Housing affordability a perfect storm for those least able to pay


Launch Housing Chief Executive Tony Keenan talks about the lack of affordable housing and the flow on effects to homelessness we’re seeing in Melbourne.

Having worked in organisations that provide services to people experiencing homelessness, I’m not surprised to be asked why people become homeless. But I find it gobsmacking that people hardly ever think that homelessness is brought about by a lack of housing.

People often assume – incorrectly as it turns out – that factors like alcohol, drugs or gambling are the main causes of homelessness. While this is true for some people, actually it is domestic and family violence and factors related to housing affordability that are the top reasons for seeking help from a service like Launch Housing. The main reason that people are homeless is that they don’t have a home.

Our workers are reporting an increasingly long and hard struggle to get people into affordable rental. We have been looking more closely at the data over the past few months and it has become increasingly clear that we are in the middle of a perfect storm of economic and social factors that are putting huge strains on housing affordability. This is not only making it more difficult to find housing for our clients, it is likely that it is playing a big part in driving them into homelessness in the first place. We have already seen an increase of 74% to the numbers of people rough sleeping in the Melbourne CBD area over the last two years, a fact that is sadly very obvious to anyone walking through the city. When the Census is released next year it is likely we will see an across the board increase in homelessness.

Increasingly, our clients are on unemployment benefits (Newstart) and Commonwealth Rent Assistance and as government data released this week shows, this income is simply too low to afford rents in the private market.

Victoria’s June quarterly Rental Report, by the Department of Health and Human services shows there has been a stunning decline in rental affordability for lower income households over the past ten years: in June 2007, 27% of all rental properties across Melbourne were affordable for lower income households; by 2016 that figure had fallen to just 8.2% . (Lower income households are defined as households receiving a Centrelink income).

Worse still are the lack of options for single people. Across Melbourne, there are just 25 one-bedroom flats that are affordable (where they would be paying no more than 30% of their income on rent) for a single person on a Centrelink benefit. The average rent for a one-bedroom flat is $340 per week, which means a single person receiving Newstart and Commonwealth Rental Assistance would have to pay the equivalent of 103% of total weekly income to afford to rent in Melbourne. In Victoria, we are particularly dependent on an affordable private rental sector because we have a much lower proportion of public housing than other states and this situation will get worse because both Newstart and CRA are indexed to inflation – rents are increasing at twice the rate of inflation as our analysis has shown.  Clearly, this situation isn’t sustainable.

The sense of urgency is building – earlier this year for example Infrastructure Victoria called for a major investment in affordable housing, pointing out that the cost of doing nothing will flow “on to our welfare system, our healthcare system and out justice system – and that is a cost that will not just be measured in dollars.” The Victorian state Government has made a great start with its housing blitz for families who have experienced violence and more recently with a similar program for rough sleepers.

The Treasurer will shortly be releasing a report announcing the Victorian Government’s affordable housing strategy. It is absolutely vital that this report considers ambitious options for increasing the supply of affordable housing for those at very lowest levels of income.  Building new social housing, increasing rent subsidies, requiring property developers to include a certain number of affordable properties and introducing a vacancy tax are all ways in which the Government could increase the supply of affordable housing. Using empty government land for housing is also an idea worth exploring.

However, not all the heavy lifting can be done at the state level. We are also awaiting the release of the National Taskforce on Housing Affordability. At a bare minimum, the Commonwealth clearly needs to look at the levels of Commonwealth Rent Assistance which are manifestly inadequate to meet the galloping rental costs in our major cities, particularly for people on Newstart. If they are feeling bolder they can ask again why they continue to support tax concessions like negative gearing and capital gains discounts that artificially inflate the cost of housing. As well, the main Commonwealth/State funding agreement on homelessness will expire in June next year and there is no clarity from the Commonwealth government about whether this will continue and in what form.

Community concerns is shifting; polling undertaken for Launch Housing and the Essential Poll in both report housing affordability as the third highest priority of voters. This means that Governments will have to take clear and decisive policy action if we are to stem the flow of people being forced to sleep on the streets of the world’s most liveable city.