Housing is affordable when households that are renting or purchasing are able to pay their housing costs and still have sufficient income to meet other basic needs such as food, clothing, transport, medical care and education.
Formulas are sometimes used to describe housing affordability. For example, it is often stated that housing is affordable if it costs no more than 30% of a household’s gross income. But while this figure provides a useful benchmark of housing stress, the reality is that the definition of affordability varies according to a household’s individual circumstances.
The demands on the same gross income may differ significantly - childcare may be provided free of charge by family members, a household may be dealing with health problems which require significant financial outlay, a household member may have significant work-related travel costs - all these factors affect how much a household can afford to pay towards rent or mortgage.
In NSW, efforts in developing affordable housing have mainly targeted low-moderate income households that are earning less than the median income for the area where they live and are paying a significant proportion of their income toward housing costs.
Individuals working in key services on low-to-moderate incomes such as those working in childcare and aged care, police, ambulance personnel, nurses, community development workers and transport workers, are finding it increasingly difficult to find affordable housing close to their work places.
Over time, we risk these individuals choosing not to work in high cost areas that are too far from their accommodation. Other people go through stressful times in their lives when living close to support networks of family and friends is crucial, but their income is too low for them to access accommodation closer to these networks. By increasing access to affordable housing, we work towards integrated and sustainable communities that function in a way that benefits the whole community.
Housing in the private market can be affordable, but demand for it exceeds current available supply. Factors such as distance from employment hubs, lack of developed transport infrastructure and land values in some city and coastal regions mean that affordable accommodation which is compatible with other family and community priorities can be difficult to access in some parts of the state and much of Sydney. These factors impact on the availability of affordable accommodation in both the rental and home purchase markets.
Where the private market does not provide sufficient affordable accommodation, housing that is designated as affordable becomes particularly important - that is, housing specifically intended for people in the low-to - moderate income bracket.
Affordable housing may be for rent or purchase. Those with highest need for affordable housing usually require affordable rental housing as they are unable to purchase a home. Affordable rents may be based on a set proportion of household income or a discounted market rent.
Throughout Australia, affordable rental housing is owned by state and local governments, charitable organisations or the private sector. Public Housing is one example of affordable housing specifically aimed at those on a low income (increasingly combined with other support needs).
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