Suburbs that renters could afford with the budget’s extra help

Tenants receiving the to-be-expanded Commonwealth Rent Assistance payment will have scant options when looking for affordable properties, even after the payment goes up later this year.

The expanded payment will mean its recipients will be able to afford rent for a typical home in just two suburbs around the country, but only if they spend 40 per cent of their income on rent.

The two towns – Cobar, 700 kilometres from Sydney, and Millicent, 400 kilometres from Adelaide – have median asking rents for units of $200 a week, on Domain data. They are the two cheapest analysed suburbs for renters in the country.

The federal government on Tuesday announced it would increase rent assistance by 10 per cent, as a cost-of-living relief measure in its 2024-25 budget.

JobSeeker is $762.70 a fortnight. Renters are also eligible for a rent assistance payment that varies depending on how much they pay.

To receive the maximum payment, a renter living alone would need to pay $396.94 a fortnight. That’s just $3 less than the median rent in Cobar and Millicent.

After the budgeted increase, the maximum rent assistance would be $207.02, an extra $18.82 per fortnight, taking the maximum welfare payment to $969.72 a fortnight.

A renter receiving the maximum payment must pay at least 40.93 per cent of their income on rent, including the assistance payment. The ABS considers someone to be in housing stress if their costs, such as rent or mortgage repayments, are more than 30 per cent of their income.

The next cheapest suburb is Stawell in Victoria, with a median weekly rent of $228 per unit, which is 47 per cent of the average income.

Sydney’s median unit asking rent hit $700 a week in March, up $80 in the past 12 months, while Melbourne rose $70 to $550 a week, according to Domain data. Brisbane’s median unit rent is $590, and Perth’s is $550.

In his budget speech, Treasurer Jim Chalmers said that the increase, on top of the 15 per cent rise in the last budget, was the first back-to-back increase in more than 30 years, calling it “more much‑needed help for young people and renters of all ages doing it tough”.

Anglicare Australia analyses how many listings would be affordable to a rent assistance recipient. Executive director Kasy Chambers said that the increase in the payment meant that just six rentals across the country were affordable to those receiving the full benefit.

“Increasing Commonwealth Rent Assistance is only a Band-Aid fix – and one that will barely move the dial for the people who will get it,” she said. “Just two weeks ago, our Rental Affordability Snapshot found that a person on JobSeeker could only afford three rentals out of 45,000 listings.”

“That was with the highest rate of rent assistance. This increase adds just three additional rentals across the entire country.”

Better Renting executive director Joel Dignam said the increase would not make a meaningful difference to low-income renters, though it would be welcome.

“A 10 per cent increase to a small number is a small number,” he said. “It’s the equivalent of being able to afford another two coffees a week.”

National housing campaign Everybody’s Home spokesperson Maiy Azize said the way rent assistance was structured was already flawed and was sceptical of the increase’s benefit.

“It’s just not a payment that’s working to alleviate rental stress. A whole lot of people who need support are not getting it,” she said. “You need to be in a high degree of rental stress to get the whole benefit from it.”

Grattan Institute economic policy program director Brendan Coates welcomed the increase. In February, the institute called for rent assistance to increase 25 percentage points from the previous budget’s 15 per cent increase.

However, Coates said the scale of the problem of rapidly rising rents was getting away from the government. “It’s another step in the right direction, but there’s more than needs to be done,” he said. “The base payments of JobSeeker and Youth Allowance need to rise significantly. Those payments remain far too low relative to any poverty line measure you can think of.

“A bigger increase in rent assistance will help, but a bigger increase in the baseline payments is the bigger part of the puzzle.”

Azize agreed that raising welfare payments more broadly would be more effective. She also called for the government to step in and spend new money on building more social housing.

Chambers said rent assistance was not an effective policy for reducing housing stress.

“The government used to invest strongly in social housing, with one in three renters renting from the government up until the mid-eighties,” she said. “That approach worked to keep rents down notI t just for people on the lowest incomes but also for renters across the board.”

“Over the past few decades, they have moved away from providing housing directly. Instead, they spend billions propping up the private rental market through Commonwealth Rent Assistance with no track record of success. Rental stress keeps going up, including for people who get the payment.”