A two-bedroom Bondi Junction unit for $1,100 a week. Is ‘affordable housing' in Australia really affordable?

The Guardian

6 hours ago

A two-bedroom apartment in Bondi Junction that is part of an 'affordable' housing scheme run by the NSW government has been listed at $1,100 a week to rent, prompting advocates to warn that programs designed to help low-income earners are increasingly out of reach.
Across the country, affordable housing programs are meant to offer rent below market rate for low-to-moderate income households that make too much for social housing but not enough for the private market.
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The two-bedroom two-bathroom apartment in Bondi Junction is listed under the Affordable Housing Scheme by HomeGround Real Estate Sydney, with the guidelines set by the NSW government.
To be eligible for the apartment, which has a $4,400 bond attached to it, applicants must not earn more than a combined income of $121,100 for a couple, $161,500 for three adults, $145,300 for a couple with one child and $169,500 for a couple with two children.
If two adults live there, they would be spending more than 47% of their income on rent, if three adults lived there, they would pay 35%, and a couple with a child would pay 39%.
Financial and housing experts consider a home affordable if it costs no more than 30% of a person's income.
A snapshot of affordable housing properties in NSW conducted by the NSW Tenants Union in January found that 13 of the 32 available properties were priced at a rate higher than the NSW Affordable Housing Guidelines.
While the NSW guidelines do allow for greater than 30% to be charged to moderate households, Leo Patterson Ross for Tenants Union NSW said the scheme was failing to address 'the difficulties people at all levels of income are having in finding a home they can afford and sustain'.
'Excluding people from living in an area because they aren't rich enough is what the private market has been allowed to do – we shouldn't be subsidising similar behaviour,' he said.
'We need to make sure affordable housing is delivering genuine affordability. Failing to do so undermines community support for the concept, as well as failing to meet the housing needs of the community.'
The rental asking price of many of the affordable homes currently advertised would also require tenants to part with more than 30% of their income.
A one-bedroom apartment in Homebush in NSW which was listed for $600 a week, would cost a prospective tenant $31,285.71 annually. Single applicants can earn no more than $80,700, meaning more than 38% of their income would be spent on rent on the 'affordable' property.
In Victoria, a one-bedroom fully furnished apartment in Caulfield marketed at 'hospitality and retail staff' is listed at $615 a week, which would be $32,068 annually.
To be eligible, singles can make no more than $73,530, making the rent more than 43% of their income.
The current advertisements follow another string of Bondi apartments recently advertised under the state's affordability program, with a two-bedroom two-bathroom flat listed for $1,300 a week.
After Guardian Australia enquired about the two-bedroom property listed for $1,100, the rent was dropped to $1,040 a week.
A spokesperson for HomeGround Sydney said the property could be rented for as much as $1,400 a week in the normal market.
'We recognise that when market rent is high in locations such as Sydney's Eastern Suburbs, even below-market affordable rents can seem high,' the spokesperson said.
But 20% below market price 'makes it much more affordable for families to live close to where they work and go to school,' the spokesperson said
As rents have surged by more than 30% in many parts of the country over the past three years, affordable housing programs are often marketed for essential workers or those making below $90,000 so they can live in their own communities.
Managing Director of Australian Housing and Urban Research Institute Michael Fotheringham said many of them offer affordability in name only, with no standardised definition of the term across jurisdictions in Australia.
'It's a really loose terminology that different state rules apply across the country, and we have both federal and state government investing in programs to deliver affordable housing,' he said.
'But what 'affordable housing' is, is really unclear.'
In NSW, affordable properties should be rented out with a discount of 20% on the market rent, though the guidelines say 'flexibility in pricing may be applied to moderate income households'.
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The spokesperson for HomeGround, which is one of the biggest affordable providers, said their policy has a ceiling of 40% of a household's income 'to accommodate people's different incomes and their personal choices on where they want to live'.
'For context, private market rent [may] be up to 50% of a household's income in high-demand areas,' they said.
In Victoria, it is often linked to income, capped at 30% of the tenant's median income and at least 10% below market rent.
In South Australia, affordable rentals are often offered at 75% or less of the market rate, while in the ACT they are offered at between 20% and 25% below the market rate.
And under the national scheme, which will end in 2026, rents are capped at 20% below market rates for eligible tenants. The Housing Australia Future Fund has promised to create 20,000 new affordable homes across Australia over five years from 2024.
'We've got this real inconsistency across the country,' Fotheringham said.
One key issue, especially in capital cities, is the huge increase in asking rents over the past three years.
In June 2022, a typical one-bedroom unit across Australia rented for $444 a week. Today, that figure has reached $565 – a jump of more than 27% in just three years, data produced for Guardian Australia by Everybody's Home shows.
For houses, the story is similar. The average asking rent for a house has climbed from $588 a week to $722, a rise of nearly 23%. That means a renter is now paying more than $7,000 extra each year for the same home compared to 2022.
In capital cities, the picture is even worse. Average unit rents have jumped by 35.7% since 2022, while house rents have increased by 31.3%.
Fotheringham said a project is more likely to get approved if a portion of a development is set at an affordable rent, with councils in some cases allowing more stories.
'Governments incentivise it, because they want there to be more affordable supply, even if the current methods of calculating what's affordable are imperfect,' he said.
Australia needs a consistent national approach that is locally sensitive, he said, suggesting the government should carefully consider tying it to incomes rather than market rate.
'Affordable housing [with a] capital A is, a name of a product, rather than experience,' he said.
While states struggle with bridging the gap, people are increasingly being forced out of suburbs they may have lived in for generations, said Everybody's Home's spokesperson, Maiy Azize.
'Governments keep rolling out 'affordable' housing schemes, but there is no substitute for social housing. That means low-cost rentals that people can actually afford,' she said.
Australia currently needs 640,000 more social homes than it has, Azize said.
'Until we clear that backlog, and then open the door to people on middle incomes, we'll never tame runaway rents,' she said.
'Right now, a person on an average income in Sydney can't get into social housing, but they can't afford the private market either. That gap is swallowing whole communities. The only fix is to boost social housing – and make it available to more people.'