More Perth tenants finding it hard to meet housing costs

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PERTH could be facing a rental crisis, with more tenants struggling to meet housing costs according to a new report by the Bankwest Curtin Economics Centre (BCEC).

The Getting our house in order/BCEC Housing Affordability Survey 2019 found the share of WA renters paying more than 30 per cent of their income towards housing costs rose from 29 per cent in 2011-12 to 38 per cent in 2015-16.

One-fifth were paying more than 40 per cent of their income on housing costs while one in ten were spending more than half.

Low income earners and single parent families were facing the greatest levels of housing affordability stress.

Households in the bottom two income quintiles committed substantially higher shares of income towards housing costs – at 36 per cent and 35 per cent respectively – than families on higher incomes.

The share of households in the bottom quintile with housing costs above the standard affordability benchmark of 30 per cent of income had risen to 57 per cent since 2013-14, and for those in the second quintile, the share was even higher at 68 per cent.

The report said this had been driven by falling real incomes among lower income families, but with no commensurate reduction in real rental costs.

Single parent families in rented accommodation faced greater housing cost burdens than any other household group.

The typical single parent in rented housing paid one-third of their income towards rent, up 5.3 percentage points over the reporting period, with 57 per cent paying more than 30 per cent of their disposable income in 2015-16, 12.7 per cent higher than in 2013-14.

The report found there was also a worrying increase in the rental cost burdens faced by seniors, with nearly four in ten Baby Boomer households aged 55-64 years committing more than 30 per cent of their income towards rental costs.

Report co-author and BCEC director Professor Alan Duncan said a shortage of new, affordable rental properties coming onto the Perth market meant real rental costs were not adjusting to alleviate the housing cost burdens faced by many low-income families.

“A typical family renting a mid-priced unit in Wanneroo would need to commit just under a fifth of their income in rent costs, but a lower income family would need to spend at least a third of their income on rent to afford even a lower-priced unit,” he said.

The report suggested policy changes were needed to support households struggling with affordability.

This included finding a replacement for the National Rental Affordability Scheme.

“The winding down of the National Rental Affordability Scheme could well mean that some tenants are unable to afford their rent next year,” Professor Duncan said.

“Protections must remain in place to provide support for housing costs for those households who need it most.”

Other measures recommended in the report included tenancy reform to make the private rental sector more secure and more attractive as a long-term tenure, increased funding for public housing and community organisations, and introducing build-to-rent programs.

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