Key workers pushed out of Sydney and Melbourne by high housing costs

Only two local government areas across greater Sydney and one in Melbourne have a median house price that is affordable to key workers on moderate incomes, according to new research led by Sydney’s School of Architecture, Design and Planning.

The research, ‘Housing key workers: scoping challenges, aspirations, and policy responses for Australian cities’, undertaken for the Australian Housing and Urban Research Institute (AHURI) by researchers from the University of Sydney examines the affordability, housing situations and commuting patterns of key workers (including teachers, nurses, emergency service workers, community welfare workers, public transport operators, delivery personnel, cleaners and laundry workers) in Sydney and Melbourne.

The events of 2020, particularly the COVID-19 Pandemic, have highlighted the vital role many workers play in the functioning of cities and their resilience in times of crisis. But new research has found that many essential workers are struggling to access housing in Australia’s most expensive cities.

Across Greater Sydney and its adjacent localities only two local government areas had a median house price that was affordable to key workers on moderate incomes, and both these suburbs are over 150 kilometres from Sydney CBD. The situation is no better in Melbourne, with only the Golden Plains local government area (over 80 kilometres from Melbourne CBD) having houses affordable to key workers.

The report found that the number of key workers living in inner city regions fell between 2011 and 2016, while outer suburbs and Wollongong, Newcastle and Geelong gained key worker residents, suggesting key workers are moving away from expensive inner-city areas to less expensive outer suburban areas and satellite cities.

“There is significant movement away from inner-city areas among key workers aged 30-44 whose moves may be driven by factors like starting a family or a desire to buy a home rather than rent”, says lead research Dr Catherine Gilbert, Postdoctoral Research Associate from the School of Architecture, Design and Planning.

“This can lead to a shortage of more experienced workers in inner areas or to workers commuting long distances – which can exacerbate work-related stress and fatigue. Long distances between home and work can also limit the ability of workers to be ‘on call’ and respond quickly to emergency situations and spikes in service demand.”

In fact, the research found that key workers in Sydney and Melbourne are more likely than the labour force generally to live in outer suburbs and satellite cities and to commute 30kms or more to work, typically by private car. Around 31,000 key workers in Sydney and over 18,000 key workers in Melbourne live in crowded homes, with the greatest concentration in inner ring areas.

In addition, over 52,000 key workers in Sydney and over 37,000 in Melbourne are living in households that are in housing stress, that is households who are paying rents or mortgages that are more than 30 per cent of their household income. The breakdown for Sydney was over 25,000 key workers in mortgage stress and over 26,000 in rental stress. For Melbourne, it was over 21,000 in mortgage stress and over 16,000 in rental stress.

The research found that in an indicative month only two percent of new rental properties in Greater Sydney had rents that were affordable for key worker households earning $790 per week (broadly indicative of a wage for a laundry worker); just five percent were affordable to households earning $960 (broadly indicative of wages for a commercial cleaner, delivery driver and entry level firefighter) and 11 per cent were affordable with an income of $1,150 (broadly indicative of the wage for an early career enrolled nurse or child care worker).

The research findings provide another impetus for governments to address housing affordability, as failure to do so could impact the safety and functioning of our cities into the future.

Dr Catherine Gilbert, School of Architecture, Design and Planning

“Measures to assist key workers to access home ownership, policies and programs to increase the supply of secure, long-term rental housing and affordable housing tenures targeted at moderate income workers could all play a role in addressing the risk.”

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