Despite the ongoing rental crisis making life difficult for tenants, there are still suburbs that are affordable for renters according to a new report.
The PRD Affordable & Liveable Rental Guide 2023, found that it was easiest for renters to find affordable properties based on relative income levels in Melbourne and Sydney, while Perth, Adelaide, Brisbane and Hobart all had tighter rental markets.
The report examined a combination of affordability based on income-to-rent levels, liveability, vacancy rates and property trend criteria to find areas that were favourable for renters.
PRD Chief Economist Dr Diaswati Mardiasmo said renters across the country are required to pay 23 per cent of their income on rent, which is high, but still not at the levels recorded during the Global Financial Crisis, when renters were required to pay 26 per cent.
In Sydney, the report found Carlingford, Granville and Wiley Park offered the best opportunities for renters looking for freestanding homes.
Homes in Granville were renting for $540 per week, while Carlingford was renting for $750 per week and had a vacancy rate of 2.3 per cent.
Crows Nest, Summer Hill and Enfield all provided affordable options for unit renters.
Dr Mardiasmo said Sydney metro’s vacancy rate had now returned to stable levels, as it recorded 1.8 per cent in June 2022, but is still lower than pre-COVID-19 (3 per cent in June 2019).
“This should provide greater confidence to renters, knowing that the rental market has somewhat returned to a more balanced supply and demand state,” Dr Mardiasmo.
Across Melbourne, Ardeer, Burnside and Coburg North all offer affordable house rentals, while Dallas, Broadmeadows and Essendon were good for renters looking at units.
It’s still possible to rent a unit in Melbourne for $350 in Dallas, while a house in Adeer is $380 per week.
Dr Mardiasmo said Melbourne was one of the easiest capital cities to find a lower-priced suburb, with a high level of confirmed incoming stock allowing unit renters the option of higher affordability and liveability.
She said it was quite surprising to see the relative affordability of some suburbs in both Melbourne and Sydney given their high-priced reputation.
For Brisbane, Capalaba, Everton Park and Richlands all had opportunities to rents houses, while Chermside, Coopers Plains and Bowen Hills were affordable units markets.
Everton Park had a vacancy rate of 1 per cent and you could rent a house for $590 per week.
According to Dr Mardiasmo, the Brisbane rental market has proven to be “sticky”.
“Although there is a considerable amount of confirmed ready-to-sell stock in the pipeline, it is still below Sydney and Melbourne levels,” she said.
“Identifying affordable suburbs with a high amount of confirmed stock was quite difficult in Brisbane.
“Those wanting a better chance of finding a rental property must spend close to the Brisbane metro rental price.”
House markets in Hobart that offered affordable options included, Warrane, Glenorchy and Mount Nelson, while Mount Nelson, New Town and Bellerive had options for unit renters.
Dr Mardiasmo said vacancy rates in Hobart metro remained well below the healthy benchmark of 3 per cent, however, have increased quite significantly compared to 12 months ago (0.7 per cent in June 2022).
“This is good news for renters, as it suggests a more balanced supply and demand market,” she said.
Adelaide continues to be one of the tightest rental markets in the country but there are still options there for renters, with Kilburn, Modbury and Port Adelaide best for houses and Hope Valley, Glenelg North and Parkside for units.
Dr Mardiasmo Adelaide Metro’s vacancy rate has now returned to a more stable level, which indicates a more balanced rental demand and supply for renters.
For Perth, Koongamia, Kenwick and Hamilton Hill provided affordable housing markets for renters, while Shenton Park, Morley and Nedlands were best for units.
Despite the rental crisis impacting the entire country, it’s a similar story around the world, with tight supply and high rents the cause of a lot of stress.
In New York and London, the proportion of rent-to-income ratio for a two-bedroom unit is more than 80 per cent, leaving only about 20 per cent for other living expenses the report said.
In Canada, there is a vast difference between renters in Toronto and Ottawa, despite both being on the East Coast, with renters in Toronto having to spend almost double their income on rent.
While, Hong Kong and Singapore have the lowest proportion of rent-to-income figures, at 13.1 per cent and 24.8 per cent respectively.
Dr Mardiasmo said that compared to other major international cities, Australia is trending either similarly or more favourably.
“The proportion of rent-to-income for units is not surprisingly the highest in Sydney, at 34.2 per cent,” she said.
“However, this is lower than New York, London, Auckland and Toronto, but higher than Ottawa, Hong Kong and Singapore.
“Although this suggests Australian renters are in a better position than some others, it does not diminish the individual stress felt by different households.”