Rental strain on family budget at record levels

Aerial shot of housing. | Newsreel
A higher percentage of income is needed to service both rental payments and mortgages than ever before. | Photo: Ingrid Hendriksen (iStock)

The portion of income needed to service rental payments is closing in on a third for most Australians, as unaffordability hits record levels.

The latest ANZ CoreLogic Housing Affordability Report showed both mortgage and rental affordability worsened over the March quarter of this year, driven by an ongoing increases in mortgage rates and continued tightening in the rental market.

The report found the portion of income required to service median new rents reached a new high of 32.2 percent nationally and the increase in private rents in lower-cost markets had absorbed the recent $48 minimum wage increase set by the Fair Work Commission.

It also showed the demographic of private renters was shifting to higher-income earners, due to long-term declines in the rate of home ownership.

This trend is driven, in part, by the time taken to save for a 20 percent deposit increasing to more than 10 years for a median household income (assuming an annual savings rate of 15 percent).

The report found the portion of median income required to service a new mortgage reached a series high of 48.9 percent last quarter.