Hobart is Australia's least affordable city to rent, worse than Sydney, Melbourne and Brisbane

Hobart remains the least affordable city to rent in Australia while people on Newstart continue to struggle to find a single rental across the country that is affordable, a new report shows.

The latest Rental Affordability Index paints a grim picture for low-income earners especially, including people on Newstart allowance, pensions and single incomes.

The index is an indicator of the price of rents relative to household incomes based on new rental agreements and is released annually.

National Shelter executive officer Adrian Pisarksi said rental affordability had particularly worsened in Hobart and Adelaide.

“Hobart is getting worse because rents are rising and incomes aren’t,” Mr Pisarksi said, adding that the situation was similar in Adelaide.

The median rental household in Greater Hobart has a gross income of $64,500 per annum, spending on average about 32 per cent on rent. 

Renters in Adelaide were not much better off, with the median rental household income $65,900, spending about 27 per cent of their income on rents. 

Adelaide’s rental affordability has declined in the past four quarters, according to the index, overtaking Sydney as the second-least affordable capital city.

The situation was particularly dire for people on Newstart, according to Mr Pisarksi, who said they were consigned to a life of poverty due to their low incomes that had not been increased in 20 years against a backdrop of rising rents.

“A Newstart recipient needs to pay 135 per cent of their income on an ordinary one-bedroom rental [in Greater Sydney],” Mr Pisarksi said. “But even in the cheapest jurisdiction in Australia, which is regional South Australia, there is nowhere someone on Newstart can rent affordably.”

The estimated gross annual income for a single person on Newstart is $18,122 and they faced the greatest financial challenge of all household types, according to the index.

A Newstart recipient in South Australia – the cheapest place to rent – would still spend 47 per cent of their income renting a one-bedroom home.

SGS Economics and Planning partner Ellen Whitte said despite marginal improvements for the average rental household nationally, lower-income households were missing out.

“The lower income households are not benefitting from those improvements … their incomes go up slower than higher incomes, Newstart hasn’t even been indexed properly,” Ms Whitte said. 

“Hobart is a real problem … rents have been going up 10 per cent for the past three years. Even if you have a good income, your pay doesn’t go up 10 per cent [every year].” 

She said there was a real need for government intervention, not just in Tasmania but across the country in a bid to build more affordable homes. 

“There’s been a real shift in how governments operate. More and more governments have decided to let the market resolve it,” Ms Whitte said. “But some things will not be delivered by the market such as social housing.”

She said pushing people out to the very outer edges of the city – where there were not enough jobs and services – entrenched the disadvantage.