Australia Has a Chronic Affordable Housing Shortage. It’s Costing Billions a Year.

Workers are being faced with a tough choice: housing stress, or extreme housing stress.

A national affordable housing crisis is pricing Australian workers out of major cities and leaving massive gaps in the labour market. Now, experts are saying the emergency has become as much one for businesses as it is for those it could leave homeless.

According to a new study conducted by policy consultants at SGS Economics and Planning, a decades-long abandonment of affordable housing policy has left some companies unable to fill jobs in Australia. In some cases, the pressure has even driven employers to scramble and offer incentives like low-cost accommodation to would-be workers to lure them to jobs hours away from their homes. 


If the lacklustre approach to affordable housing policy continues as it is, the study found, it could cost the Australian community $25 billion a year until 2051. Investing in affordable housing as a matter of urgency, meanwhile, could reap rewards worth more than $110 billion. 

The portion of rental properties currently classified as affordable in Australia—which includes public housing and other subsidised low-cost housing—accounts for a record low 4 percent of national housing stock.

The rate of affordable housing stock has only continued to fall, too, even as Australia’s population swells. 

Between 2001 and 2016, for instance, the population grew more than 25 percent, while the portion of affordable housing shrunk at a rate of 2.5 percent. What that means, according to researchers at SGS, is the Australian economy—under current housing policy—is on track to put more than 2 million low-income rental households in housing stress. 

By 2051, 14 percent of the population is expected to find themselves facing those exact circumstances. 

It’s a worst-case scenario that housing and welfare experts have been warning of for years. In the lead up to the May 21 federal election, it even came to play a small role in collective policy platforms of the mainstream parties as they spruiked their solutions to Australia’s cost of living crisis. 


Only two parties baked material housing affordability measures into their 2022 election platforms. Of the two, according to housing experts who spoke to VICE in May, only one came close to addressing the market’s needs: the Greens.

But experts say all hope isn’t lost with Labor’s new majority government. 

Within Anthony Albanese’s affordable housing policy was a promise to spend $10 billion on 20,000 new social housing properties across the country over the next five years, along with 10,000 affordable homes for frontline workers, like police, nurses and cleaners, who have for the most part been priced out of the areas where they work.

The pitch was welcomed by housing advocates, like Michele Adair, who heads up one of the largest community housing providers in New South Wales, Housing Trust, and serves as chair of the peak body for community housing in the state.

At the time, she said housing stock was—and still is—at the core of a lot of the problems seen both in New South Wales, and states around the country. 

It’s an approach that was also pitched to voters by the Greens, whose housing policy elevated the issue heads and shoulders above Albanese. 

Adam Bandt’s Greens, as part of their election platform, promised 750,000 new public housing properties, and 125,000 affordable rentals as part of an election policy that would cost $22.9 billion over the next 10 years, paid for in part by the introduction of a new “Billionaire’s Tax”. 


Like Labor, the Greens pointed to establishing a robust housing strategy. It’s a crucial element of the nation’s housing pains, Adair said, which would best be considered with urgency, as scores of Kevin Rudd-era housing initiatives begin to wind down after more than a decade of inaction under Coalition reign. 

One of them is the National Rental Affordability Scheme, which was introduced under the Rudd government in 2008. Under the scheme, landlords are offered government subsidies for building low-cost housing and renting it out to tenants well below market value. 

“By 2026, all of those subsidies will stop. Most of them will be lost in 2024. Which means nationally, there are [about] 28,500 additional households who are immediately going to be at risk of eviction, or having their rents jacked up,” Adair told VICE. 

These households, who as it stands face impending homelessness even under the new Labor government, will only add to the forecasts tabled by SGS in the group’s latest study.

 Instead, the study lends its focus to the expense set to be footed by businesses and the average Australian taxpayer. If Australia’s housing crisis is left unaddressed, the study suggests, the community will be left to foot the bill for the peripheral expenses that come with housing stress, like health and mental health services, domestic violence services, lost educational opportunities and increased “anti-social behaviour”, and general productivity dips.


“Education outcomes for children in lower-income households forced to regularly move due to housing costs can be compromised,” the study said. “Lack of secure housing and a stable home environment can foster anti-social behaviour and criminal activity, triggering expensive government interventions in the policing and justice system.”

On the other hand, researchers found, ramping up investment in affordable social housing could reward the economy more than five-fold. By their estimates, the cost of fixing the shortage would cost taxpayers about $55 billion, assuming that support is gradually ramped up every year, to meet the needs of the whole country by 2051. 

Further to that, the Australian economy could save about $110 billion in reduced health costs, domestic violence costs, improved labour market activity, and an overall reduction in the cost of crime. 

“In other words,” the report said, “for every $1 invested by taxpayers to induce delivery of social and affordable housing, the Australian community gets back $2 in benefits.”

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