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Finding a place to rent is still an impossible dream for many low-income Australians

The Guardian logo The Guardian 29/04/2019 Greg Jericho

a close up of a building: ‘Just two properties out of the 69,485 throughout all of Australia that were surveyed by Anglicare in April were affordable for a single person on Newstart’ © Getty Images ‘Just two properties out of the 69,485 throughout all of Australia that were surveyed by Anglicare in April were affordable for a single person on Newstart’ The 10th Anglicare rental affordability snapshot released on Monday shows that yet again the hope of finding a place to rent for many on government payments and minimum wage is an impossible dream – and will continue to be so without an urgent increase in social housing. 

Next week there is an almost a 50% chance that the Reserve Bank will cut the cash rate from 1.5% to 1.25%. The flat inflation growth figures released last week greatly increased the likelihood that a cut would occur. The market is now actually fully pricing in two rate cuts to occur by the end of the year:

What that means in real terms is a lot less money needed to be spent repaying a mortgage than in the past. Seven years ago the average “managers special” mortgage rate was 7.01%; if the full 0.25% pts rate cut is passed on, the new average managers special rate would be around 5.58%. That comes to around $1,100 less each month in repayments on a $500,000 loan.

That $1,100 figure is good to use because that is also roughly the amount of a single month of a Newstart payment, and it highlights the difference between the worlds of the homeowner – who looks with eagerness at interest rate news – and the renter on a meagre income, for whom worrying about interest rates is but a dream.

Anglicare’s snapshot highlights that being able to afford a place to rent, let alone one to buy, is a struggle for many.

This year’s snapshot once again highlights how those living on Newstart are very much left on the economy’s slag heap. Just two properties out of the 69,485 throughout all of Australia that were surveyed by Anglicare in April were affordable for a single person on Newstart.

The picture for those on the aged pension was not much better – just 0.8% of all properties were affordable and fit for the purpose of a retiree on the pension.

As with last year, the chances of affordability are better if you are in a relationship – 3.8% of properties were affordable and suitable for a couple on the aged pension:

But even these meagre numbers hide the calamity. Yes, there were two properties affordable for a single person on Newstart, but unless you were willing to live in a share house in Orange or Howlong in NSW, you were out of luck.

Not one place was affordable for someone on Newstart in any of the capital cities, and only 144 were affordable for a single person on the age pension (and 63 of those were in Perth).

The survey also found a decline in affordability for aged-pensioner households and those on single-parenting payments over the past two years:

Life, as you would expect, is better for those households existing with at least one adult on the mining wage. But even here we are not talking a wide range of choice.

In Sydney a mere 7% of properties were affordable and suitable for households on the minimum wage:

This was well down on the 25% availability of properties in Melbourne and reflects the massive expense of renting in Sydney compared with other cities.

Over the past decade average rental prices in Sydney have risen by 40% well above the 29% in Melbourne, and the 23% increase in overall inflation:

There has been a sharp slowing in the growth of rental prices over the past couple years, but the damage has already been done. Whereas rental prices used to rise in line with inflation, in 2008-09 rental prices soared in Sydney well above inflation:

It is why even though there has been a slight improvement in the proposition of houses in Sydney that are affordable for those on minimum wage they remain scarce pickings:

Anglicare notes that “governments in Australia used to strongly invest in social housing to meet need. It was valued as a public asset for reducing poverty and inequality. But in recent years governments have withdrawn from this responsibility. Social housing stock has simply not kept pace with the growth in population.”

Certainly the data supports this. The 1970s and 1980s the non-private sector accounted for around 10% of all residential housing construction; now it is just over 1%:

This is now the 10th rental affordability snapshot by Anglicare, and it is fair to say the authors cannot hide their frustration, concluding that “after ten years of producing the Rental Affordability Snapshot, it is clear that housing in Australia is broken.”

But whereas other public policy lacks a clear solution, here one is obvious. The report argues, “the solution is simple, but has proven to be stubbornly difficult – government must reclaim responsibility for housing”.

Next week and through to the election, interest rates and housing affordability will get a big run as debate on negative gearing and capital gains tax comes to the fore. But the latest Anglicare rental snapshot show that for far too many the real issue of housing affordability is one that rarely gets put on centre stage and is much more urgent.

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