Lack of affordable housing in Australia is hurting productivity, costing billions, and making it harder for employers to attract and retain workers.
The housing crisis is often framed as a social issue, but it's also an economic one, especially for businesses. As house prices and rents continue to climb, the flow-on effects are felt in job retention, work absenteeism, and lost productivity.
"The housing crisis is not just a social crisis, it's a productivity and economic crisis as well," said Professor Philip Oldfield, Head of School at UNSW Built Environment, from the faculty of Arts, Design and Architecture.
Research from the Committee of Sydney found that poor housing accessibility and long commutes cost the Sydney economy around $10 billion a year in lost productivity. Speaking on The Business Of podcast, Prof. Oldfield said alleviating the pressure on businesses would require a mix of structural reform, government investment and long-term planning.
"There's no silver bullet with a housing crisis," said Prof. Oldfield. "I think part of the challenge is everyone's looking for this singular solution. In reality, we will need to do many things. Build more homes. Build lots more social homes, convert stranded asset offices to residential, change tax and structural systems as well." The federal government has committed $10 billion to build 30,000 new social and affordable homes, a move Prof. Oldfield says is important, but not enough. "We need more," he said. "There's good evidence that while that $10 billion is an investment, a cost to the government, when we build social housing, we get an economic benefit back.
"The further people live from their workplace, the longer their commute and the less time they spend with their families or in their communities," he said. "That has massive implications for wellbeing and productivity."
The hidden business cost of the housing crisis
Employers are struggling to attract and retain staff in areas where there's no affordable housing. In regional towns and major cities alike, housing is now a key constraint on labour supply.
"If your business is located in a CBD or high-amenity area, it might be unaffordable for your employees to live nearby," said Prof. Oldfield. "They may be commuting 20 or 30 kilometres, and that has real implications for retention and absenteeism."
Long commutes and high rents also affect how and where employees spend. "If an employee is spending more of their income on housing, they have less money to spend elsewhere," he said. "If your rent goes up, you may be spending less on coffee, less on lunch, less on leisure, and that's going to impact small, medium and large businesses alike."
A recent study in Melbourne found that half of essential workers in the CBD, such as childcare staff, cleaners and delivery drivers, live more than 20 kilometres away, and the situation in Greater Sydney is no different. "For hospitality workers, virtually all housing in the East, Central and Inner West is either severely or extremely unaffordable," he said, referring to SGS's Rental Affordability Index. "If you run a coffee shop in the city, your staff might be commuting a significant distance to open your doors by 6am."
"As a result, staff might be more stressed, more fatigued, and harder to retain," said Prof. Oldfield.
That strain on workers doesn't just stay with them; it flows back to employers. "There's this whole kind of spectrum of indirect impacts on businesses which is going to make it challenging," said Prof. Oldfield.
Rethinking office spaces
With housing stress contributing to longer commutes, financial strain, and burnout, businesses are increasingly looking inward and rethinking how office environments can support staff wellbeing and productivity.
Prof. Oldfield said many traditional office buildings weren't designed with health or comfort in mind, leading to issues like 'sick building syndrome', where poor air quality, lack of natural light, and disconnected design contribute to fatigue, illness, and absenteeism. "If we want to retain staff, improve wellbeing, and drive productivity, we need to design better workplaces," he said.
"If you can do your focused, individual work from home, then the office needs to be a place of community, collaboration and creativity," he said. "And that means offices now have to compete with the home."
The new Atlassian tower in Sydney is one example. Currently under construction above Central Station in Sydney, the 40-storey building will blend gardens, timber interiors and flexible work zones, including indoor-outdoor spaces. "You'll be able to work in a garden space, in an air-conditioned space, or in a mixed-mode space," said Prof. Oldfield.
Prof. Oldfield said that while the tower's $1.4 billion price tag is high, the business case holds up. "Over a 50-year life cycle, let's say 10% of that $1.4 billion is all the gardens and all the extra kind of things," he said.
"But over 50 years, we know that for a business owner, 10% of their costs are to build the building, 5% to maintain it, and 85% of the salaries of the people who work in it. The building cost is quite small compared with the salaries of everyone who will work there for 50 years, which will be many billions.
"If you can create a space that builds better belonging, improves productivity, makes people happier, makes people work a little bit harder, makes people more comfortable, reduces sick building syndrome, the economic argument is really there."
Listen to the full episode on The Business Of.
