Australia's private rental market: changes (2001-2006) in the supply of, and demand for, low rent dwellings

Summary

This study compared the supply and demand for private rental dwellings in Australia. It showed that affordability had worsened for low-income private renter households. This shortage for low-income households was made even more severe by the fact that much of the low rent stock was occupied by those on higher incomes.

Project number: 50502
Research theme(s): Private rental
Project leader: Wulff, Maryann
Funding year: 2008
Research Centre: Swinburne-Monash

Research and Policy Bulletin

Research & Policy Bulletin

Issue 144: How great is the shortage of affordable housing in Australia’s private rental market?

Between 2001 and 2006, Australia’s private rental market grew by 11 per cent. Despite this growth, shortages of affordable rental housing for low-income households worsened. This was exacerbated by the number of lower cost rental dwellings occupied by higher income earners. This Research and Policy Bulletin provides details of the key findings and policy implications from the completed AHURI research project Australia's private rental market: changes (2001-2006) in the supply of, and demand for, low rent dwellings.

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Description

This study analysed data from the Australian census for 2001 and 2006. Affordable private rental dwellings are defined to be those that can be rented to households in the bottom two income quintiles for an amount no greater than 30 per cent of their household income. The study also considered the impact of supply availability—many affordable dwellings are occupied by higher income households and are therefore not available to low income households.

The study found that in 2006, very low income private renter households (i.e. those in the lowest quintile of income earning households) faced an absolute shortfall of 138 000 affordable dwellings. This translates into one affordable dwelling for every two households in the bottom quintile. However the true shortage increased to 211 000 dwellings once the use by higher income households was taken into account. Nationally, nearly four-fifths of these households could not access affordable housing. One fifth paid a severely unaffordable rent of over 50 per cent of their gross household income.

For very low income private renter households, the greatest shortages in affordable and available private rental dwellings were observed in Sydney, Melbourne and Brisbane. For example in Sydney, there is one affordable and available dwelling for every 15 very low income households.

Demand for private rental housing has increased across the income distribution including in the lowest income category. While supply of private rental dwellings has also expanded (between 2001 and 2006 by 11%), the expansion in stock has occurred mainly at the upper end of the rent distribution. By contrast, the stock in the four lowest rent categories declined from 50 to 37 per cent of the total stock over the period.

Interventions in the private rental market might be required to address shortages of affordable private rental properties for low-income households, and the spatial distribution of the demand for such properties. The outcomes of the research will have implications for the National Rental Affordability Scheme, among other government policies.

Download now Positioning Paper: No. 122: Australia's private rental market: changes (2001-2006) in the supply of, and demand for, low rent dwellings
538 KB PDF Document

Download now Final Report: No. 168: Australia's private rental market: the supply of, and demand for, affordable dwellings
590 KB PDF Document

Download now Research and Policy Bulletin: Issue 144: How great is the shortage of affordable housing in Australia’s private rental market?
500 KB PDF Document