Half of low-income renters now in rental stress: Productivity Commission

author-avatar By on January 20, 2021
Half of low-income renters now in rental stress: Productivity Commission

The Productivity Commission reports just over half of low-income renters are now in rental stress, placing them at greater risk of homelessness.

The Commission's Report on Government Services 2021, which provides information on government spending and its effectiveness each year, found 50.2% of low-income households experienced rental stress, and 43.4% of households privately renting were considered to be low income. 

According to this report, rental stress is defined as a household spending 30% or more of its gross income on rent, similar to mortgage stress, while it used the Australian Bureau of Statistics' definition of 'low-income': incomes in the 3rd to 20th percentiles of equivalised disposable household income.

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This level of rental stress among low-income earners has largely remained unchanged in the past 10 years. 

But the report also notes that 55.4% of those receiving Commonwealth Rental Assistance (CRA) - between $90 and $190 per fortnight in payments depending on the recipient - would have experienced rental stress without it. 

With CRA, 29.4% still experienced rental stress.

The Government's spending on rent assistance was $4.7 billion in 2019-20, while total Australian, State and Territory government spending for social housing and specialist homelessness services was $5.3 billion in 2019‑20.

Read (in-depth): What's in store for struggling renters in 2021?

Many Australians not having their housing needs met 

Just over a third (33.6%) of Australians who needed accommodation did not have their housing needs met, according to the report, an increase of almost 5 percentage points from 2015-16. 

The main aim of housing and homelessness services, according to the PC commission, is to "ensure that all Australians have access to affordable, safe and sustainable housing — a vital determinant of wellbeing that is associated with better outcomes in health, education and employment, as well as economic and social participation".

Mission Australia Executive Ben Carblis said there are still far too many people suffering from rental stress and homelessness. 

“Australia’s housing system remains in urgent need of repair and investment. With the severe shortage of social and affordable homes, too many people simply can’t find a safe, secure and affordable home," Mr Carblis said. 

"This leads to people and families facing terrible choices between paying for food, bills, the rent or even medication and missing out on other essentials."

A separate study by Equity Economics last year (commissioned by welfare and housing advocate Everybody's Home) found homelessness could surge by 9% in 2021, driven mainly by the economic conditions created by the pandemic. 

According to Mr Carblis, Mission Australia supports a national plan to end homelessness, through both government and private investment. 

“Investment in building, upgrading and improving social and affordable housing will support economic recovery, improve social and economic outcomes for people on lower incomes, and will help Australia take great strides in helping to end homelessness," he said. 

“As an immediate economic stimulus measure, the Government should prioritise investing in building 30,000 new social homes over a four-year period under the Social Housing Acceleration and Renovation Program (SHARP) proposal.

“We also must ensure that income support payments are set at an adequate rate to keep people out of poverty and enable them to pay for housing as well as other essentials like food, medicine and education."

According to Everybody's Home, a $7 billion investment in social housing construction could make a serious dent in homelessness, boost the post-pandemic economy by $18.2 billion, and create 18,000 jobs per year over four years.

The PC report confirmed the importance of services such as rent assistance and social housing, yet the Federal Government did not include any extra social housing investment in October's 2020-21 Budget. 

That's despite it being a well-backed policy by numerous economists, social groups, and property and construction groups

Victoria ($5.3 billion) and NSW ($813 million) have committed to social housing infrastructure in their state budgets. 


Role of housing and homelessness sector services in pathways to secure housing. Source: Report on Government Services 2021.

Photo by Nicolas Gonzalez on Unsplash


The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
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Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

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*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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