This research is the latest in a series of projects that have charted changes in the supply of affordable—and affordable and available—private rental housing for lower income households every five years since 1996. These were initiated in response to policy debates in the mid1990s about the adequacy of the supply of affordable private rental housing for lower income households in light of the changing emphasis of policy from supply-side to demand-side subsidies. A key question raised by this policy shift of several decades ago is whether the private market could provide an adequate supply of affordable rental housing to meet the needs of lower income households, including those in receipt of Rent Assistance (demand-side subsidies). The primary aim of these projects has been to determine the extent to which the supply of private rental housing for lower income households has filled, or failed to fill, the gap left by a static social housing sector, and to provide an indication of the shortfall that needs to be addressed by whatever policy means is appropriate.
The private rental sector (PRS) is the fastest growing part of the Australian housing system, increasing by 17 per cent 2011–2016, more than twice the rate of household growth (7 per cent), continuing a trend observed since 2001.
There is longer-term structural change in the private rental market, notably an increased concentration of supply at mid-market levels and more middle and higher income private renter households.
The research found an acute, and increasing, national shortage of private rental dwellings for Q1 households (lowest quintile household incomes): 212,000 dwellings in 2016. This shortage increased to 305,000 affordable and available dwellings as many affordable dwellings are occupied by households on higher incomes (Q2–Q5).
There was a large surplus of 491,000 affordable dwellings nationally for Q2 (second lowest income quintile) households in 2016. However, when adjusting for availability due to occupation by middle and higher income households (and some very low-income ones), the surplus became a shortage of 173,000 affordable and available dwellings in 2016.
Sydney had an absolute shortage of affordable rentals for Q2 households (2016), which is the first time this has occurred anywhere over the project series (1996– 2016). Elsewhere, affordable private rental stock for Q2 households was increasingly in the outer suburbs of capital cities, and in satellite cities.
Gold Coast and Sunshine Coast (Queensland) and Newcastle and Wollongong (NSW) had the greatest shortages of affordable and available supply for Q1 and Q2 households among large regional (satellite) cities in 2016.
Eighty per cent of Q1 private renter households were paying unaffordable rents (89 per cent in metropolitan areas); 36 per cent of Q2 households (and 46 per cent in metropolitan areas) are living in unaffordable rentals (in 2016).
Younger households, households with children and group households had a disproportionate share of the 29 per cent of Q1 households in 2016 paying severely unaffordable rents (over 50 per cent of income).
There is some evidence of Q2 households trading off rental affordability for access to jobs, by renting in higher housing-cost areas where access to a variety of jobs, industries and urban amenities may be better.
Australian Housing and Urban Research Institute Limited 2019