Affordability is a relative concept- it’s about costs relative to incomes.
The Rental Affordability Index considers that median rents higher than 30% of a household’s income to be unaffordable.
The rationale is that when low-income households have to spend more than that on housing, they start to go without on other things, meals, healthcare, outings- things that they reasonably ought to have.
This is why, low-income households in unaffordable housing are said to be in “housing stress” or “rental stress”.
The RAI looks at median rents, not individual rents, so it doesn’t tell us where or how many households are actually in stress.
It does however, indicate where renters face pressure in constraints on the size, quality or location of dwellings.
The RAI shows that almost nowhere in Australia’s capital cities is the median rent affordable for
- Single and Couple Pensioners
- Single people on benefits
- Single parent part time workers
Most of Sydney, except for Mt Druitt and the Blue Mountains, has median rents that are unaffordable and much of Melbourne and Brisbane is unaffordable for average renters too.
Some measures to support policies to increase the supply of affordable rentals in our capital cities would include:
- Building more social housing
- Allowing more residential development
- Inclusionary zoning
- Greater use of land tax to incentivize
Housing problems extend beyond the capital cities and are multidimensional and regional areas lack access to a lot of services.
Governments need to continually focus on policies to increase affordable housing options in our cities and regional areas.
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