Why we need more supply – or why the odds are stacked against you if you are poor, a woman, and a renter in Melbourne

The final report of the Victorian Royal Commission into Family Violence, and the Andrews’ Government’s commitment to implement all 227 recommendations represents a game changer for responses to family violence in Victoria. As such it has been well received by the homelessness and family violence sectors. Council to Homeless Persons (CHP) particularly welcomed the Government’s initial response, which included $152 million specifically for housing and crisis accommodation and an additional 130 social housing properties.

However, the Commission report also raises questions, particularly around the kind of housing solutions needed to break the link between family violence and homelessness. The Commissioners recommended resources be primarily directed to brokering families into private rental, and referred questions around supply of public and community housing, and other affordable options to a Housing Implementation Committee for further assessment and discussion.

There is no doubt that private brokerage will provide positive outcomes for many families facing temporary financial distress and dislocation from home. Private brokerage is more flexible and enabling of choice of location and housing type, and can be used to support families to remain Safe at Home.

But many households struggle in the private rental market, and may not be able to sustain their tenure beyond the expiration of a brokerage period. This blog looks at the nexus between the labour and housing markets to explore why this is.

Looking at some basic figures we see that the median rent for a one bedroom apartment in Melbourne is $329 per week and for a two bedroom apartment is $380. A low income household is considered to be in housing stress if they are paying more than one third of their weekly income on housing. Based on this calculation a single person household needs to earn more than $1,096 per week to avoid falling into rental stress; and a single parent household more than $1,266.

But a single parent on a parenting payment receiving maximum rent assistance and family payments receives only $611 per week. This puts the median property of $380 completely outside their affordable range. In fact only 2.9% of 2-bedroom apartments in metropolitan Melbourne were affordable to this household (according to the most recent Rent Report from the Department of Health and Human Services).  

Low income workers also struggle. A full time worker on the minimum wage earns $657 per week. If this worker was a single parent with one child under five they would receive maximum amounts of Family Tax Benefit A and B, and if we 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 makes this difficult situation even worse is that the few affordable properties available are often tenanted by higher income households, who can better compete. This phenomenon of people ‘renting down’ and crowding out low income households has been repeatedly documented in academic research by Kath Hulse and colleagues at AHURI.

Hulse et al report on the very serious – and growing – shortfall in supply of low cost private rental housing that is affordable and available to low income people. In 2011 this shortfall was estimated at in excess of 200,000 properties across Australia.

In addition to the problem of inadequate availability of low cost rental housing, we have the low incomes earned by many women.  Women are over-represented in minimum wage work such as child, aged and disability care, hospitality, and retail.  Women are often employed on a contractual or casual basis, making small incomes insecure.  Further, many women cannot work full time, either because the work is not available, or they have other responsibilities such as caring for children or elderly parents.  Taking these issues together, we find ourselves with a pressing challenge that risks undermining the laudable objectives of securing safe housing futures for women fleeing violence.

Some women, such as those living with – or caring for children with – disability, or who are at, or nearing retirement age, are particularly vulnerable to remaining on low Centrelink incomes.

This is why CHP, along with many others, are continuing to call for a long-term affordable housing strategy focused on supply that includes public and community housing options that are both affordable and targeted to low income households.

The devastation of domestic and family violence unveiled by the Royal Commission is all too real, and the importance of affordable housing options to securing women and children’s safety remains undeniably critical. For these reasons we need to continue to press for solutions that will work long term for women on low incomes.