Rent increasingly unaffordable for low income households in the ACT: new report

A new report has labelled renting in the ACT as acceptable to the average income, but for hospitality workers, pensioners and single persons on benefits in the nation’s capital it’s a whole different story.

The latest release of SGS Economics and Planning’s Rental Affordability Index (RAI) Report on Wednesday shows the ACT is the second least affordable place to rent, behind Sydney, for low income households.

Based on rent as a share of income, the most affected demographics are single pensioners and single people on benefits.

A single pensioner in the ACT is forking out 71 per cent of their income on rent and alarmingly a single person on benefits in the ACT is paying 109 per cent of rent as a share of income.

The report calculates rental affordability by dividing the median income by the qualifying income. An RAI score of 100 or below indicates that households are paying more than 30 per cent of their income on rent.

The report states “these households are at the critical threshold level for household stress”.

Along with single pensioners and single people on benefits – pensioner couples, single part-time worker parent on benefits, students in sharehouses, minimum wage couples and hospitality workers in the ACT all received RAI’s below 100.

Domain data shows the median weekly asking rent in Canberra is $530 for houses and $450 for units.

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Overall, the ACT was given a RAI of 128 which is considered as an acceptable rent, and means the tenant pays 20 to 25 per cent of their income on rent.

Senior associate and partner of SGS Economics and Planning, Ellen Witte said the ACT’s performance was attributed to its high gross income, currently sitting at $100,800 per annum.

“The overall affordability in Canberra has been improving slightly for the median income households but it is more so driven from increases in the income and not due to the fact rent is becoming lower,” she said.

“But lower income households have not shared in this income increase and they have not been able to keep pace and the situation has not been able to become any better for pensioners, hospitality workers or people on the minimum wage.”

Ms Witte said there’s a huge gap in the ACT.

“Lower income households are doing it tough in Canberra and these are crucial households in the community. They’re often teachers, community workers and hospitality workers,” she said.

“It’s also important to note working households are being affected as well.”

A spokesperson from the Environment, Planning and Sustainable Development Directorate acknowledged high average incomes can conceal the disadvantage faced by low income households and said the ACT Government is working on strategies to help.

“The ACT Government is particularly focused on assisting an estimated 7,000 households within the lowest two income quintiles, currently paying more than 30 per cent of their income on rent in the private rental market, and who are at risk of homelessness,” the spokesperson said. 

“The ACT Government is now working towards the delivery of a new strategy in 2018.” 

The spokesperson said the ACT Government is developing measures directed towards landlords including the recent expression of interest process that asked applicants to deliver an Affordable Real Estate Management model. 

“Under this model, landlords provide their property to either a not-for-profit real estate agency or another social housing provider to be rented out to low income tenants at below market rent,” they said.  

The report also found Canberra’s inner city suburbs are considered as moderately unaffordable to the average income, with the suburbs of City and Action among the least affordable.

“Even for the median income household it would be considered unaffordable to rent in Canberra’s inner suburbs as they would be paying 30 per cent or more of their income on rent,” added Ms Witte.