Housing affordability is a common topic of conversation across Australia. Taking the case study of Regional Victoria, Nenad takes a look at how rising housing costs impacts an area’s ability to attract and house key workers for that region.

Key worker housing affordability analysis →

Key worker housing affordability: A national problem

Australia’s key workers, that is, workers in services that are essential to a community’s functioning and wellbeing, spend large proportions of their household income on housing costs. The “Priced Out” report, published by Everybody’s Home in April 2023 found key workers on average spending two-thirds of their income on housing as increasing rental costs price them out of their communities.

Workers in aged care, hospitality, freight packing and postal services were among those most impacted, and the report also found there were very few regions in Australia where essential workers could afford to rent alone, while those in coupled homes were probably financially dependent on their partner’s income.

Key worker housing affordability: Regional Victoria case study

Housing affordability is worsening in Regional Victoria, driven by increased demand, shifts in employment dynamics (e.g. working from home/remote work) and COVID-19. Migration from Greater Capital Cities to regions has contributed to increased housing costs, which have raised median house prices to near-Greater Melbourne levels in some parts of Regional Victoria.

Almost 55,000 people living in Regional Victoria in 2021 lived somewhere within Greater Melbourne a year before. In fact, 43% of all people who moved to Regional Victoria from Greater Melbourne in the 2016–2021 period did so in the one year before the 2021 Census.

In December 2023, Regional Development Victoria created the “Regional Worker Accommodation Fund”, a program that allows many entities, including regional local governments, to apply for grants between $150,000 and $5,000,000 for the provision of new housing and accommodation for regional communities where workers in key industries and their families are struggling to find places to live. Further information on eligible projects, funding and the application and outcome process are outlined in the Program Guidelines and frequently asked questions.

Who are key workers?

Key workers are vital to a community’s wellbeing. Although there are no standard definitions of “key worker” occupations, key workers are generally employees in services that are essential to a municipality’s functioning, whose role requires them to be physically present at a work site rather than working from home. Key worker occupations include but are not limited to: waiters, chefs, kitchen staff, commercial cleaners, police, enrolled and mothercraft nurses, doctors, truck drivers, motor mechanics, electricians, welfare support workers and checkout operators.

What is the challenge?

Median house prices in Regional Victoria have increased by 153% since June 2019 and median rental costs by 128%. Both have flattened off in recent months with no indication of significant decline, while other costs of living have also increased, likely resulting in higher levels of housing stress for regional key workers and other Regional Victorian residents.

Keeping key workers close to their place of work is best for the economy and the social fabric of a community but can be a challenge in regional areas, particularly those with high tourism. Housing unaffordability pushes key workers to look for housing further away from their place of work, places of social interaction, support networks, schooling, etc. This can impact a region’s ability to attract or maintain key workers in roles necessary for places to operate and thrive.

What is the role of council?

Local government authorities can take several measures to address housing unaffordability for key workers in their municipality – from challenging long-held assumptions about higher-density developments within local planning considerations (in some cases), to collaborating with State Governments and discussing releasing additional land or engaging constructively in zoning conversations. Councils can also:

• Establish affordable housing as essential infrastructure: Following the recommendation by parliamentary committees, local governments can lead the way in recognising affordable housing as essential infrastructure, prioritising it within their overall infrastructure plans (“Building Up & Moving Out”, 2018).
• Coordinate and collaborate: Local governments should actively engage with State and Federal authorities to develop comprehensive strategies to tackle the affordable housing crisis (ALGA, 2023).
• Explore key worker housing programs: Consider implementing key worker housing affordability programs. Strategies for this can be developed by studying reports and recommendations on declining housing affordability over the years (“Key Worker Access to Home Ownership”, 2018).
• Support national initiatives: Local governments should actively support and participate in national initiatives aimed at improving housing affordability, such as the National Housing and Homelessness Plan (“Developing the National Housing and Homelessness Plan“, 2023).

We encourage councils to get their policies on affordable or key worker housing in order and seek support, partnerships, and grants to address the situation.

How we can help

We’ve worked with several Victorian councils, including the City of Melbourne, to help quantify and understand housing affordability for key workers. The main findings in all previously completed projects were that key workers are vital to a municipality and that some occupations are under much higher housing stress than others, yet housing is becoming less affordable to purchase or rent for most key worker housing groups.

We can support councils looking to obtain funding in various ways:

• Sharing how councils can use their existing suite of .id tools to develop business cases.
• Subscribing to housing.id to build strategies and monitor the ongoing housing situation, including affordability trends.
• Undertaking consulting, such as our Key Worker Housing Affordability report, to quantify key workers in your region, articulate their importance to the local economy and understand whether housing is appropriate and affordable for different key worker groups.

Please contact us for this or any other support.