While there’s no hard and fast rule on how much rent you should be paying each week, there are some guidelines to follow when you’re looking for a place within your budget.
When I began searching for a place to move in Sydney, I hoped to find one somewhere close to the city that wasn’t dilapidated and didn’t chew up my whole paycheck.
Friends suggested I follow vague rules such as using up one-third of my weekly income on rent each week but in capital cities where rental prices have risen consistently over the decades, ticking off my requirements and getting it into this bracket was tough.
Eventually, I found a place that was close enough to the city, and was reasonably nice and affordable — something surprisingly hard in Australia’s biggest city.
It did get me wondering though — why the one-third or one-quarter rule and is it what we’re all really paying?
How much rent Australians are paying
According to Savings.com.au, and based on data from the Australian Bureau of Statistics (ABS), the average Australian is spending about 27 per cent of their weekly income on rent, or about $436.
Naturally, that sways a considerable amount depending on whereabouts you live in the country. The average weekly rent in NSW, home of Australia’s most expensive city, sits at around 35 per cent of household income or $582.
In Western Australia, where the average weekly income is one of the highest at $1,757, only 21 per cent of the average income was being chewed up by rent.
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What else are Australians spending money on?
It’s hardly a reflection of recent times but ASIC’s Money Smart website states the average weekly spending for Australian households is fairly high. It’s based on a 2015-6 ABS survey but it found what households spent income on, including housing costs, varied wildly depending on age.
It showed those under 35 living alone spent a little more than 33 per cent of their weekly spending on rent compared to couples with at least one member under 35 who spent around 24 per cent. In other categories, such as food and drink, alcohol and transport costs, it was mostly equal.
Ultimately, the one-quarter or one-third rule seems to be used nationally despite being tougher to manage in bigger cities like Sydney or Melbourne. While it’s a good guide to helping you choose a place within your budget, it doesn’t take into consideration inflation or rising rental prices, and it isn’t personalised to your situation.