Affordable housing has many definitions and applications in Australia. As a policy it is confusing and confused. Across the many definitions and initiatives, there is not a clear understanding of what ‘affordable housing' is, who it’s for and what it’s trying to achieve.

A clear policy rationale is needed for new affordable housing that is created through government investment or planning requirements. This will make sure that these interventions are delivering homes to those who need them, in a way that supports a better housing system overall. 

The principles that a new affordable housing product should be defined by are:

1. All affordable housing should be rental housing so it generates an ongoing benefit. Ten per cent of it should be dedicated to housing for Aboriginal Victorians.
2. It should be targeted at moderate income households, as defined in the annual Government Gazette.
3. Rent should be set at a fixed level based on household size and the location of the dwelling, whether in metropolitan Melbourne or regional Victoria. Fixing rents at 30 per cent of the lower-limit of moderate household incomes guarantees their affordability to this whole target group, and avoids poorly targeted subsidies depending on local housing market conditions.
4. The homes should be owned by Community Housing Organisations (CHO), creating permanent growth in the affordable housing supply in Victoria. Where homes cannot be owned by CHOs, then they should be managed by CHOs and required to be rented as affordable housing.