The renters most impacted by the rental crunch

Rent increases are putting a huge financial burden on many Australians. But a closer look at the data reveals which households are suffering the most.

Over the past year, posted rents have risen 11% nationally. This follows strong demand for rental properties compared to available supply.

Rent spikes come at a time when tenants are already dealing with widespread cost-of-living pressures from high inflation. Given that renters make up her third of all households, a large portion of Australia’s population will be under significant economic pressure in 2023.

The rental crisis has affected many Australian households, especially those under economic stress.Photo: Getty

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However, some renters will be hit harder than others. The worst hit will be renters who are already under economic stress or experiencing higher than average rent growth.

To explore this, we looked at data on how Australians spend the majority of their income on rent, and how rent increases affected them based on where they live.

Single parents and singles are vulnerable to financial stress

Single parents and people living on their own are the Australian family types who generally feel the most financial pressure.

Not only do they spend the majority of their income on housing, they also have the lowest household income on average.[1].

These households spend on average more than a quarter of their income on rent, significantly higher than other family types.

With rents rising rapidly and generally far outstripping wage increases, it is increasingly likely that single parents and single-person households will need a much larger portion of their income to pay for housing. It gets difficult.

The youngest and oldest Australians will feel the rent pinch the most

Australians aged 15-24 (often students) and retirees aged 65 and over tend to spend most of their income on rent.

It also has the lowest income.

Compared to the middle-aged (ages 25-64), these age groups have a higher percentage of people making less than $1,000 a week.[2].

In addition to this, public pensions are the main source of income for almost half of retirees.Those dependent on these payments tend to experience higher levels of financial stress[3].

These factors mean that younger and older Australians are more sensitive to rent increases, arguably putting them at a disadvantage in the current rental market.

Rents also rise most in areas populated by vulnerable Australians

Rents are rising rapidly across the country, but some areas are rising significantly more than others.

Especially in the Greater Tokyo Area, rents have increased significantly over the past year as workers returned to offices, students returned to face-to-face learning and borders reopened.

This has a greater impact on the most vulnerable renters.

This is because some of these renters are likely to live in areas where rent growth is even higher than average.

Nearly half of single-person rental households lived in neighborhoods where rents increased by 11% or more in the past year.

This was a smaller percentage than for childless couples, but the economic impact could be even worse for singles who already spend a large portion of their income on housing.

The same is true for students and retirees.

Not only do these households spend a significant portion of their income on rent, but young and old Australians are more likely than other age groups to live in areas where weekly rent is above the national average. expensive.

This puts them in a particularly vulnerable position in the current rental crisis.

what’s next?

The strong rise in rents is likely to continue this year. Demand in urban centers remains very strong even after the return to offices and universities, and supply shortages are unlikely to be resolved in the near term.

These challenging market conditions will continue to put pressure on single and single parent households, as well as younger and older Australians. These households already pay much of their income in rent and often live in areas where rents are rising faster than average.

These financial pressures may push many of these households into alternative arrangements, such as shared housing, as they struggle to compete for available rent.

Building more homes and encouraging investors to return to the market is critical to addressing the housing shortage and catering to the growing population.

[1] Household Income and Wealth, Australia, 2019-20. Table 9.4.

[2] Income and Work: Census. Data table for summary of income and job data.

[3] Household Income and Wealth, Australia, 2019-20. Table 16.4.