Description:
Renting can be challenging, but what’s more challenging is understanding how much rent is too much. Read on to know how much you should be spending on rent.
Introduction:
Renting a property is the most common way to live in Australia, both for people who need a place to live and those who are looking for an alternative to homeownership. In many cases, renting is the best option: it’s flexible and affordable. Renting also means you can move out of your parent’s home or upgrade from an apartment rental to a house without having to deal with mortgages or other financial commitments that come with buying property. When you’re looking for a new place to live, rent is an expense that can be hard to predict and plan for. One of the most difficult parts about renting a property is trying to figure out how much rent you should pay. There are several factors to be considered when it comes to how much you should spend on rent.
According to the Australian Bureau of Statistics (ABS), rental stress is spending more than one-third or 30% of your gross income on rent.
Dealing with rental stress can be challenging and complex. Therefore, every individual should understand how much they should be spending on rent every week/month. It is imperative to ensure you do your own research to understand your needs when it comes to renting. Once you’ve identified where you want to live, important factors such as school zones and lifestyle requirements, you can visit a review rental properties website, like RentRabbit.com.au to help you determine a good range for the area you live in while seeing what previous tenants have to say about the property and area you want to live in.
In this article, you will understand how much you should spend on rent every week/month and prevent yourself from drowning in rental stress.
How Much Should You Spend on Rent?
To understand how much, you should spend on rent every week/month, you need to decide the exact amount of rent you can afford. To determine how much rent you can afford, it is important to know your fixed income-to-rent ratio. This will allow for optimised spending on basic necessities like food and housing while still ensuring that health care, transportation and other needs are covered.
The rule-of-thumb when it comes to renting is spending anywhere between 25% to 30% of your gross income on rent. Rent spent above 30% of your income can be a clear indication of rental stress. In some cases, the 25%-30% rule might not work out for you, especially if you plan to live in Australian capitals like Sydney and Melbourne where the cost of living is much higher than in other parts of Australia. Nonetheless, rent will still take up most of your expenses, so it is important to know roughly how much your monthly cost of living is.
Here is what an average Australian spend on rent based on locations and their average weekly salary:
| State | Median Rent | Property Type | Average Weekly Salary | Rent (As Percentage of Salary) |
| Sydney | $550 | House | $1,764.30 | 31.12% |
| Melbourne | $430 | House | $1,750.70 | 24.56% |
| Canberra | $630 | House | $1,908.60 | 33.00% |
| Brisbane | $450 | House | $1,646.70 | 27.32% |
| Adelaide | $430 | House | $1,569.90 | 27.39% |
| Perth | $450 | House | $1,879.70 | 23.93% |
(Sources: Domain Rental Report, ABS Average Weekly Earnings Report)
How to Make the Most of the 30% Income-To-Rent Rule of Thumb?
Rent is one of the biggest expenses in your income. Such housing costs can take up most of your income, without even realising. However, that doesn’t mean you have to spend hundreds, if not, thousands on your rent every week/month. Here’s how you can make the most of the 30% income-to-rent thumb rule and save maximum:
- Live with your partner – If you are renting a house or apartment with your partner, combine both of your net incomes to determine the average rent you both can spend. Similarly, if you are renting with flat mates, use only 25% of your income as rent amount. Considering this will help you save maximum on rental expenses easily.
- Find a Roommate – Instead of paying the full price for rent, splitting half of it with a roommate will not only cut your cost in half but will also make you save on expenses. It is important to choose a good roommate because this person will eventually become an important part of your life. You need to be sure that this won’t become a source of stress for you if things don’t work out between you guys.
- Negotiate with your landlord – You can also try to negotiate a lower rent price with the landlord and they might be willing to accept a lower price if you can provide him with some reasons. You could tell him that you are looking at other places and another landlord is willing to charge less than what he does.
- Location – However, the savings also depends on the rental location you are choosing. For instance, the average weekly income of a person residing in NSW is $1,764.30 (which is roughly $91,743.60 a year) with a $550 median rent. That means almost 31% of your gross income is consumed by rent. If you can find a location that is cheaper and gives you access to reliable public transport, access to local supermarkets and food, it can assist you a lot with your rent.
If you want unbiased apartment reviews and real estate reviews from previous tenants, check out Rent Rabbit. You can easily compare rental properties and make an informed decision on your next move.
