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The sobering reality of trying to rent in Canberra on a low income

Rebecca Vassarotti 27 November 2019 50
Rental Affordability

A couple on minimum wage in the ACT need to use 34 per cent of their income to cover rent. Photo: File.

This week, National Shelter has released its annual Rental Affordability Index and unfortunately, there are no surprises in this report. It has found that the ACT (and the rest of the country) continue to experience a rental affordability crisis for people on the lowest incomes.

The report details the downward trend in housing affordability in the ACT over the period from 2011.

Today, Canberra is only surpassed by Greater Sydney in the race to be the most unaffordable capital city in Australia to rent in if you are a low-income household. At a time when more people than ever are renting rather than buying their own home and when we know rents are rising, the report presents the sobering reality of what sorts of Canberra households are really struggling to keep a roof over their heads.

This annual analysis looks at the proportion of low-income households (that is, the lowest 40 per cent of households across all income bands) who have housing costs that are more than 30 per cent. It’s generally accepted if you are paying more than 30 per cent of your income on housing costs and you are on a lower income, it’s likely that you don’t have enough income to cover other essential items such as food, energy, health services, medications, travel, education, household goods and debt repayments. In considering this, it is useful to know across all households, renters are generally spending about 20 per cent of their income on housing costs. This compares to owners with a mortgage who need to use 16 per cent of their income to cover their housing costs.

One of the most useful things that this report does is provide a picture of the situation for different types of households. It profiles what housing (un)affordability means for both working and non-working people and for different types of households including single parent and dual-income families.

As was the case in previous years, the situation is particularly dire if you are on Newstart, or if you are a pensioner. If you are on Newstart, rent is more than 100 per cent of your income (115 per cent). Single pensioners don’t fare too much better, with this group of households needing to allocate 75 per cent of their regular income to cover the rent. Pensioner couples in the ACT need to hand over 50 per cent of their income to cover the rent.

Having a job doesn’t necessarily take the pressure off for particular households. A single part-time worker parent getting benefits in the ACT needs to provide 62 per cent of their income to cover the rent. A couple on minimum wage in the ACT need to use 34 per cent of their income to cover rent, and the ACT is the second least affordable city for hospitality workers to rent a home, with 39 per cent of income going towards housing costs.

If you are studying and renting as part of a share house, the ACT joins greater Sydney as the most unaffordable place to rent, with 35 per cent of income going to the rent. Life is better if you are a single parent full-time worker, with 24 per cent of income going towards rent. However, it is acknowledged for these households, there are often additional costs for things like transport, childcare and education. Single income families come just under the threshold at 27 per cent, and dual-income households with children are faring best, with around 13 per cent of income going towards housing costs.

This report is yet another significant piece of data that highlights the real issue around rental affordability in this town. This is a crisis that is growing and becoming an issue for larger groups of Canberra households. With a decline in homeownership, there is a need for us to move quickly to provide more affordable rental options. While last week’s announcement that the trial to provide a rebate to private landlords prepared to rent their properties below market rent, there is a need to continue to work together to identify creative solutions to address this urgent and growing issue.

What are your ideas about how to deal with Canberra’s rental affordability crisis?

Rebecca is a board member of Community Housing Canberra, an affordable housing organisation. She is an active member of the ACT Greens and ran as a candidate in the 2016 Territory election.

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50 Responses to The sobering reality of trying to rent in Canberra on a low income
noid noid 10:57 am 28 Nov 19

Lack of public housing, gouging land taxes and rate raises for property investors, you don’t need to be a rocket scientist to see this coming unless you are the current government of course.

    Spiral Spiral 6:53 pm 28 Nov 19

    Renting is expensive partially because land is extremely expensive in the ACT. In many areas of Canberra land is up around $1,000 per square meter. The price of land is influenced by the policies of the government.

    So if you believe it is important for kids to have yards to play in, trampolines and swing sets to encourage exercise, gardens to experience etc, use the power that the Greens get as being part of a coalition with Labor to release more land and develop other policies to reduce land prices. Of course that wont happen because the government wants high property prices to drive high rates to bring in money.

    On the other hand, if you don’t care about the above factors, just come clean about wanting everyone (except for the wealthy overlords) to live in high rise apartments and then build heaps of cheap poorly constructed buildings.

    Of course it would make sense to build those high rises near the city where lower income people can easily and cheaply get access to facilities. That could be a bit of a problem as the government seems determined to remove as much affordable living from those areas as they can.

    Instead the policy seems to be to shunt them to outer suburbs, in areas with poor public transport, thus encouraging them to use cars. Of course that goes in hand with raising parking prices so they are disadvantaged yet again.

    And just to add insult to injury, we then have community “leaders” who berate those people for being irresponsible enough to drive. They are seemingly eager to shout their moral superiority without walking a mile or two in the shoes of those they look down on.

    JS9 JS9 9:39 am 29 Nov 19

    To be fair, there is nothing wrong with higher density housing in apartments if done properly. Large swathes of the world live moreso in apartments then detached housing – even very good performing countries on wellbeing measures and the like. Like everything, its about doing it properly – which governments of all persuasions across the country struggle with.

    bj_ACT bj_ACT 12:35 pm 29 Nov 19

    Further to your point. There was a good article in the Financial Review about a week ago highlighting that the kind of multi unit dwellings we are building in our Australian cities are not delivering the reduced Green claims and reduced infrastructure and reduced government support costs that are often claimed.

    The costs of changing the built infrastructure to suit the new developments is proving much more more financially and environmentally expensive than greenfields development.

    Surprise surprise. Developers are building to maximise their own profit NOT to improve the environment or save money for government.

bj_ACT bj_ACT 11:06 am 28 Nov 19

Great article. So the ACT Government takes away Bus services from the most vulnerable people in the outer suburbs, whilst also selling off inner city public housing to rich property developers.

The Labor/Greens Government talk big on helping the less well off, at the same time as they implement policies that hurt them.

Acton Acton 5:00 pm 28 Nov 19

Labor/Greens = high rates = high rents = housing unaffordability for everyone.

    rationalobserver rationalobserver 8:52 am 02 Dec 19

    How else will they pay for socialist follies like the toy tram and bicycle super highways and the rainbow roundabout?

Phemie Phemie 10:38 am 02 Dec 19

The rise of homelessness and poverty in Australia is truly shocking. The whole political system is moving to the extreme right – including the so called ACT Labor government. What are the ACT Government spending their rates, land tax and diverse other money grabs on? We are becoming a nation divided into those that are in extreme poverty and those that have excessive wealth.

    bj_ACT bj_ACT 7:40 pm 02 Dec 19

    Great post. So sad how all persuasions of Government only pretend to help the working poor.

    Acton Acton 7:13 am 03 Dec 19

    The Barr Labor government is responsible for housing unaffordability in Canberra and the reasons have been explained on many occasions by former Labor Chief Minister Stanhope. Why is it so difficult to understand that rising rates and taxes results in rising rents and housing costs which makes housing unaffordable for many more?

    bj_ACT bj_ACT 11:35 am 03 Dec 19

    Who would have thought that increasing Government Rates and Land tax on the property by $100 a week would have flowed onto the tenant to pay in their weekly rent?

    ACT Government Ministers and Treasury officials argued the costs wouldn’t flow on to tenants. But every other Canberran with half a brain knew that the costs would flow down to renters.

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