The gap between tenants and landlords in Canberra is widening

Per Capita and the latest version of the V&F Housing Enterprise Foundation, the Housing Affordability Report: Tackling a Sticky Problemplaced Canberra as the number one city in Australia, but certainly not for its affordability.

In the 12 months between March 2021 and March 2022, house rental prices in Canberra increased by 16.4%, while unit rents increased by 11.9%.

Canberra remained the most expensive city to rent compared to all other capitals, costing an average of $768.30 per week for houses and $553.20 for units.

By comparison, the median weekly rent for a house in Sydney was $766.70, followed by Darwin at $611.10 per week.

The report also calculated rent as a proportion of income for different household types, and Canberra’s percentages painted a grim picture.

Single looking for a job Single retiree Retired couple Single part-time employee with benefits Student roommate Minimum wage couple Single minimum wage Single parent working full time Single-income couple with children Two-income couple with children
113% 68% 51% 63% 37% 33% 40% 24% 24% 14%

Key

Share of income spent on rent Relative affordability
60% or more extremely unaffordable
38-60% Unaffordable
31-38% Unaffordable
25-30% Moderately unaffordable
15-25% Acceptable
15% or less Affordable

For a single person looking for a job, living in Canberra would be considered ‘extremely unaffordable’ as 113% of one’s income would be spent on rent.

According to the report, this was the highest proportion of income spent on rent of any major region in Australia.

The second highest income percentage was for single job seekers living in greater Sydney and greater Perth, with both cities reporting 110% each.

The only type of household income for which it is considered “affordable” to live in Canberra is a dual-income couple with children, who would spend 14% of their income on rent.

The report suggested that rental stress was particularly problematic in Canberra, with less than 10% of homes being “affordable” for the bottom 40% income earners.

Along with Sydney and Perth, Canberra is one of the least affordable areas for single retirees, job seekers and part-timers.

Nationally, homeownership rates continue to fall rapidly, particularly for Australians under 40.

The report shows that if current trends continue, less than 55% of people born after 1990 will own their home by the age of 50.

In addition, mortgage costs have skyrocketed over the past few generations. For a 30-year mortgage, a person buying a home in 2000 would spend an average of 25.5% of their income compared to 11.2% in 1970, compared to an all-time high of 72%.

Per Capita chief executive Emma Dawson said Australians who have the lowest ability to afford increased housing payments experience cost increases faster.

“Our analysis reveals that the housing affordability crisis is caused by tax policies, including capital gains tax and negative gearing, which incentivize wealthier Australians to use homes as a vehicle for parking and grow their capital,” says Ms. Dawson.

“There are solutions, but governments must act. Solving this crisis will require systemic reform to tackle perverse tax incentives, anemic support for social housing and inadequate protections for tenants.

V&F Housing Enterprise Foundation co-founder Hugh Belfrage said housing is a “basic human need”.

“House prices have been rising steadily for more than 30 years. As a social worker, I have seen the huge impact this has on families, and especially children, in socio-economically disadvantaged households,” Mr Belfrage said.

“The money coming out of the household budget for housing is much higher than it was before. The underlying problem is that housing has been redefined as an asset rather than a home.

“Rather than seeing housing strictly as an asset class, the challenge is to reframe the idea of ​​housing collectively so that people hold its importance in building a life, not just in building wealth. “

V&F Housing Enterprise Foundation co-founder Ondine Spitzer said government housing policies need to be “reset and re-regulated”.

“We believe that governments have a responsibility to facilitate access to housing in the same way that they do education and reasonable health care. Strengthening a failing system is not enough,” Ms Spitzer said.

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