Report shows middle-income Australians face rental pressures with one-third of wages spent on housing

A new report has found that even middle-income Australians are facing rental pressure, with middle-income households spending 33 per cent of their wages on housing.

CoreLogic's report found that last year's annual rent growth was the smallest since 2021, with full-year rent growth at 4.8%, down from 8.1% in 2023.

But since the start of the pandemic, national rents have increased by 36.1%, equivalent to an increase of $171 per week, or $8,884 per year at the median level.

While that sounds like good news for renters, exorbitant home prices and rising rents mean the system is in crisis, housing advocates say. 10,000 new people accessing homeless services every month are calling on the government to introduce a cap on rent rises.

CoreLogic economist Kaytlin Ezzy said As of September 2024, middle-income households will now have to spend 33.0% of their pre-tax income to pay median rent, the highest percentage since CoreLogic began tracking rental affordability in 2006.

“The end result may be that some potential renters delay their decision to leave home,” she said.

“Others are looking to form a larger share of households as a way to distribute the additional rental burden, thereby mitigating the previous reduction in average household size that was evident in the early stages of the pandemic.”

This push for larger households is also reflected across property types, with quarterly rent growth for houses (0.6%) and annual rent growth (-0.6%) compared with units (-0.2% and 4.2% respectively), the report said. 5.0%) is stronger. .

By December, the median rent on realestate.com soared 11.5% year over year to $580 per week.

Throughout the country, rents in remote areas increased at a higher rate, up 1.2% month-on-month and 6.2% year-on-year. By comparison, capital city composite quarterly growth was a more modest 0.1%, and growth in the 12 months to December was 4.3%.

Maye Aziz, a spokesperson for the housing campaign Homes for All, said while growth may be slowing, people were still feeling the pain.

“We need to limit rent increases,” Aziz said. “Australia is one of the only developed countries where rent increases can be legally unlimited. Only the ACT has a legal limit and the data shows it is working – Canberra is the only capital city with rent stabilization.”

She said it was clear the private sector was failing to deliver stable affordable housing and called on the government to build more social housing.

“For years, the government has avoided taking on housing responsibilities, relying instead on the private sector to deliver affordable housing. These numbers show that this is a dangerous approach. Only the federal government can provide affordable housing to those in need, when and where it is needed. house.

“Australia has a huge social housing gap. The government needs to build 25,000 new homes every year across the country to address the social housing shortage and reduce rents across the board.”