This research examines the relationships between urban productivity and affordable rental housing, focusing particularly on the location and availability of affordable rental housing relative to employment and labour markets in capital cities and satellite cities. Lower income (Q2) workers who play critical roles in urban economies are more likely to experience housing stress (exceeding 30% of their income on housing costs) in these markets. 

The case studies of Sydney and Melbourne found Q2 rental households who are strongly engaged in the labour market are sacrificing housing affordability for access to employment opportunities. Q2 workers who do not live in inner areas of large cities tend to be at the lower end of the Q2 income scale, with some enduring high commuting burdens to access CBD employment. There is lower overall employment participation by Q2 households living in outer suburban locations of Sydney and Melbourne. This indicates serious implications for urban productivity.

Increasing the supply of affordable housing, and particularly rental housing, is an important strategy to support economic growth in areas of high employment opportunity.

The research also considered two satellite cities in Australia: Wollongong to Sydney’s south east; and Geelong, south west of Melbourne. Around 20,000 people from Wollongong and 17,000 people from Geelong commute by train to Sydney/Melbourne respectively, however very few commuters were Q2 renters, with most Q2 renter workers in Wollongong and Geelong living and working within the region. These results indicate that Q2 renter workers living in the satellite cities have been able to access relatively affordable accommodation near their employment and do not experience the affordability pressures and commuting burdens of their counterparts in Sydney or Melbourne.