- Bottom two income quintiles can only afford 10% of Australian rental properties on average
- Rental affordability improving in Sydney and Melbourne, albeit only slightly
- Hobart crowned most unaffordable city, with housing slipping out of reach for renters and first homebuyers alike
The latest data from the National Housing Finance and Investment Corporation (NHFIC) indicates many renters and first homebuyers are facing affordability challenges.
The housing affordability analysis highlighted a slight improvement in affordability for the Sydney and Melbourne markets, while affordability declined elsewhere.
Improvements in Sydney and Melbourne
The NHFIC analysis declared rental affordability to be a challenge facing lower income earners across most of Australia’s major city and regional markets.
On average, Australians in the two lowest income quintiles can only afford to rent approximately 10% or lower of all Australian rental properties.
However, the latest NHFIC data suggests rental affordability is improving in Sydney and Melbourne, albeit ‘modestly’.
The news comes shortly after InvestorKit found Sydney to be Australia’s most unaffordable capital city to buy, with the median price 22.3% above the affordability level.
This slight boost to rental affordability was cited by NHFIC to be due to border closures preventing higher volumes of migration, although vacancy rates are tightening.
Sydney renters in the second income quintile can now afford 10% of properties, in contrast to the less than 10% that would have been affordable in June of 2020.
Hobart host of most unaffordable rents
As for all other major cities and regional areas throughout Australia, affordability has been deteriorating since June of 2020.
The report bears particularly bad news for renters in Hobart, finding the capital of Australia’s island state to be home to the most unaffordable rents.
Hobart residents in the bottom three income quintiles could afford 10% or less of rental properties, significantly worse than the national average.
Hobart
SQM Research highlights rents have been rising steadily since the second half of the last decade, only briefly declining during the onset of the pandemic.
Perth has also taken a hit, with renters in the bottom two income quintiles only able to afford less than 10% of rentals, declining from 25% in June 2020.
Regional areas in Victoria and New South Wales have followed suit, with renters in the third lowest income quintile currently able to afford 30% of rentals, down from 50% at June 2020.
Affordability worsens for most first homebuyers
Owning their own home is becoming more inaccessible to many Australian first homebuyers, as affordability deteriorates across the nation.
Consistently strong growth in housing values has pushed home ownership out of reach for first homebuyers of most income levels, although differences remain between locations.
Hobart took the crown for Australia’s most unaffordable city for first homebuyers, as well as the location of the greatest deterioration in affordability.
80% of first homebuyers can only afford 10% or less of properties in Hobart.
Affordability for middle income earners in Hobart declined most steeply over the past year.
Residents in the fourth lowest income quintile can afford only 10% of properties, in contrast to 40% in June 2020.
The prospects for first homebuyers in Perth are much brighter, with those in the second income quintile able to afford approximately 30% of properties.
Those in regional South Australia, Western Australia and Queensland are well positioned in affordability, whereas first homebuyers in regional New South Wales, Victoria and Queensland are faced with dramatically declining affordability.
