Soaring rents fuel city's poverty crisis




MELBOURNE'S rental crisis has become so extreme that some low-income families have to sacrifice necessities to keep a roof over their heads.

While low-income tenants are being hit hardest, rising rents are also making it harder for average income earners to make ends meet. The median weekly rent in the metropolitan area reached $340 in March, up 5 per cent in the past year, according to the Office of Housing.

The median weekly rents for a one-bedroom flat, a two-bedroom house and a four-bedroom house are $280, $350 and $380, respectively.

Low-income households - including students, pensioners, single parents and families on the minimum wage - are spending more than 75 per cent of their income on rent, according to a new report from the Tenants Union of Victoria. About a quarter of Australian households rent.

It is generally considered that tenants spending more than 30 per cent of their income on rent are ''stressed'', but tenants union policy worker Toby Archer said the group's first Private Rental Affordability Bulletin found many households were spending more than double that figure, even with government assistance.

''Making the rent often means they have to go without the basics elsewhere,'' Mr Archer said. ''They economise by eating the cheapest food they possibly can, or … not heating the house. [They] do without things that most people would consider essential daily needs.''

The report found that a couple with two children who earn the minimum wage - plus standard family Centrelink benefits and Commonwealth Rent Assistance - will spend 38.2 per cent of their income on rent for a three-bedroom house. The picture is bleaker for single parents with one child, who will spend 70.7 per cent of their money on a two-bedroom flat, leaving $141 a week for other expenses.

Pensioners in one-bedroom flats would have to survive on $83.80 a week after paying out 77 per cent of their income on housing.

Even in Melbourne's more affordable suburbs, such as Broadmeadows, Dandenong, Ringwood, Frankston and Sunshine, low-income households are still paying up to 67.6 per cent of their income on rent.

''The fact is that if you are earning anything less than the average weekly wage, then it's a real struggle just to find and keep a place to live,'' Mr Archer said.

Amy Maughan knows all about going without. The 36-year-old single mother of two daughters, aged three and two, pays $316 rent each week for a one-bedroom South Yarra flat because it's close to family and friends. Ms Maughan, who receives no help from the girls' father, spends 55 per cent of her Centrelink pension on rent, leaving $255 a week for everything else. ''I'm constantly watching the budget, counting every dollar. It means checking the prices on canned food between different stores,'' she said. Four years ago, Ms Maughan was earning $75,000 a year working for the Northern Territory Education Department. Now, she's battling to keep a roof over her girls' heads. ''The stress is always there, knowing you're drifting further and further into poverty.''

Kate Colvin, policy and public affairs manager for the Victorian Council of Social Service, said the housing market had clearly become ''dysfunctional'' when tenants had to forgo essential items in order to pay their rent.

''You might be able to build a reserve around a very frugal food budget, pare back your daily expenses, but you're inevitably in a situation where every dollar is allocated. Sometimes [the same dollar is] allocated to more than one thing,'' she said.

The Office of Housing reports that Melbourne's median weekly rent rose by about 5.9 per cent a year over the past decade. Commonwealth Rent Assistance is indexed to inflation - but not to rises in rental costs - so tenants, especially those on low incomes, fall further behind each year.

Terry Burke, professor of housing studies at Swinburne University's Institute for Social Research, said the housing crisis was probably worse than the tenants union study suggested, because the 30 per cent threshold failed to account for differences in household size and relative expenses. For example, a single income earner on $40,000 a year is treated the same as a family of five living on $40,000.

Experts said negative gearing, a lack of rent regulation and the declining real-term value of Commonwealth Rent Assistance were fuelling the crisis.

The federal and state governments have pledged to deliver about 14,000 new properties through social and low-income housing initiatives to ease the rental squeeze. Social Housing Minister Mark Arbib's office says the government subsidises the rent of about 45 per cent of people renting privately.

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You can blame Governments for using tax payers dollars to fuel a property bubble where speculators and investors borrow to much to buy over inflated property and then burden the tenants with the repayments.

Negative gearing should be abolished and Governments should never use tax payers money to prop up the property market and encourage speculation.

Now that interest rates are going to go up, the tenants are going to be hit further

That stupid Kevin Dudd with his tripled first home buyers scam. What on earth was he thinking ?

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Not exactly. Rent will only go up to the extent that people are willing and able to pay it. Just because you paid too much for a property does not mean you can simply increase the rent to cover your bad decision. Price is governed by supply of rental properties and demand for them and you have to price your property within the market if you want it to be tennanted.

rent should be capped.
bugger the landlords.
they aren't god.
j.

freediver wrote on Oct 3^rd, 2010 at 11:23am:


They pay it because they have access to easy credit and usually own a dozen credit cards. The greedy landlords get their pound of flesh because they take advantage of the squeeze on rental accommodation.

This is bad planning by Governments. Governments want mass immigration but they don't want to spend money on infrastructure and services. They just look at immigrants as more suckers to pay taxes without worrying how and where they are going to live. And if people who have lived here all of their life now have to compete with immigrants for accommodation then it is tough titties for them and the Government couldn't give a toss

gizmo_2655 wrote on Oct 3^rd, 2010 at 2:11pm:


That's a classic myth mate.

No other country has such an inequitable tax policy.

The tax policy should be favouring first home owners and not property speculators. It should be for people who just want to own one joint for themselves and not some greedy speculators who want to buy a dozen or more existing joints built 100 years ago.

Using the tax system to allow people to recycle the same old junk properties is not helping the accommodation shortages. If anything it should be limited to brand new house and land packages only. If sepculators don't want to buy that then tough luck !!

Get rid of negative gearing and house prices will plummet..thus more young people will be able to afford to buy..
House prices went through the roof and first home buyers were pushed out of the market as soon as Howard bought back negative gearing.
Rents will go down because house prices will fall..and if they dont..to bad because people wont have to rent if they can afford to buy their own houses 

adelcrow wrote on Oct 3^rd, 2010 at 3:01pm:


Umm ok....so who will OWN the rental properties???
And who will build the NEW homes/apartments for people to buy???