Canberra among worst cities for low-income renters: Rental Affordability Index
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Canberra among worst cities for low-income renters: Rental Affordability Index

The least affordable places to rent in the ACT are the city and Acton, with low-income earners in Canberra facing almost the toughest battle in Australia to pay the rent.

The latest release of the Rental Affordability Index - RAI- found Sydney is is the least affordable capital for low-income renters.

Canberra's high median incomes distort the renting picture in the national capital.

Canberra's high median incomes distort the renting picture in the national capital.Credit:Graham Tidy

But it is closely followed by Canberra where rents are being pushed up by high incomes in the city, punishing those on low incomes.

The report found aged pensioners, single parents, young people on benefits and single-income families are all struggling to rent privately in Canberra, spending close to a third of their income on rent, and sometimes not even making enough money to cover the rent at all.

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In the case of a single person on a benefit such as Newstart, their rent in the ACT was found to more than the income they earned, hypothetically paying 110 per cent of their income in rent - a situation the report says is obviously untenable. Share houses, boarding houses and overcrowded dwellings were their only affordable prospects in Canberra.

Single parents working part-time and receiving benefits in the ACT were the next worse-off group, paying almost 60 per cent of their income in private rent. That left little for the cost of childcare and education and unexpected costs.

This is the first affordability index with data for Canberra, the city getting a rating of 136, falling into the bracket where rents are acceptable for average income households, which pay 22 percent of income for a new rental.

Dual-income couples with children in the ACT, for instance, were found to be paying 14 per cent of their income on rent, which was regarded as very affordable.

The report also found affordability had improved substantially in Canberra in the past five years, when the average income household paid 28 percent of income on rent.

The increase in affordability was "likely due to slowing economic growth. The ACT's Gross Domestic Product (GDP) growth fell to 0.8 percent in 2013-14, after cuts to the public service".

But the report does provide a caveat: "Due to a recovering economy there has been a slight decline in rental affordability in more recent quarters".

The report listed the top five least unaffordable postcodes in the ACT for private rents.

They were:

  1. 2601 (City and Acton) where rent is 29 per cent of income
  2. 2605 (Hughes, Curtin, Garran) where rent is 27 per cent of income.
  3. 2600 (Yarralumla, Deakin, Russell, Barton) where rent is 25 per cent of income.
  4. 2902 (Kambah) where rent is 25 per cent of income.
  5. 2904 (MacArthur, Gowrie, Fadden, Monash) where rent is 25 per cent of income.

While Canberra has the highest average incomes in Australia, the situation is dire for low income households, according Ellen Witte partner at SGS Economics and Planning.

"The high average incomes in Canberra are pushing the rental prices up beyond what low income households can afford to pay," she said.

Canberra is extremely unaffordable for pensioners, with couples paying 49 percent of their income and singles 73 percent of income for a new lease - well over the 30 percent stress threshold, when people experience difficulty paying for primary needs, such as food, heating, medicine and transport.

Ellen Witte said renting was unaffordable in Australia and more so in cities like Canberra, with more employment opportunities.

"Renting fails to provide a secure roof over the heads of students, pensioners and working families with children," she said.

National Shelter executive officer Adrian Pisarski said soaring rents led to overcrowding and forced people into homelessness.

"The situation is particularly dire for students in Canberra who are often working low income jobs in a city where rents are high. Low income households and people on benefits in Canberra are worse off than anywhere in Australia outside Sydney," he said.