According to REA Group’s latest Rental Affordability Report, households earning a median income of $116,000 could afford only 36 per cent of rentals advertised in the second half of 2024, marking a historic low point in affordability.
The situation is particularly dire in New South Wales and South Australia, where typical-income households can afford just 26 per cent and 20 per cent of rentals, respectively, making these the most challenging markets for renters nationwide.
PropTrack senior economist Angus Moore said the situation for Australian renters is difficult.
“Australian renters are facing the toughest conditions in at least 18 years,” Mr Moore said.
“Households across the income distribution can afford to rent the smallest share of advertised rentals since at least 2008.”
The affordability crisis stems from a significant imbalance between rent and income growth.
While rents have surged 48 per cent since pre-pandemic levels, typical household incomes have increased by only 19 per cent during the same period, creating a widening gap that has pushed many renters to their financial limits.
Lower-income households face nearly impossible conditions in the current market.
Those earning $70,000 per year, representing the 30th percentile of income, can afford just 2 per cent of advertised rentals.
Victoria is the main exception, emerging as Australia’s most affordable state for renters by a considerable margin.
Rental affordability in Victoria currently sits around the same levels as the mid-2010s, offering some relief compared to other states.
Meanwhile, young Australians are bearing the brunt of the affordability crisis.
The report reveals that just 19 per cent of rentals are affordable for median-income households aged 15-24, placing significant financial pressure on those entering the rental market for the first time.
The report also found that more affordable rental properties have experienced faster rent growth than premium properties.
Rentals in the 10th percentile of the market have seen prices increase by 54 per cent, compared to 38 per cent growth for properties at the most expensive end.
Despite the grim findings, there are early signs of improvement in the market.
Rental availability is beginning to increase, particularly in capital cities, and the pace of rent growth has slowed compared to the rapid increases seen in 2022 and 2023.
“The silver lining for renters is that conditions appear to be improving,” Mr Moore said.
“Rental availability, while still limited, is starting to increase and the pace of rent growth is slowing.
“While rents are still likely to grow this year, we expect the pace of growth will continue to moderate.”
For households earning less than $64,000 annually, representing approximately 30 per cent of renter households, the situation remains critical.
These renters would need to allocate 40 per cent of their pre-tax income to afford rent, making it extremely challenging.
“For lower-income households, renting is essentially impossible,” Mr Moore said.
“This highlights just how crucial Commonwealth Rent Assistance and community housing is for lower-income Australian households.”
