Hobart rentals are still some of the most expensive in Australia, research by the SGS Economics & Planning shows.
Since 2017, Hobart has replaced Sydney as the least affordable city for renters. The rent has become so high even average-income households are spending more than 30 per cent of their earnings on housing.
According to the report, Hobart rental problems are brought about by the city’s high property values, poor planning, and the booming market for short accommodation in the city.
This year, the Rental Affordability Index indicates rents have become a little more affordable in Sydney, Brisbane, Melbourne, Perth, and Canberra. These cities all recorded a marginal improvement in terms of affordability for renters.
Check out the Rental Affordability Index scores below.
Australia’s low unemployment benefit and slow wages growth mean neither low nor middle-income earners have it easy when it comes to renting. With rent costing 77 per cent of a Newstart allowance, the current going rate of Hobart rentals is described as “untenable” by the researchers.
The research also points out that almost one in two low-income households spend more than 30 per cent of their income on rent alone. Average-income earners who live in one of Australia’s capital cities, on the other hand, spend only about 21 per cent of their salary on rent.
In Adelaide, average-income earners spend 27 per cent while average-income earners in Hobart spend 32 per cent on Hobart rentals.
“Hobart is a bit shocking at the moment because it’s actually gone under the threshold of 100, which now means that even average-income households are experiencing housing stress,” SGS Economics and Planning partner Ellen Witte said.
“We know that in regional cities, like Hobart and Adelaide, the income levels are quite a bit lower than, for instance, greater Sydney and Melbourne, but the rents in Hobart are nearly as high as in Melbourne.”
Ms. Witte attributes high Hobart rentals to poor government planning and lack of new housing, not to mention the spread of Airbnb rentals.
“Tasmania is the only state that doesn’t have its [own government-owned land organisation], so now what we see is there’s no planning for growth,” Ms Witte said.
“And that’s really becoming an issue, because there is population growth, but there’s no planning for it. So what we see is prices rise.”
Ms. Witte believes that aside from the lifting of the Newstart allowance, the best solution right now is for Hobart to build more public housing close to where the jobs and infrastructure are. Hobart should also disallow houses being offered for short-term rentals.
The Rental Affordability Index comes after a Productivity Commission report shows roughly 170,000 households live on $35 a day or less after paying for rent.
KPMG Australia has also called for an immediate increase of $100-a-week of the Newstart allowance.
Other business leaders and economists have also urged the government to increase the unemployment rate as another way to stimulate the economy.
Will the current state of Hobart rentals improve? Maybe. For now, it’s a wait and see situation.
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