PropTrack Rental Affordability Index: Victoria’s rental market plummets to 13-year low

Low-income earners have been all but priced out of the rental market, while those taking home a typical salary can afford just over half of what’s available to lease. See where you stand.

Sarah Petty

3 min read

March 9, 2024 - 5:30AM

News Corp Australia Network

About half of Victoria’s rental homes are now out of reach for households earning a median income after one of the sharpest hits to affordability in the nation. Picture: NCA NewsWire / Andrew Henshaw

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Close to half of Victoria’s rental homes are now out of reach for households earning a typical $114,200 income, after one of the sharpest hits to affordability in the nation.

Just three years ago people earning an equivalent median wage could afford 75 per cent of rentals — a 20 percentage point decline — and economists behind new research tracking the rapid drop in the state’s housing affordability warn the situation is getting worse here faster than almost any other part of the country.

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Now, the share of homes deemed affordable for a Victorian household earning a median income hasn’t been this low since 2011.

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The crisis is even more pronounced for those on lower incomes, with about 480,000 Victorian households earning about $49,000 a year no longer able to afford any tenancies without giving up at least a quarter of their income and slipping into housing stress.

PropTrack’s inaugural Rental Affordability Index measured the share of advertised rentals that households across different income distributions could afford between July and December last year.

Nationally, it found just 55 per cent were now within the reach of those on a $111,000 typical annual income, without spending more than a quarter of their wage on keeping a roof over their head.

PropTrack senior economist Angus Moore said while Melbourne rents were generally more affordable than other capitals, this was largely because the city experienced “big declines” in rents at the start of the Covid-19 pandemic.

Mr Moore said tenant prospects of finding a home within their budget had been on a “very, very sharp downward trajectory” from the end of 2021 — bringing the capital and the state closer to a national rental crisis that is the worst it has been since at least 2008.

Rents skyrocketed by 18.3 per cent in Melbourne and 4.8 per cent in regional Victoria across the year to December 2023.

PropTrack senior economist Paul Ryan co-authored the expansive report and said a typical rental in Melbourne was now $125 a week more expensive than it was at the start of the pandemic.

“Any renter facing their rent going up by more than $100 a week over just four years, that’s a huge amount of financial strain; that’s a pretty salient statistic,” Mr Ryan said.

He added that Victoria had seen the second-largest decrease in affordability in the last two years, behind Western Australia.

PropTrack Rental Affordability Index. Source: PropTrack, ABS

PropTrack considers a person to be in housing stress if they are spending more than 25 per cent of their earnings to keep a roof over their head.

And across the nation, the cheapest rentals or those in the 10th percentile endured the strongest price growth as Aussies sought more affordable homes to lease as cost of living pressures mounted in the second half of 2023.

Tenants Victoria director of community engagement Farah Farouque said the big picture they were seeing was that renters on low and even middle incomes were doing it tough.

“Most renters must compete in the private rental market to find their home and even the so-called affordable suburbs in the edges of the city are far less accessible to singles and families,” Ms Farouque said.

Victoria’s affordability over time.

She added that as vacancy rates remained low, the outlook for Victorian renters earning low to middle incomes this year continued to look stressful.

“There is a depleted pool of rental homes available at affordable price points for people to move into,” Ms Farouque said.

“There has been welcome recognition in the recent Victorian Housing Statement that bringing on more supply of homes is critical and ambitious goals have been set, but new builds won’t happen overnight.”

She said there needed to be more recognition that housing was an essential service.

“We need to grow our state’s share of social and affordable housing so that people struggling on lower incomes can find stable housing close to jobs, transport, and other key services,” she said.