Rental affordability is worse in regional Victoria than in Melbourne, new study finds

Think renting in Melbourne is tough? It doesn't get easier for those in Victoria's regional towns.
Think renting in Melbourne is tough? It doesn't get easier for those in Victoria's regional towns.

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AMID the housing affordability debate, moving to regional areas has been suggested as a solution. But an affordability index released on Wednesday shows Victoria is the only state where rental affordability is worse in regional areas than in the capital city.

It comes as rental affordability continues to fall across Greater Melbourne — although a slight decline over the six months to December quarter — according to the report released by National Shelter, Community Sector Banking and SGS Economics and Planning.

The average renter in Greater Melbourne is paying 24 per cent of an $85,000 income on rent, less than a typical household in regional Victoria — where incomes were very low relative to rent — spending 25 per cent of their total income. It is generally accepted that a household is experiencing housing stress if they are paying more than 30 per cent of income on rent.

Working parents – not just low-income households – are getting priced out of the rental market. Photo: Gary Medlicott

Working parents – not just low-income households – are getting priced out of the rental market. Photo: Gary Medlicott

In regional Victoria, Torquay-Jan Juc and surrounding areas in postcode 3228 were the most unaffordable for the average renter; paying 41 per cent of their $60,000 annual household income on rent. Typical households in Lorne, Woodend and Queenscliff also needed to spend at least 33 per cent of their incomes. Only towns with at least 10 new rent bonds lodgement over the December quarter were included in the study. 

Though house and unit rents have soared to record highs in Melbourne, according to the Domain Group, the report describes Greater Melbourne as the second most affordable metropolitan area in Australia, with renters paying 24 per cent of their household income on rent. In comparison, Sydneysiders need to pay 29 per cent — a higher proportion than Hobart's 28 per cent and Greater Brisbane and Greater Adelaide's 25 per cent. Greater Perth is the most affordable metropolitan area, with renters paying 21 per cent of their income on rents.

SGS Economics and Planning partner Ellen Witte said cities still fairly close to Melbourne, especially if they were well connected to public transport, were increasingly a lifestyle opportunity for people moving out from the city, which could drive growth. 

Meanwhile, the report also found there are no affordable areas in Melbourne, Geelong, Ballarat or Bendigo for pensioners, while pensioner couples must move out as far as Moe and Morwell for affordable rents.

While affordability is better for dual income couples with children looking for a three-bedroom home, single income families with children can only access affordable rents in St Albans and Broadmeadows, or as far out as Melton, Sunbury or Pakenham.

Ms Witte said the most affordable areas were also where there were the least opportunities for jobs, services and education.

National Shelter executive officer Adrian Pisarski said public transport was key, and long-term planning was also needed to place jobs and other opportunities — such as health and education — near affordable housing.

"Instead of ensuring inclusive communities by building affordable housing within well-serviced areas, we have consigned low-income households to outer fringes and poorly serviced areas," he said. "Our societies pretend we put children first, but for kids of sole parents, they are excluded by their parents' low income to lower opportunity and or long and expensive travel."

Mr Pisarski said urban sprawl and an influx of apartment developments had added quite a lot of new supply, which had helped to keep some pressure off prices.

But based on current trends, he believed Melbourne would become a less liveable city and less affordable for renters.

"The Andrews government has introduced some welcome measures to improve affordability but has not yet gone far enough," he said. "All our cities need to work out how to build far more scaled affordable housing and in Melbourne that should include medium-density in middle-ring suburbs which could absorb more people and utilise the existing transport and other infrastructure they have."

The average Greater Melbourne renters are paying 24 per cent of their income on rent. Photo: Glenn Hunt

The average Greater Melbourne renters are paying 24 per cent of their income on rent. Photo: Glenn Hunt