Per Capita and V&F Housing Enterprise Foundation’s latest release, the Housing Affordability Report: Tackling a Wicked Problem, has placed Canberra as Australia’s number one city, but certainly not for its affordability.
In the 12 months between March 2021 and March 2022, rental prices for houses in Canberra increased an astonishing 16.4 per cent, while unit rents rose 11.9 per cent.
Canberra remained the most expensive capital city to rent compared to all other capitals, costing an average of $768.30 per week for a house and $553.20 for a unit.
By comparison, Sydney’s median weekly rent for a house was $766.70 followed by Darwin at $611.10 per week.
The report additionally calculated rent as a proportion of income for different household types, and the percentages for Canberra painted a grim picture.
| Single person on Job seeker | Single Pensioner | Pensioner Couple | Single Part time earner on benefits | Student share house | Minimum wage couple | Single minimum wage | Single full time working parent | Single income couple with children | Dual income couple with children |
| 113% | 68% | 51% | 63% | 37% | 33% | 40% | 24% | 24% | 14% |
Key
| Share of income spent on rent | Relative unaffordability |
| 60% or more | Extremely unaffordable |
| 38-60% | Severely unaffordable |
| 31-38% | Unaffordable |
| 25-30% | Moderately unaffordable |
| 15-25% | Acceptable |
| 15% or less | Affordable |
For a single person on Jobseeker, living in Canberra would be deemed “extremely unaffordable” as 113 per cent of their income (which is more than they earn) would be required to be spent on rent.
From the report, this was the largest proportion of income spent on rent out of every major area in Australia.
The next highest income percentage was for single people on Jobseeker living in greater Sydney and greater Perth, with both cities reporting 110 per cent each.
The only household income type for which it is considered “affordable” to live in Canberra is a dual income couple with children, who would spend 14 per cent of their income on rent.
The report suggested rental stress was particularly problematic in Canberra with fewer than 10 per cent of homes being “affordable” for the bottom 40 per cent of income earners.
Along with Sydney and Perth, Canberra is one of the least affordable areas for single pensioners, Jobseekers, and part-time earners.
Nationally, homeownership rates are continuing to rapidly decline, particularly for Australians under the age of 40.
The report shows that if current trends persist, less than 55 per cent of people born after 1990 will own their own home by the age of 50.
Additionally, mortgage costs have skyrocketed in the past generations. For a 30-year mortgage, a person buying a home in 2000 would spend on average 25.5 per cent of their income compared to 11.2 per cent in 1970, compared to the historical high of 72 per cent.
Executive director of Per Capita, Emma Dawson, says the Australians who have lowest capacity to pay increased housing payments are experiencing faster rising costs.
“Our analysis finds the housing affordability crisis is caused by tax policies, including the Capital Gains Tax and Negative Gearing, that incentivise wealthier Australians to use houses as a vehicle to park and grow capital,” says Ms Dawson.
“There are solutions, but governments need to act. Fixing this crisis will require systemic reform to address perverse tax incentives, anaemic social housing support, and inadequate protections for renters.”
Co-founder of V&F Housing Enterprise Foundation, Hugh Belfrage, said housing is a “fundamental human need”.
“Housing prices have been rising consistently for more than 30 years. As a social worker, I’ve seen the enormous impact that has on families, and in particular children, in lower socio-economic households,” Mr Belfrage said.
“The money coming out of household budgets now towards housing is far more than it used to be. The underlying issue is that housing has been reframed as an asset rather than as a home.
“Rather than viewing housing strictly as an asset class, the challenge is reframing the idea of housing collectively so that people hold its importance in building a life, not just building wealth.”
Co-founder of V&F Housing Enterprise Foundation, Ondine Spitzer, said that government housing policies need to be “reset and re-regulated”.
“We believe governments have a responsibility to facilitate access to housing in the same way they do education and reasonable healthcare. Propping up a broken system isn’t enough,” Ms Spitzer said.
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