Renters on average wages are being forced out of capital cities, according to Australia’s first Rental Affordability Index.

The report, released this week by National Shelter, Community Sector Banking, and SGS Economics & Planning, lists the most and least affordable suburbs across Australia’s major urban centres, and demonstrates that suburbs that were once considered inexpensive and attainable are now out of reach for the average renter.

Sydney is the most unaffordable city for renters, according to the report, but low-income earners are “in an absolutely dire situation” across the country.

A household is generally considered to be in ‘housing stress’ if it pays more than 30 per cent of income on rent. In Brisbane, the average household is now spending 25 per cent of its income on rent to access rental housing.

Low income households in Queensland, however, have to spend 54 per cent of their income to rent a property in Queensland under current market conditions; in New South Wales, where the situation is most extreme, that figure stands at 65 per cent.

“Rental unaffordability is dividing Australia in a big way,” says National Shelter’s Adrian Pisarski. “Working families, according to this report, are experiencing severe housing stress. Australia’s rental market is growing and that where once Australia had an owner-occupation rate of 70 per cent, it is now closer to 65 per cent and declining.

“This report shows housing affordability is a much bigger problem for renters than owner occupiers. The report is designed to fill a gap in available data on rental affordability and focus attention on the need to reform our rental system. Rental stress is a drag on productivity, is increasing poverty and breaking down social cohesion. We must be able to achieve multi-party support on such a critical issue.”

Pisarski says the report shows what we have known anecdotally “for far too long”.

“Low income households are being hammered beyond belief. Moderate income working households are very hard up and have little disposable income.

“Many middle income households are finding it hard to make ends meet. These households then ultimately don’t have disposable income to spend on key life items like health, transport, education and food.”

Joe Sheehan, spokesperson for Community Sector Banking, the non-profit banking organisation that sponsors the index, says Australia should be building 180,000 affordable houses every year to keep up with demand.

“There is now every chance your children may never own their own home,” Sheehan says. “It is a dismal outlook. All we are hearing from the housing not-for-profit sector is that there is a real urgency to act now. We cannot afford to end up like the UK, where they seem to have almost given up dealing with the scale of their crisis. There has been a massive jump in the number of Australians experiencing housing stress. It is time for serious action.”

The Combined Pensioners & Superannuants Association (CPSA) has welcomed the introduction of the report.

“The figures make it abundantly clear that something concrete must be done to address housing affordability and that Commonwealth Rent Assistance must be reformed,” says CPSA spokesperson Amelia Christie.

“We call on the Federal Government to increase the rate of Rent Assistance to bring it in line with rental prices. The maximum rate for people without dependents is paid at a paltry $64.70 per week — a pittance in comparison to what people renting privately are forced to pay in order to keep a roof over their heads.”

Unsurprisingly, the report found that the most expensive neighbourhoods in the nation are in Sydney — living the high life in Darling Point, for instance, would cost the average income household a whopping 87 per cent of their income.

By comparison, the report found that rents across Brisbane’s metropolitan area are relatively affordable for the average income household, although certain suburbs are highly unaffordable.

Burbank, a greenbelt suburb in the city’s south-east, topped the list of Brisbane’s least affordable suburbs, with rents there claiming 37 per cent of the average income, well above the ‘stress’ threshold of 30 per cent. Burbank is dominated by large acreage blocks; it has not been divided into smaller residential blocks of land, ensuring that the population remains low and the median house price remains high.

The top five least affordable localities in Greater Metropolitan Brisbane, according to the Rental Affordability Index

  1. Burbank (37 per cent of average household income)
  2. Samford Village (37 per cent)
  3. Fig Tree Pocket, Kenmore (35 per cent)
  4. Brisbane City, Spring Hill (34 per cent)
  5. Albany Creek (32 per cent)

The top five most affordable localities in Greater Metropolitan Brisbane, according to the Rental Affordability Index

  1. Coochiemudlo Island (16 per cent of average household income)
  2. Aratula (17 per cent)
  3. Dinmore (18 per cent)
  4. Allandale (18 per cent)
  5. Kingston, Woodridge (19 per cent)

National Shelter, Community Sector Banking, and SGS Economics & Planning plan to update the Rental Affordability Index every quarter.