How to work out how much rent you can afford
Most experts agree that you shouldn’t spend more than 30% of your after-tax pay on rent. Of course, depending on your location, your income and your other expenses, keeping your rent to 30% of your income may not always be possible.
On top of that, you may be willing to sacrifice in other areas to live in a place you love, feel secure in or which offers other benefits that are particularly important to you. So the 30% figure is a guide only.
How much can I afford to spend on rent?
Let’s take the 30% rule and see how much you should pay in rent each week, based on your income.
| Annual salary | Apprx weekly pay after tax | What you should spend on weekly rent |
|---|---|---|
| $35,000 | $598.23 | $179.47 |
| $40,000 | $674.19 | $202.26 |
| $45,000 | $750.15 | $225.05 |
| $50,000 | $813.13 | $243.94 |
| $60,000 | $939.10 | $281.73 |
| $70,000 | $1065.06 | $319.52 |
| $80,000 | $1191.02 | $357.31 |
| $90,000 | $1316.98 | $395.09 |
How much is the average rent in Australia?
The average weekly rent in Australian capital cities as of December last year was $499. That’s up from $366 (nation-wide, not just in capital cities) in 2018, according to the last census.
Here’s a breakdown of the figures by state.
| State | Average Rent Per Week (Houses and Units) |
|---|---|
| ACT | $626.50 (source) |
| NSW | $620.00 (source) |
| NT | $472.50 (source) |
| QLD | $394.25 (source) |
| SA | $360.00 (source) |
| TAS | $383.00 (source) |
| VIC | $400.00 (source) |
| WA | $462.50 (source) |
What happens if I pay more than 30% of my wage in rent?
The experts we mentioned above came up with the 30% rule based on the typical living expenses (including savings goals) of an average person. But we all know there is no “average person”. And those experts acknowledge that people on lower incomes are likely to pay a larger portion of their take-home wage toward rent than people on higher incomes.
So, what does it mean? If you pay more than 30% of your wage on rent, you’re left with less available cash to cover emergencies like car repairs, health issues or computer breakdowns. You may find you need to sacrifice other things, like savings or protections like insurance, or life’s small enjoyments: subscriptions, dining out or a weekend away every so often.
That said, some of us naturally live frugally and some living situations save us money. If you live close to work (or work from home), for instance, your travel expenses might amount to almost nothing, for example — you may not need a car. That might justify paying more than 30% of your income into rent, since you can avoid paying for transport.
Ultimately, it all comes down to your priorities, and what works for you.
How can I save money on rent?
One glance at the tables above will show you that 30% of the average take-home pay won’t cover the average rent in many states or territories. Keep in mind that those are averages and they combine house and unit rentals across those states. That’s a wide range of rental markets and we know there’s plenty of variability in terms of housing stock and prices locally, so the picture isn’t as bleak as those tables might make it seem.
There is, of course, one sure-fire way to save money on rent, and that’s to share a place with a flatmate or two! Depending on how you split the rent and bills, you might even end up paying a smaller share than your flatmate. Not sure how to go about finding the right person? Our guide shows you how to find a good housemate every time you move. Happy housemate hunting!
