Finance Property Hobart again named Australia’s least affordable rental city
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Hobart again named Australia’s least affordable rental city

Hobart on a clear day
Rents in Hobart have increased roughly 10 per cent over the past year. Photo: AAP
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Hobart is still Australia’s least affordable city for renters, an annual report has found.

The Tasmanian capital overtook Sydney as Australia’s least affordable city in 2017 – and soaring property values, poor planning, and a booming short-stay accommodation sector has only made things worse.

Rents in the city have raced so far ahead of incomes that even average-income households are spending more than 30 per cent of their pay packets on housing, which is the threshold for rental stress.

This year’s Rental Affordability Index shows rents have become slightly more affordable elsewhere, though.

Sydney, Brisbane, Melbourne, Perth and Canberra all recorded marginal improvements in rental affordability over the year.

But Australia’s extremely low unemployment benefit means that life is still “untenable for people on Newstart, with rent costing at least 77 per cent of their income in every capital city”.

And slow wages growth means things aren’t much easier for low-to-middle-income workers, either.

Almost one in two (43 per cent) low-income households spend more than 30 per cent of their income on rent.

And people who earn an average income and live in one of Australia’s capital cities spend at least 21 per cent of their pay on rent, with average-income earners in Adelaide and Hobart spending 27 per cent and 32 per cent respectively.

“Hobart is a bit shocking at the moment because it’s actually gone under the threshold of 100, which now means that even average-income households are experiencing housing stress,” SGS Economics and Planning partner Ellen Witte told The New Daily.

“We know that in regional cities, like Hobart and Adelaide, the income levels are quite a bit lower than, for instance, greater Sydney and Melbourne, but the rents in Hobart are nearly as high as in Melbourne.”

According to Domain, Hobart’s average house rents are now even higher than Melbourne’s, after increasing 9.8 per cent in the 12 months to September 2019.

Ms Witte blames poor government planning and a lack of new housing.

And she says Airbnb’s success is exacerbating the issue, by eating into the city’s already limited rental housing stock.

“Tasmania is the only state that doesn’t have its [own government-owned land organisation], so now what we see is there’s no planning for growth,” Ms Witte said.

“And that’s really becoming an issue, because there is population growth, but there’s no planning for it. So what we see is prices rise.”

Hobart should build more public housing close to jobs and infrastructure, and issue an “immediate halt on allowing more houses to be offered for short-term rental accommodation,” Ms Witte said.

And the federal government should lift the Newstart allowance, so that people can still afford basic necessities once they’ve paid their rent.

As it stands, Australia’s unemployment benefit is the second lowest in the OECD.

It hasn’t risen in real terms since 1994.

“Newstart is meant to be a temporary solution so that people can try and find jobs and get back into the workforce,” Ms Witte said.

“But [when the rate’s this low], you actually push people so far out of the city, so far away from jobs, that it becomes increasingly hard for these people to find jobs again. You trap them in a cycle of poverty.

“The only way to get them out of it is not to set them up for failure, but to set them up for success.

“And that means raising the Newstart allowance, so that people can, for instance, actually pay to go to a job interview.”

The Rental Affordability Index comes just two months after a Productivity Commission report found roughly 170,000 households live on $35 a day or less after paying for rent.

And it follows hot on the heels of KPMG’s call for an immediate $100-a-week increase to Newstart.

A growing chorus of business leaders and economists have also urged the government to lift the unemployment rate as a way of stimulating the economy, which is growing at its slowest pace since the GFC.

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