Sunday, October 26, 2014

Rents & Poverty

An interesting report at the SMH: Sydney's tale of property and poverty
Rural Tasmania, where unemployment rates are high and economic opportunities limited, had the nation's highest poverty rate at 16 per cent. But Sydney's poverty rate was not far behind at 15 per cent. That's well above the national average of 13.9 per cent and the highest of any other Australian capital. And there's a twist to Sydney's poverty story. The norm is for state capitals to have lower poverty rates than the rest of the state. Brisbane's rate, for example, is 1.5 per cent below the rest of Queensland and Hobart's rate is 2.2 per cent lower than the rest of Tasmania. But in NSW the reverse it true; Sydney's poverty rate is 1.2 percentage points higher than the rest of the state.
So why is the poverty rate in a place with the wealth and economic dynamism of Sydney similar to regional Tasmania? You've probably guessed the two-word answer: housing costs.
This is derived from the recent ACOSS Poverty in Australia Report 2014.
ACOSS chief executive, Cassandra Goldie, said high housing costs are a "unique factor" contributing to Sydney's higher than average poverty rate. "We've just been through a period of very rapidly escalating rents in Sydney and those who are in poverty are much more likely to be renters than owners or purchasers," she said. "It's a huge factor driving poverty in Sydney."
It was noted in my previous post Cairns rents fit for a King that rents in Cairns were now higher than Townsville and Mackay based on the most recent RTA bond data. Cairns also has lower median incomes than either of those as well as a larger proportion of renters. A similar comparison to the ACOSS report could be interesting particularly if rents increase further relative to inflation.

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