PropTrack Rental Affordability Report – 2024

Angus Moore
Angus Moore

Executive Summary

Rental affordability has hit its worst level in at least 17 years, when records begin, according to the PropTrack Rental Affordability Index – a new and comprehensive way to measure the share of advertised rentals that households of all incomes can afford to rent.

Read the full report: PropTrack Rental Affordability Report – 2024

Rental affordability is toughest in New South Wales, Tasmania and Queensland. In contrast, Victoria is Australia’s most affordable state for renters. While Victorian rental affordability has worsened significantly in the past few years, it has not deteriorated as sharply as other states. As a result, Victorian rental affordability is still around the levels it was in the mid-2010s.

The deterioration in affordability has been driven by the significant increase in rents since the pandemic, which wages have not kept pace with.

This report quantifies the challenging state of rental affordability across the country, particularly for low-income renters.

Rental affordability has fallen to its worst level on record

Surging rents over the past few years mean renters across Australia are now facing the worst level of rental affordability in at least 17 years.

The PropTrack Rental Affordability Index shows that, over the six months from July to December 2023, households across the income distribution could afford to rent the smallest share of advertised rentals since at least 2008.

That is a substantial change from conditions before and during the pandemic.

After rental affordability hit a low point in 2009-10, owing to slow income growth after the Global Financial Crisis, rental affordability gradually improved as rents increased at a slower pace than incomes.

Affordability reached a high point nationally in 2020-21, following the initial stages of the pandemic which slowed average rent growth further. In many parts of the country, such as inner Sydney and Melbourne, rents decreased significantly.

Read the full report: PropTrack Rental Affordability Report – 2024

However, that was not the experience in all parts of the country. Many smaller states and regional areas experienced strong rental demand and rent increases from the early stages of the pandemic.

Renters in New South Wales, Tasmania and Queensland face the worst affordability

Households in New South Wales, Tasmania and Queensland face the toughest rental affordability in the country.

For analysis of affordability in each state, see the full report: PropTrack Rental Affordability Report – 2024

While rental affordability in New South Wales has not deteriorated as sharply as in some other states, it is still the least affordable state across Australia for renters – a position it has held for most of the past 17 years. With median rents of $750 for a house and $680 for a unit in Sydney, it is substantially more expensive to rent there than elsewhere in the country.

Renters in Tasmania also face extremely strained rental affordability, but in contrast to much of the country, Tasmanian rental affordability improved over the past year. From FY2020-21 to 2022-23, Tasmania eclipsed New South Wales as the least affordable state to rent in – the only time since at least 2008 that any state has been less affordable than New South Wales.

Queensland continues to rank as the third-least affordable state to rent in across Australia, a position it has held since 2017.

Victoria remains the most affordable state to rent in, by some margin. This is a recent development – Victoria was the second-least affordable state for renters as recently as 2016-17. This improvement reflects the slower pace of rent growth in Melbourne since the pandemic.

Current rents in Victoria are low relative to much of the country, despite households having relatively high incomes. At $550 per week, median advertised rents in Melbourne are $50 lower than Brisbane and Perth.

Median-income households have never been able to afford so few rentals

Highlighting the alarming state of rental affordability at present, a household earning the median (or typical) income in Australia of $111,000 can now afford just 39% of rentals advertised over July-December 2023. This is, by a reasonable margin, the lowest share since records began in 2008.

Read the full report: PropTrack Rental Affordability Report – 2024

That represents a substantial decline from historically favourable affordability conditions seen before and during the pandemic. Affordability peaked in 2020-21, when a median-income household could afford 60% of advertised rentals – although this was not true across all states.

Even relatively high-income households earning about $170,000 a year — more than 70% of Australians — are facing more challenging rental conditions than they have in some time. These households could afford 85% of advertised rentals in 2023-24 – a substantial fraction, but nonetheless the worst since 2008-09, and down from a high of 91% in 2020-21. Many, though not all, of these higher-income households would be homeowners and so not directly affected by rental affordability.

Rents surging faster than incomes has driven affordability lower

The key reason for deteriorating rental affordability is, unsurprisingly, surging rents.

In 2023, median advertised rents surged 11.5%, which followed even stronger growth in 2022, when rents grew 15.6%. Relative to before the pandemic, rents nationally are up 38%, which has significantly worsened affordability.

For more, including analysis of affordability for low-income renters, see the full report: PropTrack Rental Affordability Report – 2024

While all parts of the country have seen substantial increases in rent, growth has been particularly strong in Perth where rents have increased $240, or 67%, since the start of the pandemic.

Brisbane and regional Queensland have also seen very strong growth: rents have increased by $200, equivalent to 50% and 53% growth, respectively.

While Hobart hasn’t seen as strong growth as some other cities, and rents have fallen a little in the past year, that is largely because Hobart was already quite expensive prior to the pandemic.

Incomes have not kept up. From 2019-20 to 2023-24, median household income has increased 19%. While that’s faster than incomes were growing prior to the pandemic, it is far slower than the surge in rents.

Read the full report at: PropTrack Rental Affordability Report – 2024

Written with Paul Ryan

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