The rental market in Australia is seeing a significant shift as high-income earners increasingly dominate the private rental sector, squeezing out lower-income households, according to PropTrack.
“High income earners are squeezing lower income earners in the rental market, highlighting the urgent need for more affordable housing,” said Eleanor Creagh (pictured above), PropTrack senior economist.
The shift is detailed in a recent Australian Housing and Urban Research Institute (AHURI) paper, which showed that higher income earners have grown from representing 8% of the private rental market in 1996 to 24% in 2021.
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The PropTrack Housing Affordability Index highlighted a dire situation where a median-income household can now afford just 13% of homes sold across the country.
“Increasing house prices and reduced affordability are associated with delayed homeownership,” Creagh said.
The ongoing increase in rental prices, which have surged 42% across capital cities since the pandemic began, exacerbates this issue, significantly outstripping household income growth.
The competition for affordable rentals is fiercer than ever, with lower-income households finding almost no available options that fit their budget.
“For households earning in the bottom 20% of households ($49,000 a year or less) just 1.3% of rentals advertised in March 2024 would be affordable,” Creagh said.
Despite the gloomy outlook with continued high demand and low supply expected to drive rents higher, there is some hope that rent increases may slow. However, Creagh argued that “improving rental availability is key to solving the issue long-term.”
National Cabinet’s goal to build 1.2 million well-located homes by 2029 is currently off track, emphasising the need for significant efforts to meet housing demands, PropTrack reported.
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