Neither renting or buying is an affordable option for low income earners

Neither renting or buying is an affordable option for low income earners
Neither renting or buying is an affordable option for low income earners

There was data out earlier this month showing that Australian renters devote more of their income to housing than home owners.

It was not one of those reports suggesting the wisdom of buying over renting, but rather an insight into the struggle of many to keep housing over their heads.

On average, private renters paid 20% of their income on their housing costs, compared to 16% for owners with a mortgage.

It was 3% for households who owned their home outright across Australia.

The Australian Bureau of Statistics calculated housing costs as including rent payments; rate payments (water and general); and mortgage or unsecured loan payments if the initial purpose of the loan was primarily to buy, add, or alter the dwelling.

CoreLogic head of research Cameron Kusher noted the 16% share has been trending lower for mortgage holder since it peaked in 2005-06 at 19%.

The decline basically reflects the ongoing drop in mortgage rates to their current historic low levels.

The renters spending 20% of their income on housing costs was only slightly lower than it was two years earlier.

Kusher notes the circumstance reflects that renters typically have lower gross household incomes than those with a mortgage, hence paying a greater proportion on their housing outlay.

The mortgage holders have also been in a situation of reducing their debt payments over time as they pay down their loan.

The recent ABS data indicated it was the lower income households that spent an even greater proportion of their household income on housing.

On average, lower income households renting privately paid $339 per week nationally which was 32% of their gross weekly income.

Lower income households who owned their home with a mortgage paid on average $376 per week nationally which was 29% of their gross weekly income.

In New South Wales, 35% of NSW households are renting and some 35% own with a mortgage.

Some 30% owned in NSW without a mortgage, down from 32% in 2015–16.

NSW owners without a mortgage paid $48 a week on average.

NSW owners with a mortgage paid $508 per week, or 15% of gross weekly household income.

NSW renters paid $422 per week, or 21% of gross weekly household income.

The median mortgage outstanding in NSW was $265,000, which isn't that much above the the median mortgage in Australia which is $260,000, up from $238,000 in 2015–16.

There's always been reports that grab headlines suggesting the Sydney suburbs where it was cheaper to pay down a mortgage on a house than to rent one.

But these days they virtually don't exist.

Indeed even our regional areas are failing to offer relief for renters.

There was a recent snapshot of the 70,000 rental properties available across Australia by the advocacy group Anglicare Australia that found only 4% were affordable for households on government income support payments. 

“Making sure everyone has a home should be our first priority," says Anglicare Australia executive director Kasy Chambers.

"We need a national plan to make renting fair for a generation of people who might never own their own home.

"For too many people, paying the rent means they can’t afford to eat decent food, fill a prescription, pay for transport, or buy clothes."

Chambers fears this matters enormously for the 660,000 people on the aged pension who do not own their own home.

This article was first published in the Saturday Daily Telegraph. 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

Housing Affordability Abs


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