This report presents the findings of a research project commissioned by CHIA NSW and Homelessness NSW to provide estimates of the social and affordable housing need for Australia by sub-region and the likely costs to government of delivering housing to meet these needs over the period to 2036. Social and affordable housing needs estimates have been based on an assessment of households currently living in housing stress in the private rental market, that is those paying over 30% of their income in rent, and implied need from homelessness population figures. This produces a current housing need that is in addition to ‘met need’ which comprises households already housed in social or affordable housing. The resulting housing needs figures have been estimated at SA4 regions across Australia, which accounts for geographic variation in both household structures and household incomes.

For the purposes of this report, housing need is separated into two categories. The first are households deemed to be in need of ‘social housing’ (implying higher levels of housing subsidy) and includes only households in the bottom income quintile (Q1) for Australia and who are in private rental stress, combined with homelessness figures. The second category relates to households in need of ‘affordable housing’ (implying lower levels of housing subsidy) which includes households who were assessed as being in housing stress who are in the second income quintile (Q2) for Australia.

Household income thresholds that define the quintiles are differentiated by household type. This is to recognise the fact that family households will likely earn more than singles, but also be seeking a larger and so more expensive housing product. The household income thresholds for the first quintile households (and so the demand for social housing) are $400, $800 and $1,000 per week for singles, couples and families respectively. The household income thresholds for the second quintile (and so the demand for affordable housing) are $500, $1,250 and $1,750 per week for singles, couples and families respectively. The thresholds are based on 2016 census counts, so reflect 2016 incomes. The thresholds also only approximate the actual quintile thresholds as they are based on pre-determined census household income brackets.

Figure 1 below shows the distribution of all Australian households by three key household types and demonstrates how the needs figures are derived from the Q1 and Q2 income quintiles through four stages to produce the estimates of unmet housing need. The unmet social housing need is estimated to be 437,000 while the unmet affordable housing need is estimated to be 213,000 (see Table 1).

Growth in need is projected to 2036 based on regionally differentiated population growth estimates produced by ABS and assumes no shift in the distribution of household types and incomes, i.e. the current profile of both household types and income profiles is assumed to be relatively constant over the 20-year period. It is possible for underlying economic conditions to change, shifting more household out of rental stress (e.g. if household incomes improve or housing costs fall) or more into stress (if incomes deteriorate or housing costs increase). These estimates assume a 20-year delivery program and, as such, would realistically adapt as underlying economic conditions either improve or deteriorate.