Affordable housing

Advocacy priorities:

Across the M9 region, there is a significant shortfall in social (public and community) housing and (private) affordable housing. As housing prices increase, greater numbers of households are unable to afford suitable private rental housing or enter home ownership.

Figure 1: Spectrum of Housing Products

In large parts of the region, housing is unaffordable to the lower 70% of the household income range, based on the benchmark of households paying no more than 30% of gross household income on rent or mortgage costs. This results in greater pressure on the private rental market and increased housing stress, and subsequently, increases demand for social and affordable housing.

All social and most affordable housing requires subsidy, and successive State and Federal Governments have not adequately invested in both new growth and maintenance of social housing. This has resulted in a reduction in social housing, both as a proportion of total households, and in some cases, in real numbers.

The combination of increased rent and house prices is creating additional demand for social and affordable housing, and the lack of earlier government investment, has:

Participating M9 councils are each addressing this issue, in a variety of ways, as outlined below:

The key issue in relation to social and affordable housing is the need for subsidy. Subsidy is highest at the lower end of the spectrum (supported housing to address homelessness and very low-income households), lessens for social housing, lessens further for affordable housing products targeting moderate income households, and is not required for market priced housing targeting upper income households.

Social housing does not generate profit, and some form of subsidy or capital funding will always be required. The State and Federal Governments have, over the past decades, failed to adequately subsidise and fund social and affordable housing. Because of the necessity of this subsidy and current market conditions, social and affordable housing cannot be provided by the private market, without introducing ways to increase private sector involvement in delivery of social and affordable housing, including through targeted funding planned under the Big Housing Build, and the introduction of mandatory affordable housing planning mechanisms.

As supported social housing requires the greatest level of subsidy, this will remain a role for government to deliver in partnership with the community housing sector and support agencies.

More broadly, housing affordability is impacted by a large range of factors, including tax settings (e.g. untargeted negative gearing), market forces, and demand-side incentives (e.g. First Home Owners Grant). Advocacy in relation to these broader issues is not addressed in this paper, as the ability of local and state government to impact these issues is limited.

Key opportunities that should be considered to improve outcomes in this space are: