Increasing rental prices and a scarcity of stock have contributed to Bendigo bucking a statewide trend of improving rental affordability.
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Worsening affordability has seen the city labelled "moderately unaffordable" at a time when conditions for tenants have improved across most of the state.
The Rental Affordability Index (RAI) report released this week by SGS Economics & Planning shows rental affordability in regional Victoria has decreased with prices now considered acceptable rather than affordable.
Unlike the rest of the state, the decline in affordability has steadily continued steadily in Bendigo, with prices now considered moderately unaffordable compared to two years ago when they were rated acceptable.
Fringe commuter areas such as Woodend and Kyneton have also become unaffordable.
The average rental household in regional Victorian is now paying 26 per cent of their income to rent if they are paying the median rate.
The report states the gross annual income of the average rental household in regional Victoria is $77,938.
Regional Victoria's rental affordability index score is 115 - significantly lower than when the COVID-19 pandemic started in 2020.
Haven Home Safe chief executive Trudi Ray said rental affordability was not a new issue for their clients.
"It has become more dire in recent years," Ms Ray said.
"The pandemic saw a massive spike in migration from cities into regional areas, which has driven up rental prices and limited affordability for people in places like Bendigo, that traditionally have had more affordable options.
"Cost of living pressures mean that not only are people having to spend more on their rent, but they also have to divide what income they have for higher utility payments, food and fuel - all of which have increased dramatically.
"It's incredibly challenging and we are seeing more first-time clients than ever before."
Ms Ray said rental affordability was far from the only issue facing Haven Home Safe clients as they look for permanent housing.
"Currently in the Bendigo area there are 3113 applicants waiting on housing on the Victorian Housing Register," she said. "The majority of these are looking for a one-bedroom home.
"To support these people into affordable housing, we need to rethink what regional housing looks like.
"It's important for communities to understand and be open to multi-level apartments as this is what is required if we are to reach the yield and economies of scale governments and other investors need in order to invest in this very difficult market.
"We are also acutely aware of the increasing complexity and magnitude of hardship faced by vulnerable First Peoples across Victoria including increasing rates of homelessness, being forced off Country due to unaffordable and unobtainable housing and a lack of culturally safe, secure and affordable housing."
National housing campaign Everybody's Home said the RAI was showing Australia's housing crisis had reached fever pitch.
"No part of the country has been spared," spokesperson Maiy Azize said.
"Rents are shooting up in towns and regions, and our cities have never been more expensive.
"It's clear that the chronic underinvestment in social and affordable housing over the past decade has created a domino effect of housing stress in all corners of the country.
"Stagnant wages, low rental vacancy rates and rising interest rates all add to rental stress, but the huge shortfall in social and affordable housing is one of the biggest drivers."
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Ms Ray said hopes of improvement in rental affordability laid with a newly announced federal government initiative.
"The Future Fund, Housing Accord and National Housing and Homelessness Plan announced by the Federal Government gives us hope that we'll be able to come together to shift the dial on the housing crisis in Australia," she said.
"However, we're also conscious that we need a solution now and these funds won't come to fruition for a few years yet.
"We have been advocating for the need to find investment outside of government in order to solve what is essentially a $200 billion problem."
Ms Ray said exploring revenue streams and market models outside of government funding would also help "create a pipeline of supply throughout the entire housing continuum."
"Ultimately, we all need to pull whatever levers are available to us to increase the supply of social and affordable housing and ensure more affordable rentals are available for people," Ms Ray said.
"Councils have a role at looking at planning and unlocking land supply. State and federal governments can give consideration to tenancy reform, increasing income support payments and planning on how we support people displaced due to climate change events.
"What we also know is that 54 per cent of mortgages are fixed, so as they become variable, we will likely see more distress. That is coupled with a drop to 24 per cent investment into property, so it is a real challenge."
Ms Azize said the rental market was as competitive as ever with less social and affordable housing available compared with a decade ago.
"We need governments to ensure all of us have a safe place to call home by building at least 25,000 social and affordable houses each year to keep up with demand," she said.
"We also need to expand and raise Commonwealth Rent Assistance to ensure people struggling to make ends meet aren't forced to choose between paying rent or putting food on the table."
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