Lifestyle renters suffering ‘housing stress’, new research reveals
- Lifestyle renters’ spending up to 38% of income to rent in preferred suburbs
- Growing number of residents are now renters, not owner-occupiers
- Rents in capital cities up to 15.5% higher than regional areas in same state
- finder.com.au’s top 5 tips on how to reduce housing stress
February 8, 2016, Sydney, Australia – One of Australia’s biggest comparison sites finder.com.au reveals ‘lifestyle renting’ is sweeping the housing market, and warns the trend is putting some under dangerous housing stress.
According to the new research, Australians are shelling out up to 38 per cent of their weekly income to rent in desirable locations – well above the 30 percent threshold for housing stress.
The finder.com.au analysis showed across the capital cities, renting a house in Sydney takes a staggering 37.9 percent of the NSW average wage.
On average, Melbourne renters are handing over 30.7 percent of their weekly earnings on rent. Brisbane rent was also a potential source of stress, requiring 28.4 percent of the average Queensland wage.
Renting an inner-city property that is close to trendy bars, cafes and work trumps the home ownership dream for a growing number according to Bessie Hassan, Consumer Advocate at finder.com.au.
“This new generation of renters are not renting while they save for their dream home – they are renting their dream home instead,” she says.
"It’s alarming that they are over-stretching themselves. It’s a case of ‘keeping up with the Joneses’ for some who are living in properties they can’t afford.”
“Interestingly Sydney renters spend a higher proportion of their weekly income paying rent than what some people are committing to their mortgages,” she says.
Proportion of average weekly salary spent on renting across Australia’s capital cities
“If you’re forking out more than 30 percent of your income to pay for housing, then you are considered to be in housing stress,” she says.
Ms Hassan says the old real estate belief that people rent because they couldn’t afford to buy was not the case anymore.
“Some have just become accustomed to the ‘good life’ of being close to everything and are not prepared to give that up to get onto the property ladder,” she says.
“‘Rentvesting’ is also becoming a more popular option for Australians – this is where people buy an investment property in a more affordable suburb as a way to enter the property market sooner, and proceed to rent in their desired location.
Data from the Australian Bureau of Statistics shows an increase in households who are renting over the past two decades.
In a 2013-14 report on Housing Occupancy and Costs, the ABS noted that 25.7 percent of households were renting their home privately, up from 18 percent in 1994-95.
The proportion of private renters will likely continue to increase, with renters avoiding the hidden costs of homeownership, which include maintenance, council rates and insurance, Ms Hassan says.
Hobart was identified as the most affordable capital city to rent where you will sacrifice 25.2 percent of your weekly wage on rent.
Ms Hassan says renters could be forced out of capital cities with rents between 4.9 and 15.5 percent higher than regional areas in those states.
The biggest gap was in New South Wales where the proportion of the average weekly wage to rent in the capital city (37.9 percent) was 15.5 percent higher than regional areas (22.4 percent).
Renting in areas outside of the capital cities was much more affordable with the percentage of weekly earnings ranging from a modest 19.9 percent (in Victoria and Tasmania) up to 23.1 percent (in Queensland).
“Queenslanders pay the highest proportion of their average weekly salary on renting a home outside of the capital cities, where the average weekly salary is $1512.20 and median rent is $350. But even then, this is well within the housing stress threshold making regional living, unsurprisingly, an attractive option for some renters,” says Ms Hassan.
Proportion of average weekly salary spent on renting across regional Australia
Top 5 tips on how to reduce housing stress
- Rental costs increase almost exponentially the closer you get to the city centre, so moving a couple of train stops further away could save you hundreds of dollars a month.
- If you have a good relationship with your landlord, it's always worth asking for a rent reduction if you're prepared to sign a longer term lease.
- Put more aside for rent than the required amount. This will give you a buffer if you are faced with challenges
- Be in the habit of budgeting before you start a tenancy. Know what you can afford and only rent what’s reasonable.
- Give yourself a financial makeover. Go online and compare what you're paying for things like contents insurance and utilities to make sure you aren’t paying too much.
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
More than 3 million Australians turn to finder.com.au every month to save money, time and make important life choices. We compare virtually everything from credit cards, phone plans, health insurance, travel deals and much more.
Our free service is 100% independently-owned by two Australians: Fred Schebesta and Frank Restuccia. Since launching in 2006, we’ve helped our users make more than 17 million decisions.
We continue to expand and launch around the globe, and now operate in the United States and United Kingdom. For further information visit www.finder.com.au.