There are signs of green shoots with Sydney's rental affordability marginally improving after years of rapid decline, though the city's West and South West have deteriorated, according to the nation's most authoritative rental affordability study.
The 11th annual National Shelter-SGS Economics and Planning Rental Affordability Index, which compares rents with incomes, found the average renting household in Sydney pays exactly 30% of their income on rent, the commonly accepted threshold for housing stress.
While Sydney's overall affordability improved 1% over the past year to reach a Rental Affordability Index (RAI) score of 100, Western and South-west Sydney, including areas from Camden, through Liverpool to Parramatta have deteriorated to Moderately Unaffordable or Unaffordable levels.
"Sydney remains one of Australia's least affordable rental markets, though there are early signs of a stabilisation and perhaps some hope after years of deterioration," said Shelter NSW CEO, John Engeler.
"To maintain this momentum, we need to build on the delivery of hundreds of homes under the Housing Australia Future Fund. Thousands more homes are in the pipeline and these will take pressure off the private rental market. But our scale of ambition must not weaken. Housing is Australia's most pressing social and economic challenge."
SGS Economics & Planning Principal Ellen Witte said: "After reaching historic lows between 2021 and 2024, Sydney's rental market shows signs of stabilising, though it remains deeply unaffordable."
"The city's harbour, northern, and coastal suburbs are an affordability desert, with no coastal areas offering acceptable rents. To find acceptable rents, the average household must travel at least 15-20km from the CBD to areas like Campsie, Lakemba or Rosehill."
The report found that even full-time workers face severe rental stress across much of Sydney. A full-time hospitality worker would need to spend 42% of their income on rent, while a single full-time working parent would spend 33% - both well above the affordability threshold.
For vulnerable groups, the situation is even more dire. A single person receiving JobSeeker payments would need to allocate 131% of their income towards rent in Sydney, making independent housing virtually impossible without additional support.
"Suburbs in Western and South-west Sydney were once among the city's most affordable regions, but they no longer offer the same rental respite, and have deteriorated to moderately unaffordable or unaffordable levels," Ms Witte said.
Robert Pradolin, Founder & Executive Director of Housing All Australians, which has recently become a partner in the Affordability Index, said the rental crisis is directly impacting Sydney's economic productivity.
"This is more than a social crisis. It's an economic deadweight," Mr Pradolin said. "Cafes, hotels, hospitals and childcare centres across Sydney are struggling to find staff because there's nowhere affordable for them to live nearby. When they do find them, the commute is so long that workers have to wake up at the crack of dawn and end up starting work exhausted. This is productivity poison.
"Housing that people can afford is absolutely critical economic infrastructure. Without it, we are severely crimping our economic growth.
"To address our affordable housing shortfall, we must build 44,500 homes each year for 20 years. Governments can't do this on their own, and so innovative public-private partnerships will continue to be absolutely vital."
With Sydney's median weekly rent at $750 and the average rental household earning $130,273 annually, the modest improvement over the past year offers little relief for the thousands of Sydney renters in housing stress.
