Affordability has been a mixed bag for rental and sale markets across major cities and regional markets over the past year.

The National Housing Finance and Investment Corporation (NHFIC)’s latest study shed light on worsening affordability, particularly for the rental market, which remains most inaccessible for lower income earners across major cities and regions.

In fact, the lowest income earners can only afford to rent 10% or less of properties across Australia.

Interestingly, the two biggest cities — Sydney and Melbourne — have seen modest improvement to rental affordability over the past year.

The impact of closed borders that drove a decline in net migration has offset the constricted supply as vacancy rates drop.

“For example, renters in Sydney in the second income quintile can now afford 10% of properties, up from less than 10% in June 2020,” the report said.

This was the opposite in other major cities and regional areas, where a deterioration in rental affordability was more common.

For instance, despite affordability rising modestly in Sydney and Melbourne, regional NSW and Victoria worsened.

“Renters in the third income quintile in regional NSW and Victoria can afford 30% of rental properties, down from 50% at June 2020,” the report said.

The most unaffordable rents, according to the report, were in Hobart, with renters at the lowest income brackets only being able to afford just 10% or less of rental properties in the market.

Perth also witnessed substantial deterioration in rental affordability — low-income earners can now only afford less than 10% of properties, down from 25%.

The report also highlighted how the pandemic has made conditions difficult for many would-be buyers looking to enter the housing market.

In fact, affordability among first-home buyers across most low-income brackets deteriorated over the year due to the strong house price growth.

Still, affordability remained relative and dependent on geographical locations.

In Perth, for instance, prospective first-home buyers experienced much more favourable opportunities to buy.

Low-income earners in Perth can afford around a third of properties in the market.

But the situation in Perth is a far cry from Hobart, where affordability has deteriorated the most. Four in five first-home buyers in Hobart can only afford 10% or less of properties.

Regional first-home buyers were put into different scenarios depending on location, with affordability improving in regional South Australia, Queensland, and Western Australia while deteriorating substantially in New South Wales, Victoria, and Tasmania.

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