Rent Affordability – a world-wide crisis

 

Australia is suffering a rental affordability crisis as home ownership shrinks and more people are squeezed out of renting a home by soaring prices. Sound familiar?

Yes, this same sentence could describe the US, Canada, New Zealand, Ireland and of course, the UK.

Sitting at the top of the historic Lowell hotel, on the Upper East Side of Manhattan, a three-bedroom apartment is on the market for a whopping $300,000 a month, according to the Wall Street Journal.

This may be an extreme example, even though it includes amenities such as Wi-Fi, dog-walking, twice-a-day turndowns, and packing and unpacking services. Ridiculous as it may sound; Mayfair and Knightsbridge are not too far behind,

The first Rental Affordability Index produced in Australia shows that some renters in New South Wales are facing paying 65% of their income on rent, a far greater financial challenge than most homeowners. In that country rental housing is slipping beyond the grasp of many low-income families, paying up to two-thirds of their income in rent.

The situation is only slightly better in Queensland and Tasmania with rents taking up 54%, South Australia 59% and Western Australia 57% of incomes. Inner Melbourne and Sydney are the most unaffordable places for renters according to the index.

The index shows that low-income families are suffering all across Australia with pensioners and single people are suffering the worst. Even moderately well off middle income households, earning $A1,000 to $A1,500 per week are spending at least 30% of their incomes on rent.

In America renting has become significantly less affordable in recent years, that’s according to a report by the Harvard Joint Centre for Housing Studies. Around 50% of U.S. tenants spend more than 30% of their gross income on rent. Many of those households, about 27%, will spent more than half of their income renting; this according to the statistics is up from just 19% of renters who did so a ten years ago.

Again doesn’t this sound rather familiar:

“Landlords are also hiking rents, making it harder for renters to save enough money to consider buying a home.” Real median rents in the US, adjusted for inflation, increased by 6% nationally between 2000 and 2012, while the real median income of tenants actually fell by 13% over the same period”, the Harvard study found.

Eric Belsky, managing director of the Joint Centre for Housing Studies at Harvard, said in a statement: “We are losing ground rapidly against a chronic problem that forces households to cut essential spending.”

 

Article courtesy of LandlordZONE

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