waiting list for social housing continues to grow, and has now reached 4,468 applications; these applications represent individuals, couples and families.

“COVID-19 has shown the importance of everyone having a safe and secure place to live. This report shows people across Tasmania are facing an increasingly competitive and expensive private rental market. Tasmania needs to reverse this long-term trend of sustained rental hardship and continue to build more affordable and social rental homes.

“We have seen that the Tasmanian government can act quickly to support those people in housing hardship and facing homelessness, and this report shows the need to build new housing supply and extend the social housing target to achieve 10% of dwellings,” Ms Chugg said.

Ellen Witte, Tasmania-based Partner at SGS Economics & Planning and lead author of the RAI report said, “during the pandemic, many households relocated from mainland cities into Hobart – which had a major impact on housing demand – and consequently rental affordability plummeted. Households from mainland cities also tend to have higher incomes, pricing the local community out of the market. At the same time, Hobart was confronted by an increase of people on JobSeeker after losing their jobs during the pandemic as tourism came to a grinding halt.

“The onset of the COVID-19 pandemic saw improved affordability in several parts of the city; including central South Hobart, Taroona, and Lindisfarne– which notably tend to be in demand by international students and tourists,” Ms Witte said.

“The reprieve in affordability levels was short-lived. Rental affordability is now even lower than pre-pandemic. Overall rental affordability plummeted by 9% compared to last year. The average income rental household is now paying 34% of income on rent to enter a rental agreement. This means even full-time working households are now in housing stress, and struggling to pay for other primary needs such as food, medicine and education for their children.

“As part of the economic recovery out of the pandemic, we need structural adjustments to welfare payments. We need to prioritise those most in need and create jobs; expanding the social and affordable housing stock will achieve both,” Ms Witte said.

To read the media statement from National Shelter, including comment from Executive Officer Adrian Pisarski, click here. To view the full RAI and interactive map, and find out how your area is faring in rental affordability, click here.

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Media release – Greens Senator for Tasmania Peter Whish-Wilson, 24 November 2021

Tassie renters suffer as Liberals fail to act

Data released this morning in the Annual Rental Affordability Index shows Hobart is now the least affordable city for renters in Australia.

This comes as no surprise to Tasmanians, who have suffered from years of government inaction and failure to address skyrocketing rents and exploding house prices, Greens Senator for Tasmania Peter Whish-Wilson says.

“Housing in Tasmania is completely cooked, and Scott Morrison is totally MIA on this critical issue,” Senator Whish-Wilson said.

“The Greens urge him to show some leadership and adopt our federally funded plan to fix the housing crisis – this wouldn’t be the first time the Liberals adopted Greens economic policy.”

“The Tasmanian government had its $157 million debt to the Commonwealth waivered in 2019, and in return gave a commitment to invest substantial funds into public housing.

“It’s not good enough that the Gutwein Government and Tasmanian Liberal Senators seemingly aren’t able to explain if the debt waiver funds have been spent to help fix this most urgent crisis.”

“What little has been invested is just a drop in the ocean on what is required.

“The Greens’ housing policy will deliver our state 19,000 new homes, covering the shortfall of 14,000 public and community homes required to fix Tasmania’s housing crisis.”

“Tasmania’s renters are being left out in the cold as rents soar and house prices explode.”

“Wage growth has stagnated as Hobart house prices have seen double digit growth during the pandemic.

“How are young people and people on low and middle incomes expected to save for a deposit on their first home when more and more of their household budget is being spent on rent?”

“For renters, the deck is stacked firmly in their landlords’ favour. We need urgent policy changes to give Tasmania’s renters hope and a helping hand.”

“Our plan will also give people who have been locked out of home ownership the opportunity to purchase up to 75% equity in their home. Our Shared Equity Ownership Scheme will make it easier for people to buy their first home, in suburbs they want to live in, for $300,000.”

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Media release – National Shelter, 24 November 2021

Rental affordability for low-income households falls back to pre-pandemic levels, regions hardest hit and Hobart still least affordable

Low and moderate-income Australian households are still facing moderate to extreme rental stress nationwide according to the latest release of the Rental Affordability Index (RAI). The results reveal that there is currently no affordable rental housing in Australia for single pensioners, people on jobseeker, pensioner couples and single part-time working parents also on benefits, apart from in regional South Australia.

The RAI is an indicator of the price of rents relative to household incomes based on new rental agreements. It is released by National Shelter, SGS Economics & Planning, the Brotherhood of St. Laurence and Beyond Bank Australia. This report measures rental affordability for households until the June quarter of 2021 and shows how the pandemic temporarily impacted rental affordability.

The RAI found Hobart remains the least affordable city to rent in Australia, with the average household income ($67,900 gross per annum) paying 34 per cent of their income under a new rental agreement. This is well beyond the housing stress threshold of 30 per cent, meaning that after paying rent, there is not enough remaining income to spend on other primary needs such as food, medical needs, heating or cooling or children’s education.

Greater Adelaide is the next least affordable city, where households pay 27 per cent of their income on rent. The ACT and Greater Sydney remain the least affordable locations for low-income households to rent. In Canberra and Sydney, a single person on JobSeeker now pays 113 per cent and 110 per cent of their income on rent. JobSeeker in major cities temporarily saw rental affordability increase due to larger allowances, but these households are now back at the same stress levels as they were pre-pandemic, except Greater Melbourne.

In Greater Perth, Hobart and Brisbane, rental affordability is worse than before the pandemic. During the pandemic, many households moved out of the capital cities into regional areas, where rental affordability has significantly deteriorated. Normal net migration to regional Australia peaked at around 12,000 people per quarter during the pandemic.

Regional areas such as Wollongong and the Gold and Sunshine Coasts are now unaffordable for households earning under $80,000 per annum. The greatest drop in rental affordability was recorded in Greater Perth, where affordability declined by 14 per cent, a bigger jump than seen in cities like Brisbane and Hobart.

Greater Melbourne saw an improvement in rental affordability. Rental affordability improved in Melbourne’s inner-urban areas while rents on the outer edges increased. It improved 7.3 per cent, and the average rental household now pays 20 per cent of their income on rent. JobSeekers still face severely unaffordable rents, paying 79 per cent of their income on rent.

Adrian Pisarski, Executive Officer, National Shelter said rental affordability is worse than before the pandemic, with COVID taking a toll on renters and wiping out improvements made in previous years with rent rises and income losses.

“Low-income households have fared the worst over the past year after an improvement generated by the COVID supplements in the previous year. It may be time to be calling for rent controls to put a brake on unsustainable rents, at the very least Commonwealth Rent Assistance needs to rise by 50 per cent to allow households receiving it to retain a level of affordability. Australia needs a National Housing Plan, much more social and affordable housing, better tenancy laws, reforms of tax settings, new planning measures and the removal of incentives distorting our housing system,” Mr Pisarski said.

Ellen Witte, Partner at SGS Economics & Planning, said the COVID pandemic markedly impacted rental affordability across Australia.

“This report shows the most marked changes in rental affordability since we first released the RAI in 2015 – especially for JobSeeker recipients and renters in regional areas. The situation continues to be untenable for low-income households. With households having to pay most of their income on rent, many are pushed into poor quality, overcrowded houses and often far away from jobs and services.”

“During the pandemic, many households relocated from capital cities into regional areas – which had a major impact on housing demand and consequently rental affordability plummeted. Households from capital cities also tend to have higher incomes, pricing the local community out of the market. People on JobSeeker experienced a short reprieve from soaring rents. But now, in Perth, Hobart and Brisbane, renters are even worse off than before.”

“Hobart escaped most of the lockdowns during the pandemic and saw a lot of people moving from mainland states. With its lower median incomes, many working families are now experiencing housing stress. As part of the economic recovery out of the pandemic, we need structural adjustments to welfare payments and to curb increases in rent levels and limit rent increases to inflation. We need to prioritise those most in need and create jobs – expanding the social and affordable housing stock will achieve that.”

Professor Shelley Mallett, Director of Research and Policy Centre at the Brotherhood of St. Laurence said the RAI highlights the challenges younger Australians are facing.

“Young people living in regions with the highest rental unaffordability will face even greater stress as they are the ones who are often in low-paid and insecure work. And with woefully inadequate youth allowance payments, many will struggle to make ends meet,” Professor Mallett said.