RENTAL affordability across regional Victoria is continuing to rapidly decline, hitting a historic low in 2024 with low-income earners bearing the brunt of the crisis, but the silver lining was that Hamilton was faring better than some other major regional centres.

The 10th annual National Shelter - SGS Economics and Planning Rental Affordability Index (RAI) report was released last week and it revealed the average rental household in regional Victoria was now paying 28 per cent of the gross income of $84,203 if renting at the median rate.

Renting in regional Victoria is now classed as ‘moderately unaffordable’, with an RAI score of 108.

The RAI uses the total household income of renting households, which is varied by region (capital cities and the rest of state).

Households paying 30 per cent of income on rent have a RAI score of 100, indicating these households are at the critical threshold level for housing stress.

The RAI is calculated using the median rental price of dwellings for which bonds were lodged in a region for a given quarter; a lower score is worse.

A score of 40 or less indicates critically unaffordable rents, 41-60 indicates extremely unaffordable rents, 61-80 indicates severely unaffordable rents, 81-100 indicates unaffordable rents, 101-120 indicates moderately unaffordable rents, 121-150 indicates acceptable rents, 150-200 indicates affordable rents and more than 200 indicates very affordable rents.

The Hamilton area scored 136.

People on low incomes are suffering the most, with a single person on JobSeeker facing ‘extremely unaffordable’ rents, with 59 per cent of their income going towards a rental.

Another group that was struggling has been single part-time workers on parent benefits with ‘severely unaffordable rents’ and sacrificing 46 per cent of their pay.

Meanwhile, single or coupled pensioners were facing ‘unaffordable’ rents in regional Victoria.

“Renters tell Tenants Victoria’s frontline services that housing affordability remains a huge concern and continue to report steep rent hikes to us,” Tenants Victoria chief executive, Jennifer Beveridge said.

“Indeed, our services can’t meet the heavy demand from renters on low to middle incomes who seek our help.

“Under Victoria’s rental laws there is no fixed method to calculate a rent rise, so we have long called for the State Government to introduce a fairness formula to guide the setting of fair rent increases.”

The trend of declining affordability was consistent across regional Victoria but at different levels.

While the Surf Coast and Geelong regions experienced some of the largest decreases in affordability between 2020 and 2021, Ocean Grove and Torquay are now considered ‘Severely Unaffordable’ to the average regional Victorian household.

Coastal towns are among the least affordable regions in the state.

Rental affordability in regional cities such as Bendigo, Shepparton and Ballarat have continued to decline and are now considered ‘Moderately Unaffordable’ for the average household.

SGS Economics & Planning principal, Ellen Witte said they saw increasingly more households renting and often renting for the long term with many younger households no longer expecting to ever fully own a home.

“The rental market in Victoria is spiralling and what was once affordable is slipping out of reach for many,” she said.

“Households are being forced to live further away from their jobs to access affordable rents, causing fatigue and other issues in workers.”

“This is a severe problem which needs to be addressed by the government with an expansion in social and affordable housing, before we have more people on the streets. Both state and federal governments need to provide urgent intervention.

“After reaching a peak during the COVID-19 pandemic, most regional areas in Victoria have seen a decline in affordability and people on low incomes are suffering the most. Families and pensioners are in dire straits.

“We need urgent rental market reform to ensure residents across the state have access to safe and affordable housing and remain in areas with access to essential services such as schools, hospitals and emergency services.”

She also highlighted the problem of accommodation scarcity having an impact on available talent for jobs, sometimes ironically even construction workers to build houses.

“A few studies (have been done) around different locations in regional Victoria,” Ms Witte said.

“With these rents, and also with the vacancy rate so often being very low, it actually indeed starts to impact the economic growth of regional areas, sometimes because workers are not able to move in the region.”