Rent stress on the rise
Rent stress has substantially increased over the six months to June 2021, according to ME Bank.
77 per cent of Queensland renters and 72 per cent in NSW are now experiencing stress, the poll of 1500 households by the bank found.
On average renters are spending 41% of their income on rent, which has increased 8% over the past six months to June 2021.
Currently, over two-thirds (68%) of renters reported rent stress – as typically considered to be rental payments of more than 30% of household disposable income.
The current level of rent stress is even higher (3% higher) than that measured in December 2019, before the COVID-19 pandemic.
Rent stress is typically considered to be rental payments of more than 30% of household disposable income.
Single parents, couples with young children, retirees, and households on low incomes are most subject to rent stress, with women (75%) reporting notably higher rent stress than men (60%).
ME’s consulting economist, Jeff Oughton said a combination of factors were contributing to the rise in rent stress.
“Rental markets have tightened markedly across the majority of Australia and rents have risen significantly due to falling vacancies,” he said.
“Renters are now facing some of the biggest rent hikes we’ve since the global financial crisis.”
As at June 2021 the median rent of houses and units had jumped to $476 per week, a 6.6 per cent increase compared to the same time last year, according to the latest CoreLogic data.
“While wage gains, on average, have picked up slightly from the historical lows recorded at the onset of the pandemic, government income support has gradually unwound, and rental moratoriums have ended,” added Oughton.
“We may see more renters facing hardship as lockdowns continue, particularly among low-income, low-saving households reliant on government support.”
Compared to rent stress, mortgage stress is lower, with 42% of mortgagees reportedly paying more than 30% of their household disposable incomes on mortgage repayments.
A recent CoreLogic analysis suggests servicing a mortgage is now cheaper than paying rent on 36.3% of Australian properties, which is higher than the pre-COVID proportion of 33.9% reported in February last year.