Rising rents eating up low-income worker pay gains

Property data firm CoreLogic and ANZ bank found rents at the lower end of the market were rising faster than more premium offerings, with the 25th percentile rent lifting $53 a week in the past 12 months.

The Housing Affordability report for the March quarter found the 25 percentile of income earners were spending 54.3 per cent of their income to rent in the 25th percentile of available rentals.

And while the large wage boost delivered by the Fair Work Commission in 2023 was recognised in the report, the $48-a-week pay boost for a full-time minimum-age worker was entirely eaten up by the $53-a-week rental increase over the same period.

Rents have re-accelerated in the first few months of 2024, based on CoreLogic data, suggesting there could be more financial pain to come.

Rental prices lifted from 8.1 per cent annual growth through to October to 8.6 per cent in the 12 months to March.

Rents have been rising rapidly since the pandemic, with reopened borders colliding with a trend towards smaller household formations.

ANZ chief economist Richard Yetsenga said new home building had also been sluggish, adding to the mismatch between housing demand and supply.

"International competition for both materials and labour remains intense," he said.

The report also revealed deteriorating affordability for mortgage holders, with the portion of median income required to service a new home loan reaching a series high of 48.9 per cent nationally in March.

Australian Associated Press