Affordable housing vs. housing affordability

Affordable housing is different to housing affordability.

The term 'Housing Affordability' refers to the relationship between expenditure on housing (prices, mortgage payments or rents) and household incomes. Melbourne’s median real house price has almost quadrupled since the 1970s while real wages have only doubled. The result of this is that most Victorians, regardless of income are paying more of their income towards housing costs.

The term 'Affordable Housing' is often incorrectly used to describe lower cost housing (purchase or rental) because it is within the financial means of more people.

On the other hand, 'Affordable Housing' can be described as non-market housing which, without some kind of incentive, regulatory requirement or subsidy - would not be delivered by the standard property market.





What is affordable housing?

Affordable housing is housing that is appropriate for the needs of very low to moderate income households. It is not the same as 'low cost housing'. One way to think of affordable housing is as non-market housing which without some kind of incentive, regulatory requirement or subsidy - would not be delivered by the standard property market.

A common benchmark is that housing costs do not absorb more than 30 per cent of the gross income of very low, low and moderate households. This is so that these households are also able to meet other basic living costs such as food, clothing, transport, education and medical care.

There are a range of reasons why anyone in our community might need affordable housing, for example:

  • recently separated people with children, who are now on a single income and can no longer stay in their family home
  • people with or without children fleeing domestic abuse
  • older people whose spouse has passed away and are on a reduced income.





What is social housing?

Social housing forms part of affordable housing. It is mostly government-subsidised rental housing including supported accommodation for people who cannot afford housing at market prices. Priority for social housing goes to those in greatest need.

There is a misconception that affordable housing refers only to social or community housing. This is not true - affordable housing is much more than this a includes a diverse mix of housing types required to meet the needs of a diverse community.

In the City of Casey, supply of social housing is much lower that in Greater Melbourne and is decreasing over time.


Who is most affected?

People may be experiencing housing stress if, after paying for housing costs, very little money is left over for utilities, food, transportation and education.

There are many reasons why people might require more affordable housing, for example:

  • recently separated people with children, who are now on a single income and can no longer stay in their family home,
  • people dealing with domestic violence,
  • older people whose spouse has passed away and are on a reduced income.

What is housing stress?

If you are paying more than 30 per cent of your gross income on housing needs, you are in housing stress. A household can experience rental stress or mortgage stress.

Housing stress levels have increased due to rapidly rising housing prices for both purchase and rental. This is made worse by low incomes, underemployment and a lack of supply (of cheaper rentals).

Households earning very low or low incomes are most likely to suffer from housing stress, and more likely than any other group at risk of being homeless.

Who needs social and affordable housing?

Affordable housing is needed for households on very low, low and moderate incomes. This means households that earn $130,870 per annum and below. It is priced so that these households are also able to meet other basic living costs such as food, clothing, transport, education and medical care.

Households on very low and low incomes are most likely to experience housing stress and needs access to social and affordable housing. There are a range of reasons why anyone in our community might need affordable housing, for example:

  • recently separated people with children, who are now on a single income and can no longer stay in their family home
  • people with or without children who are fleeing from domestic violence
  • older people whose spouse has passed away and are on a reduced retirement income.


What is homelessness?

Households struggling with housing costs, for a variety of reasons, are at risk of being homeless. A person or household becomes homeless when they no longer can stay in their houses and have to seek alternative forms of temporary shelter.

While there are various degrees of homelessness, the ABS census considers the following people as 'homeless':

  • persons living in improvised dwellings, tents or sleeping out
  • persons in supported accommodation
  • persons staying temporarily with other households (e.g. couch surfing)
  • persons living in boarding houses or other temporary lodgings; and
  • persons living in severely overcrowded dwellings.

Who provides social and affordable housing?

Most social housing is public housing operated by the Victorian Department of Health and Human Services (DHHS). The Victorian Government own approximately 73,000 social housing dwellings. To complement the public housing system, the community housing sector provides housing at subsidised rents to eligible households. The sector owns approximately 13,500 dwellings across Victoria. These public and community housing dwelling stock, and their tenants are operated,managed and maintained by DHHS or the community housing sector. The community housing sector can borrow money and seek capital funding from federal and state governments to expand the stock of housing they own and operate.

Some Councils in Victoria own, manage and operate their own affordable housing stock though this is not common. Majority of Councils which have successfully negotiated and facilitated new social and affordable housing dwellings often transfer ownership and management of the dwellings to the community housing sector.