JobSeeker recipients spending up to 69% of their income on rent

author-avatar By on December 01, 2020
JobSeeker recipients spending up to 69% of their income on rent

Despite receiving additional JobSeeker payments, new research reveals Australians on Newstart pre-COVID are under extreme rental stress.

While the JobSeeker supplement has slightly improved rental affordability for Newstart households, recipients are still facing moderate to extreme rental stress nationwide, according to the latest release of the Rental Affordability Index (RAI).

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

The RAI measures the price of rents relative to household incomes based on new rental agreements and is released annually by National Shelter, Bendigo and Adelaide Bank, SGS Economics & Planning and the Brotherhood of St Laurence. 

Despite rents falling in many capital cities during COVID, the index found rental affordability has worsened for about 755,000 new JobSeeker recipients who are spending between 42% to 69% of their incomes on rent in every capital city.

Housing stress in this instance is defined as spending more than 30% of gross income on rent repayments.

"Despite JobSeeker being a welcome boost to many low-income renters, it was not enough to lift them out of rental stress," said Adrian Pisarski, Executive Officer, National Shelter.

"This shows the depth of our rental affordability problem, where even with doubled income support, there is not one place in Australia where a JobSeeker recipient can rent affordably."

Mr Pisarski said the rental affordability crisis could tip many Australians into homelessness without government intervention.

“As the Victorian Government has now done, there is a massive need for government investment in social and affordable housing – and now is the time for it since borrowing costs are so low in Australia. Without investment in this space, we are ignoring our responsibility to help people be decently housed," he said. 

"Now is not the time to pass the buck of responsibility for building social housing between the Commonwealth and States; a truly national effort is required.

"If there is no action, the net result of our housing system failures will be a dramatic increase in homelessness."

The JobSeeker rate is set to be reduced by $100 a fortnight on January 1, to be roughly the equivalent of about $50 a day, which is considered to be below the poverty line. 

The national poverty line is $457 a week ($65 a day) according to the Australian Council of Social Service definition.

In an article published by The Conversation yesterday, 24 out of 45 Australian economists surveyed think JobSeeker should be increased by at least $100 a week. 

Screen Shot 2020-12-01 at 11.13.32 am

Source: The Conversation

Two-thirds of those surveyed want JobSeeker to increase in line with wages.

SGS Economics & Planning partner Ellen Witte said already vulnerable Australians are finding themselves on the brink of poverty, but the pandemic has created an opportunity to push them out of it.

“With the Government now reducing JobSeeker allowances dramatically, and the economy not (re)creating jobs, many households are being trapped in a poverty cycle, seeking affordable rents in areas further away from jobs and services," Ms White said. 

"There is a real opportunity to use the current recession to build a stronger future.

"With low interest rates, high unemployment and an increase of demand for affordable housing, this is the time to invest in social housing. And at the same time, people can be brought back into jobs.

“An investment of about $7.8 billion would create 15,500 to 18,000 jobs over four years and add 30,000 dwellings to our social housing stock and refurbish aged stock."


Photo by Jonathan Rados on Unsplash

Disclaimers

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): Credit Union Australia, 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.

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.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*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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Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's passionate about empowering people to make smart financial decisions and improve the financial literacy of Australians by translating complex finance topics into understandable, relatable content.

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