Affordable housing in innovation-led employment strategies

The uprise of digital technology is forcing Australia to continue the shift from manufacturing to an innovation and knowledge lead economy.

Smart Cities

The increasing use of digital information and communication technologies (ICT) is reshaping Australian cities into ‘smart cities.’

‘Innovation-led’ employment growth is the key focus of smart cities based strategic planning, however, there is limited consideration given to including affordable housing into the development of smart cities in Australia.

This Australian Housing and Urban Research Institute (AHURI) report investigates the role of affordable housing in supporting innovation-led employment growth and demonstrates affordable housing as essential for providing housing diversity in emerging smart cities.

The Role of Affordable Housing Smart Cities

Preserving and providing affordable rental housing is a key challenge for innovation-led employment strategies, but it is vital for allowing younger and lower-income workers to enter into innovative employment opportunities.

Despite the necessity of affordable housing in innovative districts, the AHURI research found a significant lack in a systematic review of housing and innovation. A literature review found that affordable housing was linked with ‘urban productivity’, ‘new economy’ and ‘knowledge economy’, but not from planning and policy perspectives, and was rarely mentioned in smart city literature. However, the report was able to denote that smart city and emerging innovation precincts negativity impact housing affordability.

To attract a knowledgeable and creative based workforce, relatively high pay needs to be offered. This has proven internationally to drive the housing market up within these precincts as higher-paid workforce demand close secure housing. Hence, smart cities and innovation precincts are known to reduce housing affordability and displace many lower-income earners and long-term residents. The below table emphasises the key barriers and opportunities for employees of the innovative sector across housing in both inner-city land outer-city locations.

Policy Development Options

There are a number of regulatory and planning interventions which can mitigate the rising housing costs in smart cities to increase affordable housing stock in innovation districts, including;

  • inclusionary zoning;
  • tax subsidies;
  • new zoning frameworks;
  • provision of land, and;
  • subsidies for low-income housing providers.

A review of international case studies found that effective inclusionary planning policy is particularly vital to addressing housing early in smart cities development, as well as increasing urban productivity and avoiding economic stagnation in the longer term.

The AHURI report uses the review of international case studies to identify and develop a model for fostering innovation-led employment which prioritises four key areas:

The full AHURI report including more information on policy and reform options, can be found here.


Dowling, R., Maalsen, S., Emmanuel, L., Wolifson, P. (2020) Affordable housing in innovation-led employment strategies, AHURI Final Report No. 333, Australian Housing and Urban Research Institute Limited, Melbourne. View here.