AHURI NEWS

Federal cities policy, housing affordability and low-income jobs

New AHURI research into high urban housing costs complements the Australian Government's cities agenda

6 April 2016

As the Australian Government's cities agenda is focussing on local jobs and affordable housing, recent AHURI research reveals the impacts of high housing costs for low-income workers who work in the central city areas in Perth, Darwin, Melbourne, Sydney and Brisbane. In very large and expensive cities such as London, high housing costs limit low-income workers access to central city workplaces which in turn reduces overall productivity and economic growth.

Australian low-income workers who work in the central city have to travel greater distances to get to work. For example, low-income workers in central Sydney travel 16.3 km to get to work whereas other low-income workers in greater Sydney travel 9.1 km, roughly half as far.  In addition low-income central city workers were more likely to make a number of housing related compromises, such as living in a smaller dwelling, sharing with unrelated adults, or renting rather than buying.

Currently the effects of the housing challenges faced by low-income central city workers are not registering on productivity and economic growth measurements in Australian cities. One of the key reasons is that, depending on the city, only between 18.6 per cent (Darwin) and 28.8 per cent (Melbourne) of low-income workers employed in the central city are members of a low-income household. Instead the vast majority of low-income workers live in middle and high-income households (including as the children or partners of higher paid family members). As a result, high housing costs have less impact on these low-income workers.

... low-income central city workers were more likely to make a number of housing related compromises, such as living in a smaller dwelling, sharing with unrelated adults, or renting rather than buying.

Nevertheless, the research identified six industries vulnerable to shortages of low-income central city workers. The selection of each industry was based on the number of low-income central city workers employed, the reliance on these workers and competition for these workers from outside the central city. These six industries are: hospitality, retail, support services (e.g. travel and recruitment agencies), professional services (e.g. legal and accounting), finance-insurance, and government services.

16.3 km

is the average distance a  low-income worker in central Sydney travels to work.

van den Nouwelant, R., Crommelin, L., Herath, S. and Randolph, B. (2016) Housing affordability, central city economic productivity and the lower income labour market, AHURI Final Report No. 261, Australian Housing and Urban Research Institute Limited, Melbourne, http://www.ahuri.edu.au/research/final-reports/261.

To attract and keep low-income workers, central city businesses rely on good transport links to cheaper housing (in particular public transport); a supply of short-term workers (often international students); low-income workers who live in middle and high-income households; and the lifestyle benefits and professional kudos (i.e. the chance to move to better job opportunities) that come from working in the central city. Qualitative interviews with businesses that employ large numbers of low-income workers suggest having enough good applicants for any advertised job in the central city (particularly in the hospitality sector) is being affected by housing costs and transport times.

Housing affordability, central city economic productivity and the lower income labour market

AHURI Final Report no. 261

Authors: Professor Bill Randolph, Ryan van den Nouwelant, Dr Laura Crommelin, Dr Shanaka Herath