• Young people who receive rent assistance are the most likely to be under rental stress. (AAP)
Rental stress among young Australians on welfare payments is increasing, new data shows.
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2 Jun 2016 - 4:05 PM  UPDATED 2 Jun 2016 - 4:34 PM

Young people are the most likely to be in rental stress despite receiving rent assistance payments, a new report says.

The Housing assistance in Australia 2016 report, by the Australian Institute of Health and Welfare, cites a person as under rental stress if 30 per cent or more of their income before tax goes to rent. 

To help people on lower incomes cope with their rents, the federal government provides rent assistance - a capped income supplement to eligible people.

But 58 per cent of people aged 24 years and younger who received rent assistance were also in rental stress in 2015, data from the Productivity Commission’s Review of Government Services shows. That's up from around 55 per cent in 2010.

The same report says if rent assistance was not provided, 79 per cent of young people receiving rent assistance would be under rental stress.

The use of 30 per cent to define rental stress was arbitrary and might underestimate the effects on lower income households, Director of Australian Housing and Urban Research Institute, Associate Professor Steven Steven Rowley told SBS.

"A low income household spending 29 per cent of their income on housing costs may have very little income left over for essential expenditure, far less than a moderate income household paying 40 per cent, yet the low income household is not considered to be in housing stress," Prof Rowley said.

This also overstated the impact on moderate income households, he said. Some households might choose to pay higher rents to live in some areas or live in a preferred type of house, but other households had no choice.

“It is those low income households forced to spend a high proportion of their income on rents that are most in danger of falling into homelessness,” Prof Rowley said.

The reasons younger people are under rental stress despite receiving rent assistance partially comes down to lower incomes than older generations, National Shelter executive officer Adrian Pisarski told SBS.

"Their low income(s) is the reason they are strongly represented among households in housing stress," Mr Pisarski said.

"Nobody offers discounted rents even though young people often have discounted incomes."

report released in February of 2015 recommended reviewing the indexing of rent assistance, which noted had not kept up with rises in the price of rents.

"Commonwealth Rent Assistance is indexed to the CPI, but private rents have been rising at a higher rate than the CPI for some time," the 2015 report stated.

Data from the ABS shows how the general CPI (Consumer Price Index) and the housing CPI have diverged in the last 20 years.

As a result, people receiving rent assistance payments have to cover their rent from other income, leaving them with less money for other things, Mission Australia chief executive Catherine Yeomans said.

"As these people have to pay too much of their income in rent, they cannot afford other basic necessities, cannot save for unexpected events such as medical emergencies and are at risk of homelessness," Ms Yeoman said.

"Income support and rental assistance should be sufficient for people on low incomes to avoid rental stress and to live in areas where they have opportunities to participate in work and their communities. This would relieve some pressure on currently rising homelessness rates."

Ms Yeomans called on all political parties to commit to providing affordable housing to young Australians.

The first chart on this article was updated for clarity.