Melbourne rental affordability worst on record

The latest DHHS rent report shows that Melbourne’s rental affordability is the worst on record, with just 5.7% of all rentals in Melbourne affordable to someone on a low income. Put simply, 1-in-20 rentals in Melbourne are affordable to someone on a low income compared to five years ago when 1-in-5 were affordable. So, if we want to know why homelessness is on the rise, we simply have to look at the rapidly shrinking pool of affordable rentals that on a low income can afford. This graph shows the stark reality of rental affordability in Melbourne for low income earners.

The housing crisis is driving increased rates of homelessness, with 45% of clients citing housing issues as the main reason they need homelessness help, and family violence being the next main reason. The DHHS data paints a dire picture for low people on a very low income. If you’re poor, there is virtually nowhere left to live, or you’ll be living in extreme poverty just to pay the rent.

As housing prices have skyrocketed in Australia, home ownership slips out of reach of more and more people, meaning more people are renting. This pushes up rents and creates increased competition for cheaper rental properties that would previously have been occupied by people on low incomes. 

Let’s not forget that someone on Newstart is receiving $268/week plus up to $65 in Commonwealth Rent Assistance. The DHHS rent report indicates median rent for a one-bedroom flat in metro Melbourne is $350/week. Even in the outer suburbs, one-bedroom rentals are more than $300/week.

Low income earners find themselves pushed out of the private rental market and yet there is not an adequate safety net of public and community housing to prevent them falling into homelessness.  Despite a shrinking pool of affordable rentals for low-income earners, successive Governments have failed to keep up with the demand for more social housing. Social housing housing stocks have been allowed to fall to the lowest on record, at just 3.52% of all housing stock.  

The solution involves both State and Federal Government. Changes to Federal housing taxation would allow more people to buy their first home, freeing up rental properties for those on low incomes. Direct investment in social housing plus better use of planning mechanisms (such as Inclusionary Zoning) is needed to boost the social housing to at least 4% of all housing stock. Public and community housing (social housing) provides permanent, subsidised housing for people on low incomes and rents are set as a proportion of tenants’ income.

Recent announcements from the State Government under its Homes for Victorians plan are promising, with around 6,000 new social housing dwellings to be delivered over five years, but in the context of 35,000 Victorians waiting for public and community housing, urgent action is needed at the Federal level. A recent report recommended that Victoria would need to add an additional 30,000 social housing properties over the next 20 years just to maintain the status quo, and double that number to make a real impact on public and community housing waiting lists. 

Our housing market is failing ordinary Australians who just want to put a roof over their head. The homelessness we see on the street is a visible symptom of the broken housing market. 

To tackle rising homelessness and the underlying housing crisis we need action at both State and Federal government level to make home ownership more affordable, create a fairer rental market for low income earners and boost supply of public and community housing so that people on the lowest of incomes are not pushed into homelessness. 

To end someone’s homelessness, we need to be able to provide them a permanent, safe and affordable home and, for some people, the support needed to keep it.