REIA analysis shows renters still struggling despite budget increase in Commonwealth Rent Assistance

Despite the recent decision to increase the rate of Commonwealth Rent Assistance (CRA) by 10%, renters are still struggling to keep up with rising market rents, according to the Real Estate Institute of Australia (REIA).

The increase, which follows a 17.5% rise in December last year, has not significantly improved the financial situation for eligible families and individuals. “Despite the increase, which tops up the increase in December last year, eligible families and individuals are only marginally better off and are worse off compared to two decades ago. This is because the payments have not kept pace with movements in market rents,” said REIA President, Ms. Leanne Pilkington.

In 2002, CRA covered 24.9% of the weighted average Australian rent, ranging from 20.8% in Canberra to 30.3% in Perth. However, this proportion has declined over the years, with CRA covering only 18.1% of rent by March 2024 due to additional rent increases in the March quarter.

“The Budget announcement of the 10% increase in CRA, if applied to the March quarter of this year, would see the proportion of weekly rent covered increase to 19.9%, varying from 17.1% in Sydney to 22.5% in Brisbane,” Ms. Pilkington said.

Over the past two decades, the proportion of rent payments covered by CRA has decreased by 5 percentage points of the weighted average Australian rent and significantly more in some states, with Perth seeing a decline of 10.4 percentage points and Hobart 8.3 percentage points.

“This is why in its Pre-Budget Submission, REIA called for the CRA payment to be pegged to market rental rates at 25%,” Ms. Pilkington added. “If CRA payments had been higher, not only would eligible families and individuals have benefited, but the CPI would have been lower. A lower CPI could have led to lower interest rates, potentially prompting a supply response from builders to address the housing demand-supply imbalance.”

The REIA’s Housing Affordability Report, which will cover the cost of buying housing as well as renting across all capital cities, is set to be released in June.