Housing affordability
Housing affordability is determined by the cost of housing - rental (or mortgage) payments in relation to the level of income. The Victorian Government Department of Health and Human Services provides reports on housing affordability by local government area.
Affordability of private rental properties
There has been a significant decline in affordability of private rental dwellings over the last 10-15 years. The following Figure 4 shows the proportion of dwellings available for rent that would be affordable as defined by DHHS (Rent Report) for one 2 3- and 4-bedroom properties in Geelong since 2000.
Figure 2: Median Rents – 2011 - 2016
Source: DHHS Rental Report
The data indicates that despite the substantial growth in housing supply in Geelong in recent years the proportion of affordable dwellings has significantly decreased. Analysis of recent rental costs across the City of Greater Geelong shows:
- Only 15 percent of recently let 2-bedroom rental properties are affordable
- About 30 percent of recently let 3-bedroom rental properties are affordable
- The affordability of 4-bedroom rental dwellings has reduced over the last few years to about 20 percent
- There are currently no affordable 1-bedroom rental properties [5]
Overall the number of affordable rental properties declined from around 80 percent in the year 2000 to 20 percent in 2018. This is the result of increases in rents without commensurate increases in incomes in low income households.
The reduction in affordability of rental properties has been most dramatic for one- and two-bedroom dwellings. Much of the increase in Geelong’s housing stock over the past decade has been 3- and 4-bedroom dwellings with significantly less investment in 1- and 2-bedroom dwellings. For example newly developing areas such as Armstrong Creek have a relatively high proportion of 3- and 4-bedroom dwellings (99 percent of dwellings).
Geelong now has a relatively high proportion of separate dwellings (84 percent) compared to Melbourne (66 percent) and 70 percent of the dwellings in Geelong are 3 or more bedrooms compared to 63 percent for Melbourne. This indicates an immediate need for a significant increase in affordable one and two-bedroom dwellings (for example: suitable for lone person households and single parent families).
Further evidence in the reduction in affordability is provided by comparing median (average) rents with median incomes.
Median rents
In the 5 years from 2011 to 2016 median rents in Geelong increased on average by 22 percent. This was a greater increase than rental costs in Melbourne in the same time (15 percent) (Figure 3).
Some areas experienced significant increases in rents (for example: new growth areas) while in other areas rental increases were more modest.
Figure 3: Median Rents – 2011-2016
Source: ABS 2016
Significant increases in median rents were evident in Area 1 Area 5 Area 7 and Area 14. In some suburbs rental increases were higher than those indicated in Figure 17 for example median rents in Waurn Ponds increased from $220 to $395 per week over the 5 year period.
The following Figure shows the longer term increases in median rents for Geelong for different sized dwellings.
Figure 4: Median Rental Payments 2000-2018
Median incomes
In 2016 low income households represented 21 percent of all Geelong households compared to Melbourne where low income households were 17 percent of total households.
Over the 5-year period 2011 to 2016 median incomes increased from $1 048 to $1 242 per week (that is: by 18.5 percent). A significant number of low-income households in Geelong are in receipt of government income support as shown below.
Table 6: Income support recipients – 2018
| Recipients of: | No. (2018) |
|---|---|
| Commonwealth Rent Assistance | 5 166 |
| Youth Allowance | 4 000 |
| Parenting Payment Single | 2 600 |
| Family Tax Benefit B | 11 284 |
| Age Pension | 29 000 |
| Disability Pension | 9 000 |
| Newstart | 8 000 |
Source: www.socialstatistics.com
Cost of houses apartments and vacant blocks
The reduction in private rental affordability has been underpinned by significant increases in median prices for houses apartments and vacant house blocks over the last 15 years.
Figure 6: Median Dwelling Purchase Price – 2000 - 2018
Source: Valuer General