High cost of rent in Australia is putting a strain on tenants
There was interesting data out earlier this month showing that Australian renters devote more of their income to housing than homeowners.
It was not one of those reports suggesting the wisdom of buying over renting, but rather an insight into the struggle of many to keep housing over their heads.
On average, private renters paid 20 per cent of their income on their housing costs, compared to 16 per cent for owners with a mortgage.
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It was 3 per cent for households who owned their home outright across Australia.
The Australian Bureau of Statistics calculated housing costs as including rent payments; rate payments (water and general); and mortgage or unsecured loan payments if the initial purpose of the loan was primarily to buy, add or alter the dwelling.
CoreLogic head of research Cameron Kusher noted the 16 per cent share has been trending lower for mortgage holders since it peaked in 2005-06 at 19 per cent.
The decline basically reflects the ongoing drop in mortgage rates to their current historic low levels.
The renters spending 20 per cent of their income on housing costs was only slightly lower than it was two years earlier.
Kusher notes the circumstance reflects that renters typically have lower gross household incomes than those with a mortgage, hence paying a greater proportion on their housing outlay.
The mortgage holders have also been in a situation of reducing their debt payments over time as they pay down their loan.
The recent ABS data indicated it was the lower income households that spent an even greater proportion of their household income on housing.
On average, lower income households renting privately paid $339 per week nationally which was 32 per cent of their gross weekly income.
Lower income households who owned their home with a mortgage paid on average $376 per week nationally which was 29 per cent of their gross weekly income.
In NSW, 35 per cent of households are renting and some 35 per cent own with a mortgage.
Some 30 per cent owned in NSW without a mortgage, down from 32 per cent in 2015-16.
NSW owners without a mortgage paid $48 a week on average on costs.
NSW owners with a mortgage paid $508 per week, or 15 per cent of gross weekly household income.
NSW renters paid $422 per week, or 21 per cent of gross weekly household income.
The median mortgage outstanding in NSW was $265,000, which isn’t that much above the median mortgage in Australia which is $260,000, up from $238,000 in 2015-16.
There’s always been those reports that grab headlines suggesting the Sydney suburbs where it was cheaper to pay down a mortgage on a house than to rent one.
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But these days they virtually don’t exist. Indeed even our regional areas are failing to offer relief for renters.
There was a recent snapshot of the 70,000 rental properties available across Australia by the advocacy group Anglicare Australia that found only 4 per cent were affordable for households on government income support payments.