Research estimates the costs of social and affordable housing shortages to society

Everybody’s Home has released a report with research undertaken by Associate Professor Andi Nygaard from Swinburne University, which estimates the foregone wider social and economic benefits that the affordable housing shortage imposes in Australia on an annual basis.

This ‘cost of inaction’ is broken down for the national, state / territory and Statistical Area 4s (SA4) levels. The cost of inaction nationally is conservatively estimated as $680M a year.

The Research

The research forms a larger project being funded by several housing organisations including Community Housing Industry Association (CHIA), Everybody’s Home and Shelter NSW.

The report provides an overview of the monetary value of a series of wider social and economic benefits generated by social and affordable housing; and provides an assessment of the incidence of these wider benefits accruing in new social and affordable housing construction. The wider benefits calculated include:

  • Public sector cost savings (health cost associated with homelessness and stress/depression),
  • Health and justice system costs associated with domestic violence,
  • Private sector costs associated with stress/depression,
  • Private educational attainment,
  • Reduced disposable income, and
  • Wellbeing Values.

In the longer term, the joint project aims to operationalise a tool for community housing organisations (and government, councils etc) to estimate the economic benefits of individual housing projects or programs. The strategy is to shift the conversation from one where social and affordable housing is a burden to the budget bottom line to one where its value is recognised.

The Findings

The initial report provides evidence that the affordable housing shortage is imposing large, but avoidable, annual social and economic costs to Australia. It estimates that by 2036 these costs will exceed $1billion every year unless the supply of affordable, adequate and secure housing is significantly improved. These estimates do not include productivity gains or shared infrastructure gains, such as might arise from well-located and connected affordable housing or utilising affordable housing stock or additional service delivery.

In WA, the report estimates that the total current cost of the affordable housing shortage is $45.4 million per annum, rising to $131 million per annum by 2036 if the current under-investment in social and affordable housing persists.

The highest current social and economic costs due to the shortage of social and affordable housing are in north-west and south-east Perth, however societal costs are also high in regional areas such as Bunbury and in the north of the state.

Shelter WA

With a federal election on the horizon, this report confirms the economic benefits of government investment into social and affordable housing. Shelter WA will work with National Shelter to advocate for increased federal investment into social and affordable housing, and for a national housing strategy to align this investment with other policy levers that government can use to increase supply.

In WA, Shelter WA acknowledges the recent investment by the state government to increase the supply of social housing. This research reiterates the importance of increasing social and affordable housing supply in line with evidence-based current and future need, as recommended by Infrastructure WA in their inaugural Draft State Infrastructure Strategy, Foundations for a Stronger Tomorrow.

The Report

The report titled ‘COST OF INACTION: Social and economic losses due to the social and affordable housing shortage: The urgent case for social and affordable housing investment’ can be found here.