Where are the most affordable suburbs for renters?

First, what is “affordable?” According to ABS, average weekly earnings as of November 2023 was $1,431 per week, a 35 per cent increase from 10 years ago. During the same period, rent has outpaced our growth in earnings with the median asking rent for houses growing by 56 per cent to $580 and the median asking rent for units growing by 52 per cent to $550.

Rent should be lower, yes, but this doesn’t answer the question of how low it should be because it would be unfair to demand rent stay flat (even if that’s actually what it did between 2013 and 2016).

A helpful perspective would be to consider weekly rent as a percentage of weekly earnings.

Here, we see where things went wrong. For the first eight years of the last decade, the share of rent versus earnings stayed relatively flat between 33 and 35 per cent. Weekly earnings growth even outpaced rent growth with the share of rent reaching its lowest point in 2020 for houses at 32 per cent of weekly earnings and in 2021 for units at 31.4 per cent of weekly earnings.

Since then, however, rent has skyrocketed. As of the latest release of ABS earnings data, the share of median asking rent versus weekly earnings was 40.5 per cent for houses and 38.4 per cent for units.

So, what can we consider as affordable?

If we take weekly earnings at $1,431 and if we assume the share of rent to stay flat relative to what we earn at 33 to 35 per cent, then weekly rent should only be between $475 to $500 a week. Instead, as of April 2024, CoreLogic reported median asking rent at $600 for both houses and units.
Using the share of listings under $500 as our benchmark for “affordability,” Hobart must stand out for renters with 32 per cent of all house listings and 62 per cent of all unit listings over the last 12 months coming with an asking rent under $500.

Adelaide comes second for units with 57 per cent of its 6,152 listings asking for weekly rent under $500, while Melbourne comes second for houses with 30 per cent of its 52,929 listings asking for weekly rent under $500.

In terms of houses, Gold Coast and Canberra are the least affordable with only two and four per cent of their listings coming under $500 (not that there were many listings to begin with). In terms of houses, it's Sydney and Gold Coast that trail the pack.

In terms of the most affordable suburbs for renters looking for a house, Melbourne arrives as the undisputed favorite, no other city comes close to the volume of listings with asking rent under $500. Within Melbourne, you would want to keep your eye out for Werribee where almost three quarters of house listings have an asking rent under $500. Hoppers Crossing, Wallan, and Melton South also have a very high share of listings with asking rent under $500.

The list is slightly more diverse for renters looking for units. Of the top 10 most affordable suburbs, half come from Melbourne, three come from Adelaide, while Hobart and Sydney offer one.