Rental Crisis Deepens for Low-Income Australians: Analysis

Signage for a real estate property is seen in Carlton North, Melbourne, Australia, on July 18, 2018. AAP Image/James Ross

The rental crisis is getting worse for Australians on low incomes and welfare recipients, a new report has shown.

Anglicare Australia, one of the largest charity networks in the country, has released a new report portraying a bleak outlook for renters in 2023.

By analysing nearly 46,000 rental listings across Australia, the report found that less than one percent of the available accommodation was affordable for a person earning a full-time minimum wage–around $42,300 (US$28,000).

Anglicare Australia executive director Kasy Chambers said the results were shocking.

“Each year, we think the market couldn’t get any worse. And each year, we’re shocked to see that it can,” she said.

“This year’s result is the worst we have ever seen for a person on the minimum wage, with affordability halving over the last year.”

To evaluate the affordability of rental properties, Anglicare Australia used an international benchmark that indicated that rent should not exceed 30 percent of household income to avoid financial stress.

Under this benchmark, the charity found that a full-time minimum wage earner could only afford 0.8 percent of the rental properties, and those relying on age or disability pensions had to compete for less than 0.5 percent of the affordable rentals in the market.

In addition, there were no affordable rentals for students and apprentices on Youth Allowance, while the figure for a single parent on welfare payments was 0.1 percent.

The executive director said the rental market was failing low-income people despite a record number of homes being built over the last ten years.

“If full-time wage earners are doing it tough, then people on Centrelink payments don’t stand a chance,” Chambers said.

The Greens Call for Rent Freeze

Following the release of Anglicare Australia’s report, the Greens party urged the Labor government to introduce a two-year rent freeze to tackle the rental crisis in the country.

“Rents are skyrocketing across the country, but the prime minister thinks a national rent freeze is too hard,” Greens Leader Adam Bandt said in a statement.

“A rent freeze is not just legally possible, it’s also politically possible. With the Greens’ support, the government could pass a serious plan for renters through the parliament by July.”

Greens Leader Adam Bandt speaks at Parliament House in Canberra, Australia on Dec 9, 2020. Sam Mooy/Getty Images

The Greens leader then called on the government to take decisive actions during a National Cabinet meeting on April 28 or risk “throwing renters across the country to the wolves of the private market.”

In August 2022, the Labor government turned down a proposal by the Greens to suspend housing rent across the country.

At the time, Treasurer Jim Chalmers said the government was focusing on improving supply to tackle the housing crisis.

Labor Government Announces New Housing Measures

Meanwhile, the federal government has announced new measures to increase the housing supply after the National Cabinet meeting concluded.

Specifically, it will raise the depreciation rate from 2.5 percent to four percent per year for eligible new build-to-rent projects which commence construction after the release of the federal budget on May 9.

Moreover, it will halve the withholding tax rate for eligible fund payments from managed investment trusts to foreign residents on income from newly constructed residential build-to-rent properties from 30 to 15 percent after July 1, 2024.

The government also plans to increase funding for social and community housing by expanding the liability cap of the Affordable Housing Bond Aggregator (AHBA) by $2 billion.

The AHBA is a government-owned intermediatory that provides low-cost, long-term loans to registered community housing providers (CHPs) to improve Australia’s housing outcome.

Property Council of Australia, a peak industry body, welcomed the government’s decision to lower the managed investment trust withholding tax rate.

Citing a report conducted by Ernst & Young, the council said that levelling the withholding tax rate in line with investment in other property asset classes could create an additional 150,000 homes over the next decade.

Property Council CEO Mike Zorbas said that the earlier the changes introduced by the government took effect, the earlier additional investment could commence.

“More supply means downward pressure on the cost of renting and buying homes and will offer more housing choices and affordable options at a time when we desperately need them,” he said.