Melbourne is the most affordable capital city for renters, but lower-income earners are still struggling to keep a roof over their heads, new research shows.
The National Housing Finance and Investment Corporation (NHFIC) today released a report into the state of housing affordability across Australia.
It found there had been a “modest improvement” in rental affordability for Melburnians between mid 2020 and September 2021 — a result of the lack of migration caused by ongoing border closures and Covid-19 related lockdowns.
But the city’s bottom 40 per cent of income earners could still only afford up to 30 per cent of properties available for rent.
Ray White Southbank head of department for property management Persa Kapsali said when the pandemic hit vacancy rates “blew up,” which ultimately forced rental prices down
“As Covid hit we had about 100 keys returned from people not being able to afford a rental in that first week alone,” Ms Kapsali said.
“The rent on Southbank reduced about 25 per cent — a lot of owners didn’t want to reduce it, but they knew they had to get tenants in.”
Ms Kapsali noted prices were still very reasonable for renters looking to experience city life, but warned they would rise as borders reopened and students and migrants returned.
The NHFIC report also showed rental affordability in regional Victoria plummeted with the typical renter only able to afford 30 per cent of properties on the market.
This was a drop of 20 per cent on June 2020.
Tenants Victoria chief Jennifer Beveridge said the rental situation in Victoria was “complex” with eviction still a real risk for many.
“The reality on the ground is that, in the aftermath of public health lockdowns, there are still many Victorian renters who are struggling to pay their existing rent due to financial pressures,” she said.
“For these renters, finding an affordable, safe and secure home close to amenities such as childcare, schools and public transport remains very challenging.”
There was also an ongoing and “dire” shortage of rental properties in regional Victoria, Ms Beveridge said.
On average, the bottom 40 per cent of Australian income earners could afford just 10 per cent or less or rental properties, the report found.
Strong house price growth also drove affordability for first-home buyers to deteriorate, however this was “highly dependent on geographical location”.
An affordable property was based on rent or mortgage repayments 30 per cent or less than a household’s disposable income.