AH, the big renter’s conundrum. You’re trying to save as much money as you can to buy a home of your own, but you don’t want to spend hours commuting.
If you’re not ready to completely sacrifice convenience and lifestyle, these are the cheapest suburbs to rent a room in Sydney and Melbourne within 5km of the CBD.
Share accommodation website, Flatmates.com.au have trawled through their data to reveal the areas in Sydney you can still rent a room in a sharehouse for less than $300 a week and less than $250 a week in Melbourne.
In Sydney, the cheapest suburbs to rent within 5km of the CBD are Leichhardt and Greenwich, where the average room rents for $275 per week.
Cremorne Point was, technically, the closest cheap suburb to the city at $298 per week, at just 3.2km from the CBD. However, only those catching the ferry would benefit from the location.
Other suburbs included Kensington ($277), Lilyfield ($289), Enmore ($292), Beaconsfield ($295) and Crows Nest ($296).
In Melbourne, the cheapest area to rent a room — based on private room listings created on the site in the past six months — was Hawthorn, where the average room rent was $217 per week. The closest cheap suburb to the CBD was East Melbourne at $249, which is just 1.5km from the hustle and bustle.
Other suburbs included Kensington and Toorak ($218), Flemington ($221), Brunswick East ($234), Carlton North ($238), North Melbourne ($243) and Richmond ($246).
DON’T GET TOO EXCITED
Rental affordability is just as big of a problem as housing affordability for many Australians. A recently released government report on housing and homelessness, produced by the Productivity Commission, revealed that nationally, the proportion of low income renter households in rental stress increased from 35.4 per cent in 2007-08 to 42.5 per cent in 2013-14. That’s almost half of struggling families need rental relief the most if they have any chance of securing their financial future with bricks and mortar.
When it comes to the average Australian, the latest Rental Affordability Index (RAI) released in November 2016, claims that Australia’s rental market is in an affordability “crisis”.
According to the report, the average renting household in Sydney spends near 28 per cent of its total income to pay the median rent. In Melbourne, the average renting household spends around 24 per cent of total income on rent.
And rental affordability issues aren’t just confined to Sydney and Melbourne. The average household renting in Greater Brisbane would pay around 25 per cent of total income, while those in Greater Adelaide spend near 27 per cent of total income on rent. In Hobart, the proportion is 27 per cent and in Perth, it’s 23 per cent. That makes it pretty darn hard to save a deposit while you are renting.
Moreover, to find those inner-city Sydney suburbs still renting rooms for a comparatively reasonable price, Flatmates.com.au had to analyse 21,700 room listings, and found just eight suburbs within a 5km of the city centre that had average private room rents under $300 per week.
In Melbourne, there were just 14 suburbs, despite new listings in Melbourne increasing by 330 per cent during the fourth quarter of 2016 compared with the previous year.
Sydney has just eight suburbs within 5km of the CBD where the average rent is under $300.Source:Supplied
WHAT NOW?
Ellen Wittes, an associate at SGS Economics and Planning, told news.com.au in November when the affordability report came out that the government needs to boost social and affordable housing.
“There is a need to ensure there is a pipeline of new social and affordable housing, specifically through government incentives and through growing the community housing sector,” she said.
“The government should work to attract institutional investors into the affordable housing sector. “There should also always be a means to pay for a subsidy which makes up the difference between market rents and affordable rents; there is an important role for government to fulfil that.”
At least 10 per cent of all new housing stock should be social housing, Ms Wittes said.
In addition to more social and affordable housing, Australia also needs to urgently review outdated and oppressive rental regulation.
In Victoria, for example, a landlord can increase the rent as often as twice a year, and there is very little regulating by how much it can be increased.
In New South Wales, it depends on lease terms. For a fixed-term lease of two years or more, a landlord may increase the rent if an increase is permitted under the tenancy agreement and they set out the amount of the increase or the method of calculating it.
For a two year fixed-term, which is rare in NSW anyway, the landlord is allowed to increase the rent once a year.
For a periodic agreement — where the fixed term has expired or no fixed term is specified — a landlord has no limit to how often they can increase the rent.
And like Victoria, there is very little regulation on the size of the increase.
Compare this to Germany where landlords must use local reference rents — from a database of average rents across the previous four years — to set their own rent, and they have limits on how much they can raise it. Rent increases can only occur once every 12 months and cannot be increased by more than 20 per cent during a three-year period.
Speaking of Europe, tenancy unions here are also campaigning for better rights for renters, similar to those already in many European countries. These rights include long-term leases — currently, most leases in Australia are for periods of just 12 months — and stricter rules around when a landlord can evict tenants.
The instances of tenants receiving these ‘no grounds’ notices of termination is common, Ned Cutcher, senior policy officer at the Tenants’ Union of NSW told news.com.au back in October 2016, in light of International Tenants Day. This leaves many tenants living in fear to ask their landlord for basic repairs and maintenance.
“One of the things with the European context is there are often a lot more people who do rent and rent for long periods of time in those places. But we are rapidly moving towards that kind of situation in Australia with the price of home ownership being out of reach for many. And that’s not going to change,” Mr Cutcher said.
“So now is the time to be looking at these laws and saying they are not suitable to a housing system that is not producing the outcomes that we assumed it would.”
