Affordable housing needs more than a definition. It needs a strategy

Why a definition of affordable housing is just the starting point 
Australia has no nationally consistent, practical definition of affordable housing. Without a shared understanding of who affordable housing is for, what “affordable” means, and how long that affordability should last, it is harder to target funding, design effective policy, measure outcomes and attract investment. 

And while momentum for change is growing (last month, Member for Bradfield Nicolette Boele introduced a bill seeking to establish a nationally consistent definition of affordable housing), a single definition should be just the starting point. 

Housing need exists on a spectrum. The circumstances of a household experiencing homelessness are fundamentally different from those of a moderate-income worker, who is priced out of housing near where they work. Treating both through one broad definition risks producing policy and investment settings that do not reflect those differences.

However, a national framework with consistent housing categories that is underpinned by an overarching strategy will recognise different levels of need and market failure, while targeting appropriate funding, planning, regulatory, and investment responses.

The central importance of income 
The foundation should be a nationally published and annually indexed income schedule, adjusted for household composition and geography. It should establish three bands:

• Very-low income: below 50% of relevant median household income.
• Low income: 50% to below 80%.
• Moderate income: 80% to 120%.

Priority groups, including people experiencing homelessness, people with disability, domestic violence victim-survivors, First Nations people, and essential workers, should help determine how housing is allocated. However, it is key that priority status does not replace income eligibility.

From there, housing can be structured into three clear categories:

• Social housing should primarily serve very-low-income households and people with significant or urgent housing needs. It should provide secure, long-term rental housing through regulated public, community or First Nations housing systems, with rents linked to household income and generally limiting a tenant’s net contribution to 25–30% of assessable income. Delivery requires the deepest level of government support, including capital grants, concessional finance, land, operating subsidies and support services.
   
• Low-income affordable housing should provide secure, regulated rental housing for households at risk of rental stress and housing insecurity, helping prevent people from falling into greater need. Net rent should generally not exceed 30% of assessable household income, while remaining below an applicable market or cost-rent ceiling. Government, community housing, First Nations, private and institutional providers can all play a role, supported by mechanisms including grants, concessional finance, land contributions and payments that bridge the gap between affordable rents and project costs.
   
• Moderate-income affordable housing should serve households that earn more but still struggle to access suitable housing in the places they live and work, particularly in high-cost locations close to employment, transport and essential services. Rents should be meaningfully below market and set through an agreed framework that balances affordability with project viability. This category creates greater opportunity for private developers and institutional investors, supported by planning and build-to-rent incentives, concessional finance, tax settings, land contributions and targeted gap funding.

Each category should be funded for what it is designed to achieve, with a national framework backed by an ongoing national funding program with separate funding pools for social, low-income, and moderate-income affordable housing.

Further, social housing should not compete directly with moderate-income housing for funding simply because moderate-income projects require less government support. Value for money needs to be assessed within each category and against the outcomes it is intended to achieve.

Funding should reflect tenant capacity to pay, local development costs, the depth of subsidy required and, importantly, how long the housing will remain affordable.

Measure homes, not promises 
Clear definitions also allow Australia to set clearer targets. Targets should reflect current and future housing need, incomes and geography, measuring how many households are affordably housed, what proportion of their income is spent on rent, where homes are located and how long they remain affordable.

Projects should be tracked from announcement through funding, commencement, completion and occupancy. Only completed homes with tenants living in them should count towards final delivery targets.

A national register could record each dwelling’s category, location, funding, rent formula, affordability period, occupancy and compliance, reducing the risk of double counting and creating a much clearer picture of what Australia is delivering and its effectiveness

From definition to delivery
Australia does not lack ideas, funding commitments or investor interest in affordable housing. What it lacks is a common framework that clearly defines who housing is for, how affordability should be measured, and how success should be assessed. But the framework cannot operate in isolation or without a strategic foundation. 

It needs to sit within a national housing strategy that aligns policy, funding, planning, investment and delivery around shared objectives, while allowing states, territories and local governments to respond to their different housing markets. If we get those two pieces right, Australia can shift focus from what it is to define to what it is to deliver affordable housing.