Housing Affordability


Though there are different ways to measure housing affordability, especially across the rental and ownership markets, a generally accepted standard is that no more than 30% of gross household income is spent on housing. This applies across income brackets but the 30% threshold is especially important for the lowest 40% of incomes. This is often called the ‘30/40 rule’. People are considered in ‘housing stress’ if they spend more than this 30% on housing. For low-average income earners, being in housing stress will impinge on their ability to meet the costs of basic living like transport, groceries, education and utilities. Extreme housing stress, or an unexpected financial shock while in housing stress, is one of the key reasons people end up homeless.[3]

There are different ‘sectors’ of housing that make up Australia’s housing landscape. They are linked to each other so that pressure in one has effects on others. Below are some definitions of income ranges and related major types of housing.


For high income households it was $2,037 in the same period.  The NSW Federation of Housing Associations classify very-low to moderate annual incomes as those falling within the range of minimum statutory levels up to $83 000 per annum.[4]

In terms of weekly incomes the ABS calculated that in 2013-14, low income households were those with a weekly equivalised disposable income of $407.[5] This is below one of the commonly used poverty lines, set at 60% of the median income for all households. Just over 4 million people lived in low income households across Australia.[6] The average weekly equivalised disposable income was $998 in 2013-14.[7]


This is a very common style of housing where the occupier owns a dwelling outright or is repaying a mortgage taken out with a private lender. People will generally need a 20% deposit of the purchase price to enter the market as a first home buyer. Without this the borrower may be able to take out lenders’ insurance on their mortgage but this will add substantially to the sum and interest for which the borrower is liable. In NSW, at the 2011 Census, about two thirds of households are home owners, with an even split between outright ownership and mortgagees.[8]

Private Rental

This is another familiar and common housing option where the housing is leased by a tenant through a private arrangement with a landlord or, more commonly, through a real estate agency or management firm. Prices will be set by the market. At the 2011 Census 26% of households in NSW were private renters.[9]

Affordable Housing

This is a style of housing that has a type of ‘rent-control’ to make it more accessible for low-moderate income earners (see below for income ranges). This may be rent being set below (usually at least 20%) the market value of comparable private rentals or at a percentage (usually 25-30%) of the tenant’s income. It will generally be managed by a Community Housing Provider or similar body. In Sydney, income eligibility for an ‘affordable housing’ home for a single person is $57 500, for a couple it is $86 300 and up to $155 500 for a couple with four children. These figures are slightly lower in greater NSW.[10]

Social Housing

This is another specific category referring to housing targeted at very low-low income earners. It is usually leased on a long-term basis and managed by government and social housing providers. It is often referred to as public or community housing, and previously has been called ‘housing commission’.  In NSW the department with primary responsibility is Family and Community Services (FACS). Eligibility criteria vary but are focused on ‘people on low incomes that need support to help them live independently’ and ‘people on low incomes who have problems finding affordable housing in the private market that is suited to their needs’.[11] As at June 2014 about 4% of Sydney households were renting social housing.[12]

The situation in Sydney

There is pressure across the whole housing market, and it is causing stress in each sector. There are long waitlists for social or affordable housing due to lack of stock and high demand which is driven, in significant ways by the cost of private rental and ownership in Sydney. The cost of private rental in Sydney has been growing while income growth has not kept pace, and this is similar in the ownership market.[13] Collectively the pressure in private rental and ownership is having a downward pressure effect on social and affordable housing as more people vie for and stay in private rental longer, making the price go up and consequently harder for those on low income to exit affordable or social housing.[14] This is why it is important to understand what is happening at each level and how increasing exclusion from ownership, and precarious private rental prices are a part of the picture of homelessness.

Social Housing

In 2013 there were 404 289 social housing dwellings across the country. In that same year there were 217 536 applicants on waiting lists across Australia. While application for this housing type increased 8.7% between 2008-2013.[15]

The number of applications in NSW in June 2015 was 59 035, while the state has experienced a 12% decline in stock over the last twelve years.[16]

Private Rental

Across Australia the average rent increased by 75.8% for houses and 91.8% for other dwellings in the decade between 2002-2012. Average earnings only rose 57% in that same period.[17] As at June 2016 Sydney remained the least affordable of Australian metro areas, while regional NSW remained the least affordable of other state areas (both excluding NT and ACT). [18] In the December 2015 quarter the median rent for new tenancies in Sydney was $500 per week, representing 2% increase over the preceding twelve months.[19]

The most recent Rental Affordability Index (June 2016) calculated affordability for low income earners across the country. It scored regions with 100 being the threshold for affordability. That is, a score of 100 indicates housing costs sitting at 30% of gross income. A score of 80-100 is unaffordable, while 150-200 is affordable. The score in Sydney for the lowest 20% of household income was 47 for families, and 25 for single person households. Both of those scores were in the ‘extremely unaffordable’ category. They remained in that category for the second lowest 20% of household income. Since 2006 rental affordability in Sydney has been in general decline.[20]

To see specific figures of affordability for suburbs across the greater Sydney region see this interactive map.


There are varying ways to calculate affordability in the ownership category. There is the 30% threshold, but other factors such as the ability of people to get into the housing market as well as how the overall mortgage size compares to a household’s annual income as well the size of deposit and mortgage loan conditions can all affect affordability calculations. Below gives a sense of the ownership sector from various angles and sources.

In 2011, 21% of Australian households were spending more than 30% of their income on mortgage repayments; this was more than double the 10% of people in the same position in 1982.[21] The cost of purchasing a home relative to median income increased from 4.7 in 1991 to 7.3 in 2011. That is, the cost of home in 2011, on average across the country, was 7.3 times the median income.[22]

In Sydney the median house price in the December 2015 quarter was $910 000. That was a 1% increase from the previous quarter and part of a total 8.6% increase over the preceding twelve months. In June 2015 only 2.4% of stock was affordable for very low income households; 10.3% for low income households, and 35.0% for moderate income households. [23]

For a look at affordability across Sydney suburbs check out the UNSW City Futures Project – Interactive Map here.


There are a whole range of reasons for why housing is largely unaffordable in the ownership and private rental sectors. The housing sector is not simply the outcome of ‘market forces’ but is heavily influenced by government policies, planning processes, incentives and spending decisions. For an introductory discussion of the major issues and suggestions for positive reform see:

NSW Federation of Housing Associations and Urbanista, Affordable Housing Through the Planning System: An Industry Strategy Paper, 2015.

Australian Council of Social Services, An Affordable Housing Reform Agenda, 2015.

Australian  Housing and Urban Research Institute – Key Research Themes.


[3] National Shelter, Community Sector Banking, SGS Economics and Planning, Rental Affordability Index, June 2016; see also HIA, Housing Affordability Index for a discussion of the affordability calculation for ownership.

[4] NSW Federation of Housing Associations and Urbanista, Affordable Housing Through the Planning System: An Industry Strategy Paper, 29 September 2015, esp. 13.

[5] http://www.abs.gov.au/ausstats/abs@.nsf/mf/6523.0

[6] http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/6523.0~2013-14~Feature%20Article~Wealth%20of%20Low%20Income%20Households%20(Feature%20Article)~30

[7] http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/6523.0~2013-14~Main%20Features~Household%20Income%20and%20Wealth%20Levels~5

[8] Shelter NSW, ‘NSW Housing: A Fact Sheet’.  – Shelter NSW ‘Housing terms Factsheet’.

[9] Shelter NSW, ‘NSW Housing: A Fact Sheet’.

[10] For a full discussion and income tables see centre For Affordable Housing articles here and here; for a thorough discussion of affordable rental housing in Australia see, Rowley, S., James, A., Gilbert, C., Gurran, N., Ong, R., Phibbs, P., Rosen, D. and Whitehead, C. (2016) Subsidised Affordable Rental Housing: Lessons from Australia and Overseas, AHURI Final Report No. 267, Australian Housing and Urban Research Institute, Melbourne, .

[11] FACS, ‘Eligibility for social housing policy’, as at 27 June 2016; for more specifics on how social housing is allocated see, National Shelter, ‘Housing Australia Factsheet – A Quick Guide to Housing Facts and Figures’, 6-8

[12] Shelter NSW, ‘NSW Housing: A Fact Sheet’.

[13] Rental Affordability Index, 2016.

[14] Australians for Affordable Housing, Australia’s Broken Housing System, 2011, 3-5.

[15] Shelter Australia, ‘Housing Australia Factsheet – A Quick Guide to Housing Facts and Figures’.

[16] Shelter NSW, ‘NSW Housing: A Factsheet’.

[17] National Shelter, ‘Housing Australia Factsheet’.

[18] Rental Affordability Index, 2016.

[19] Shelter NSW, NSW Housing: A Factsheet.

[20] Rental Affordability Index, 2016,  esp. 4-11; 20-22; see also Shelter NSW, NSW Housing: A Factsheet, esp 7; see also a RAI presentation of affordability across the country.

[21] http://theconversation.com/the-facts-on-australian-housing-affordability-42881

[22] National Shelter, ‘Housing Australia Factsheet’.

[23] Shelter NSW, NSW Housing: A Factsheet.

[24] http://www.abs.gov.au/ausstats/abs@.nsf/mf/6302.0

[25] https://cityfutures.be.unsw.edu.au/cityviz/affordability-index/