Kate Colvin, Policy and Communications Manager, Council to Homeless Persons.
This article originally appeared in the May 2016 edition of Parity, Australia’s only dedicated publication on homelessness and housing issues. Subscribe to Parity here
The Royal Commission report recognised the critical importance of women having safe and affordable housing options so they can escape from violence. This article explores what it would take for women to have ready access to safe, affordable housing, given the context of women’s labour market outcomes, and the housing market in Victoria.
Firstly, what is the affordability of renting in the private market currently?
The Department of Health and Human Services (DHHS) Rent Report indicates that the median rent for a one bedroom apartment in Melbourne is $329 per week, and a two bedroom apartment is $380.
The affordability threshold for a low income household is housing costing up to one third of weekly income. This means a single person household needs to earn more than $1,096 per week to afford the median one bedroom property; and a single parent household more than $1,266 to rent a two bedroom apartment.
According to the 2011 ABS Census, 63 per cent of one parent families earn less than $1,250 per week; meaning most single parents cannot afford the median property.
In fact many women earn much less. Currently, a single parent on a parenting payment receiving maximum rent assistance and family payments receives $611 per week. This puts the median property of $380 well outside affordability. In fact only 2.9 per cent of two-bedroom apartments in metropolitan Melbourne were affordable to this household according to the Rent Report. (1)
Low income workers also struggle. Full time workers on the minimum wage earn $657 per week. If these workers are single parents with one child under five they receive maximum amounts of Family Tax Benefit A and B. If we also assume they receive maximum rent assistance, their weekly gross income would be $898, putting the amount they could afford to spend on rent at $269; still inadequate to afford to rent the median 2-bedroom apartment.
What Would Need to change?
Affordability of housing is a product of both income, and housing costs. If we could raise women’s incomes, affording private market housing would be more possible. Unfortunately, single parents face considerable challenges in the labour market, and additional costs from working, such as childcare.
Without considerable reform to reduce the gender pay gap, improve conditions and security of employment, and increase family payments, the current situation in which single parents are overrepresented among low income earning households will continue. Women exiting violence commonly face additional labour market challenges, even if they do have education levels or skills that mean they could feasibly do relatively highly paid work.
Aside from the emotional and mental health consequences of experiencing violence, many women fleeing violence have also been victims of financial abuse. This means they must devote considerable time, energy, and often money to the legal and other administrative processes involved in disentangling their lives from a violent partner. This means for many, a period of time without access to wage income is likely.
Improving the availability of housing that is both affordable and available to low income women-headed households is therefore critical.
How Much New Low-cost Housing do we Need?
National research indicates that Australia has a shortfall of more than 500,000 rental properties that are affordable and available to people on a low income. This data is not disaggregated by state,(2) but given that Victoria houses 25 per cent of the national population, and has a median household income slightly less than the national median, (3) it is reasonable to estimate the Victorian shortfall at around 125,000 rental properties.
Considering the proportion of properties in Victoria that are public or community housing is another way of looking at the same problem.
In Victoria, rapid population growth, and increases in the number of overall dwellings, alongside only slow growth in social housing properties, has meant that the proportion of social housing has been steadily decreasing.
Victoria now has 85,524 social housing dwellings, representing only 3.27 per cent of all stock. Nationally approximately 4.75 per cent of stock is social housing.
Given that all states and territories have considerable waiting lists for social housing, it is clear that a higher proportion of social housing will be necessary to meet need.
However, to increase Victoria’s supply of social housing to five per cent of all stock, an additional 45,000 properties would be needed in 2016-17, with more needed each year, as the overall number of properties grows.
This represents a considerable task. In addition to this expansion in social housing, there also need to be increases in affordable private rental housing to meet the total shortfall of 125,000.
How Would We Achieve Such a Significant Increase in Low-cost Housing?
Although this seems like a huge leap, in fact there are numerous ways to make significant interventions into the housing market to increase affordability.
- The most obvious way to increase the supply of housing is to directly invest in new supply
What is less obvious is that this investment can be resourced in different ways, with differing levels of direct cost to government. While the simplest way is to directly budget to build or buy new dwellings, the same outcome could be achieved with a future fund.
A future fund could be created with the proceeds of a substantial asset sale, like a proportion of the proceeds for the long-term lease on the Port of Melbourne. These proceeds, invested in income generating assets, like shares would generate a flow of income that could be spent on increasing housing supply. Alternatively, the flow of income could resource annual subsidies, in a similar way to the National Rental Affordability Scheme, that was used by many community housing organisations to expand supply.
Resources for housing supply could also be created by taxing owners of vacant properties. This would have two advantages, both increasing the revenue base, and also encouraging more rental properties onto the market.
- Use the planning system to implement inclusionary zoning
One way of building social mix into communities, is to require large new developments to include some social housing, or to provide an equivalent level of resources for social housing.
- Use government purchasing, and government-funded development to procure new properties at low cost
When new infrastructure, like a train station or precinct development, is planned there is often a significant jump in local property values. Often government already owns under-used land in these locations, and can increase this land-holding in advance of improvements. This land could then be used to leverage social housing development at a relatively low cost to government in partnership with community housing and private developers.
These are just some among many ways that low cost housing can be developed. Other methods like shared equity, and government bonds for housing also have merit.
What is certain is that this is a problem to be seized and solved, not shied away from. If safe, affordable housing options are available, then we can be sure that many more women will confidently leave violent situations, securing a happier and safer future for themselves and their children. Similarly, an adequate availability of affordable single housing will better ensure men who perpetrate violence are appropriately housed, decreasing the likelihood they will return to the family home or seek to join another, to continue the violence.
- National Housing Supply Council, Housing Supply and Affordability Issues, 2012-13 at http://www.treasury.gov.au/PublicationsAndMedia/Publications/2013/NHSC
- ABS Census 2011 cites the Victorian median household income at $1,460 and the national median at $1,481