Australia’s housing shortages have grown over more than two decades, through inadequate housing supply and underinvestment in social housing. Building the supply of social housing back up to a level that meets the level of need requires sustained investment and long-term commitment, both in its construction and maintenance.

The annual recurrent expenditure cost to Government of public housing is $55,981 per dwelling, well above what public housing tenants can reasonably pay. As the social housing stock expands, funding must grow to support the new homes alongside the operation, maintenance and renewal of existing homes. 

Affordable housing could relieve some of the pressure on social housing waitlists. At present though, it does not support those households most in need. Affordable rents are set at a discount to market rates, not as a share of what a household earns. In an expensive market, a discount applied to a high rent is still a high rent, and the lowest-income households the scheme is meant to serve cannot pay it. Eligibility runs from very-low to moderate incomes, so people who earn more absorb the stock while very-low and low-income households are crowded out. Those in greatest need get little relief, and the social housing waitlist barely moves. If one in ten households on the social housing waitlist could be adequately moved into affordable housing, almost 19,000 families would then have access to safe and secure housing.

Like social housing, Affordable housing also faces a structural funding gap. The rent that very-low and low-income households can afford does not cover the cost of land, construction, finance and maintenance. That gap has widened as construction and finance costs have risen faster than the incomes of households this housing is meant to serve. Incentive-based schemes that allow density uplift for the provision of Affordable housing, allow that gap to be covered through the construction of additional market-rate dwellings in the development. 

However, the value generated by uplift is often not deep enough to reach the households with the greatest need, so these schemes tend to deliver dwellings affordable to moderate-income earners while the gap for very-low and low-income households remains. Ongoing and consistent funding is needed to fill this gap. Even where the scheme covers delivery costs, managing the dwellings or engaging a community housing provider adds complexity, compliance cost and long-term risk to an otherwise straightforward project. 

Australia needs more housing and it especially needs more affordable housing that can be accessed by those who need it most.