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Australia’s multibillion-dollar investment in social and affordable housing is helping to pay for thousands of relatively high-priced new apartments that people on lower incomes cannot afford and in some cases are explicitly blocked from occupying.
An analysis of government funding in the sector has found that taxpayer money is going towards building more “affordable” homes, with rents that are pegged slightly below market rates, than on social housing, where rents are tied to tenants’ incomes.
Economist and YIMBY Sydney secretary Dominic Behrens says Australia should do away with subsidising affordable housing.Edwina Pickles
Affordable homes require a smaller government subsidy than social homes, but are often leased to people on average incomes and do nothing for low-income earners facing genuine housing precarity, the report argues.
In some high-priced suburbs, government-subsidised affordable apartments built by private developers are so expensive that only a high-income earner could afford to live there.
In one glaring example cited in the analysis, a one-bedroom “affordable” apartment in Bondi was listed at $925 a week, or $48,000 a year.
Rules about eligibility also block many low and middle income people from leasing some affordable units.
The analysis identified an affordable two-bedroom unit on Queens Road in inner Melbourne listed at $561 a week, or $29,172 annually.
Although the unit was priced below median rental rates for that area of the city, Victorian government eligibility rules bar people from renting subsidised affordable units if the cost exceeds 30 per cent of their gross income.
“To avoid the 30 per cent rental stress ceiling, a tenant must earn at least $97,240,” the analysis states.
Under the same eligibility rules, any single person earning more than $75,530 a year, or a single parent with one child earning more than $93,873, is also prohibited from renting the unit because their income is deemed too high.
“Absurd situations like this are the outcome of a thicket of well-meaning but arbitrary thresholds and rules of thumb that comprise ‘affordable’ housing in Australia,” the report says.
“It’s time for Australia to move on from ‘affordable’ housing.”
Written by economist and Sydney YIMBY (Yes in My Backyard) secretary Dominic Behrens, and Melbourne YIMBY organiser Ethan Gilbert, the analysis, published in online journal Inflection Points on Sunday, argues funding should be fully redirected towards social housing for the homeless or those at risk of homelessness.
The first two rounds of the Albanese government’s signature $10 billion Housing Australia Future Fund has so far funded 9366 affordable homes and 9284 social homes.
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The analysis says Australia’s affordable housing programs are “a wasteful use of public funds that redirects government support away from the people who need it most”.
“Affordable housing gives politicians a great announceable, but it really is nothing more than a subsidy for those on average incomes,” it says.
Affordable housing is discounted housing generally leased at 10 to 30 per cent below market rates, built by private developers with subsidies or concessions from government. Social housing is built for low-income renters who generally pay 25 to 30 per cent of their income, and requires a bigger government subsidy.
There are about 169,000 people in Australia on waiting lists for social housing, according to Australian Institute of Health and Welfare figures.
Homelessness Australia chief executive Kate Colvin said the federal government was making significant investments in housing, but that public money spent on affordable housing was going towards new-build apartments beyond the reach of people on income support, or even on low incomes.
“Affordable housing that’s 10 per cent below market rent is generally not affordable for people who are homeless or at risk of homelessness,” Colvin said.
Social housing “might need a bit higher subsidy than affordable housing to build it, but it probably delivers twice the value to the community”, she said.
But Colvin said there was a case for government investment in affordable housing, particularly in areas where key workers, such as child care and aged care staff, have been priced out of the rental market.
The Albanese government defended its housing program, saying funding “mixed tenure developments” – private sector apartment buildings with a mix of market and affordable units – made sure more projects stacked up financially and delivered more homes overall.
“There are no silver bullets in housing. We need to support all forms of housing if we want more Australians to have a secure place to call home,” a spokesman for Housing Minister Clare O’Neil said.
Robert Pradolin (left), pictured in 2025 with Housing All Australians CEO Dan McKenna, says Australia must invest in both social and affordable housing.Alex Coppel
“Affordable housing is just one part of our ambitious $47 billion plan to level the playing field for home buyers and build more housing across all parts of the spectrum.”
The government’s position was endorsed by Housing All Australians executive director Robert Pradolin, who said more affordable housing was needed to help stop people falling into housing stress and adding their names to the growing social housing waiting list.
“It’s not either-or,” Pradolin said. “Unless we go upstream and stop people falling into housing stress and eventually homelessness, we’ll never solve the social housing problem. We must do social and affordable at the same time, which is a big investment.”
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Adam Carey is an investigative reporter. He has previously been senior city reporter, education editor, state political correspondent and transport reporter. Contact him at acarey@theage.com.au or on Signal at adamlcarey.39Connect via email.From our partners