Ben moved 28km for affordable housing,
Ben Kreunen has increasingly moved further away from Melbourne over the years in search of more affordable rent.
This shift comes as the rental crisis in the city has worsened, making housing prices climb significantly.
“I began by living in share houses, which was more affordable,” said Kreunen, reflecting on his early days.
At the time, living closer to the city was manageable due to multiple income sources from housemates.
However, as time passed, rent in the areas closer to the city steadily became more expensive.
As a result, he gradually relocated to more distant suburbs to maintain affordability in his living situation.
New research reveals the hidden costs that households face as a trade-off for cheaper rents or sticker prices.
These costs are often unaccounted for in standard housing affordability measurements, which can lead to misleading conclusions.
In Australia, the most common measure defines housing as unaffordable when the lowest 40 percent of income earners spend over 30 percent of their income on housing.
As a result, housing can seem affordable even though it costs households in other ways, such as location and transport.
Additionally, there are costs associated with energy expenses, home size, and build quality, as a recent report found.
Kreunen’s pursuit of affordable rental housing has led to other costs, including increased travel time and lower home quality.
“I have a 55- to 65-kilometre commute on my bike. We save $10 a day compared to public transport,” he said.
However, despite the savings on commuting, their housing costs an extra $20 a day for heating due to poor insulation.
“We live in a house that becomes unbearably hot in summer and costs a fortune to heat in winter,” Kreunen explained.
As a result, their energy bills make up about 20 percent of their rent, which is a significant additional expenditure.
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Despite rising rents, Kreunen noted that the quality of homes has not kept pace with the increasing asking prices.
He also mentioned that it has been challenging to find a rental that is reasonably energy-efficient.
Dr. Adam Crowe, the lead author of the new report and a Curtin University research fellow, shared his insights.
He explained that the current housing affordability metric fails to account for a broad range of trade-offs.
These trade-offs often come with additional costs that households must bear to keep their housing affordable.
“It overlooks factors such as household size, meaning the number of people living in a home,” Crowe stated.
Moreover, it is insensitive to the quality and condition of housing, as well as locational and neighborhood characteristics.
Crowe also pointed out that the metric neglects the operational costs and daily living conditions in these homes.
For example, it doesn’t consider proximity to major employment centers, amenities, and essential services such as food or transport.
These factors, according to Crowe, intersect and compound, impacting households in uneven ways.
The key finding of our research, Crowe emphasized, is that this approach leads to misleading conclusions about affordability.
He further explained that these trade-offs disproportionately affect lower- and middle-income households, particularly essential workers.
As a result, this often leads to material deprivation and poverty for many families.
Not only are there significant health and wellbeing implications, but also social exclusion due to high commuting costs.
These high commuting costs affect people’s ability to work or visit friends and lead to other hardships, like energy rationing.
Crowe called for mandatory disclosure of energy and thermal performance for rentals and homes for sale, similar to the ACT.
Joel Dignam, the executive director of Better Renting, echoed these concerns, highlighting the unaccounted costs in raw housing data.
He noted that tenants often choose lower-quality rentals as a way to save money.
However, this decision often shifts costs to other areas of their life, such as higher heating bills or transport.
He explained that many renters are forced to move to the urban fringes, where households incur significant economic and time costs.
“We often treat the time of lower-income people as if it has no value, but it does have real value,” he said.
This situation also affects society as a whole, as it is not ideal for anyone to spend their day in traffic.
Leo Patterson Ross, chief executive of the NSW Tenants’ Union, called for a more comprehensive housing affordability measure.
This would enable policymakers to better plan for housing solutions that truly meet the needs of the population.
“It is crucial that we recognize housing’s central role in various aspects of our lives,” Patterson Ross emphasized.
He highlighted the clear connection between energy costs and rental prices, which is often overlooked in affordability discussions.
Lower-quality housing is typically more energy-inefficient, which may make it seem cheaper to rent, but costs more to maintain.
If your energy bills are higher, the savings on rent are effectively canceled out, making the situation less affordable.
For very low-income households, this means they may struggle to afford necessities like food and healthcare.
Even if they fall under the 30 percent threshold, adding energy costs as part of the housing burden is critical.
