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Most financial advisers will tell you that you should only spend about 25% of your earnings on rent, especially if you are trying to pay off debts or save for a house deposit. The upper limit should be about 30% to avoid what’s known as “housing stress.” The Australian Bureau of Statistics says about a quarter of Australians rent – up from 18% about 25 years ago. With all the talk of rent and cost of living increases, how much does the average Australian spend on rent?
Sydneysiders feel the pain, though Victoria isn’t far behind
According to the Australian Bureau of Statistics and CoreLogic, if you rent in Sydney, you’re spending 37.9% of your weekly earnings on rent with an average rent of $592.
Melbourne comes second with about 30.7% of earnings going toward rent, with Brisbane a shade under at 28.4%.
Adelaide (26%), Perth (25.6%) and Hobart (25.2%) are within tolerances for avoiding housing stress, though the margins are quite thin.
“It can be hard to get ahead when sinking so much of one’s income into rent,” says housing expert and Savvy CEO Bill Tsouvalas. “Sydney and Melbourne are job centres, and the pull to those areas is high. However with high speed rail and other infrastructure improvements, moving to regional areas may be the answer to housing stress for some.”
Regional areas aren’t far behind
If you’re living in metropolitan regions, you could save a lot of money by moving to the regions. Compared to Sydney, living in regional New South Wales only consumes about 22.4% of earnings.
Of course, this may not be feasible for many people due to location commitments such as work or family. However, moving to a less sought-after area or on the regional fringe could make a difference when it comes to rent prices.
In Victoria the regional average rent is 19.9%, which is well within the house deposit savings range. Victoria is emphasising regional hubs such as Ballarat, Bendigo, and Geelong, designed to entice people away from the cities. The Victorian State Government is building Government Hubs in these areas.
However regional Queensland tops the chart at 23.1% of earnings being spent on rent. Western Australian regions also comes in at third place at 20.7%. These may be influenced by primary industry and mining towns such as Mt. Isa in Queensland or Broome in WA. Tasmania comes in at the same level as Victoria, while South Australia sits on a comfortable 19%.
Ways to save on rent
The tried and true method of saving on rent is splitting the rent with a partner or housemate. If you can split the rent at the current rate you’re paying, you’ll pay 12.5% instead of 25%.
Moving further into the regions or suburban fringes might not save you money, as commuting costs may rise. Do a bit of budgeting and calculation before planning a big move.
You should always speak to a financial professional before making any decisions with money.
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