How can Australia make housing affordable for essential workers? Here are 4 key lessons from overseas

Essential workers such as teachers, health workers and community safety staff play a vital role in ensuring our society works well. Yet soaring housing costs in cities like Sydney, Melbourne and Brisbane are squeezing essential workers out of the communities they serve.

The issue is reaching crisis point across Australia. Anglicare Australia yesterday released a special edition of its Rental Affordability Snapshot focused on essential workers in full-time work. Housing costs under 30% of household income are considered affordable. In a survey of 45,115 rental listings, it found:

• 3.7% were affordable for a teacher
• 2.2% were affordable for an ambulance worker
• 1.5% were affordable for an aged care worker
• 1.4% were affordable for a nurse
• 0.9% were affordable for an early childhood educator
• 0.8% were affordable for a hospitality worker.

This trend is creating unsustainable patterns of urban sprawl and long commutes. It erodes workers’ quality of life. It also undermines public service delivery by making it harder to recruit and retain these workers in high-cost areas.

International experience, particularly in the UK where I have advised on similar policies, shows there are solutions to this crisis. These global lessons fall into four categories.

1. Define essential worker housing

Essential worker housing typically targets front-line public sector workers on low to middle incomes. Yet eligibility should extend to support roles, such as ambulance drivers, porters and medical receptionists, who play a vital part in enabling front-line services. They too struggle to find affordable housing near their workplaces.

Conditions of eligibility should also include a cap on household earnings.

The UK experience highlights the importance of providing both rental and ownership options. To keep key worker housing affordable and accessible over time, both types need to be priced appropriately.

Australian cities could adopt similar approaches, by requiring housing developers and community housing providers to allocate affordable housing for essential workers. Prices would be below market rates for both rentals and home ownership for the long term, and not revert to market rates. This ensures stability for public service workers.

2. Financial innovations focused on long-term affordability

Innovative financial models, such as shared equity schemes, have succeeded in the UK. These allow workers to gradually buy into their homes, creating long-term stability.

Shared equity involves the government or another investor covering some of the cost of buying the home in exchange for an equivalent share in the property. Australia could explore similar schemes to provide immediate relief while ensuring sustained affordability for future essential workers.

This approach could build on the Commonwealth’s proposed Help to Buy scheme, currently before the Senate, and existing state and territory shared equity programs. These may need refinement to better serve essential workers by, for example, adjusting income thresholds and eligibility criteria to ensure they qualify. These schemes also need to expand to cover all urban areas where housing affordability is most strained.

3. Leverage planning systems

Countries like the UK have leveraged their planning systems to deliver affordable housing for key workers. In England, planning authorities use mechanisms such as Section 106 agreements to ensure a portion of new developments is reserved for key worker housing as a condition of planning approval.

Australian states could adapt this model, setting targets within existing planning frameworks. For example, they could use Voluntary Planning Agreements to prioritise essential worker housing.

Yet essential worker housing should not displace housing for other people in urgent need. They include people who are homeless, low-income families, people with disabilities, the elderly, those at risk of domestic violence, veterans and youth leaving foster care.

4. Use public land for housing development

The use of surplus public land for essential worker housing has proven successful in several cities, including London, Amsterdam and San Francisco.

Earmarking land owned by the public sector, such as hospital or education sites, is a strategic way to deliver affordable housing near key public sector employers. It also allows staff to travel to work nearby using sustainable transport instead of cars.

Affordable housing has profound benefits

Without action, essential workers are likely to be forced into lower-quality, high-cost housing, shared accommodation, or long commutes from more affordable areas. Over time, these patterns of job-housing imbalances and urban sprawl are unsustainable. These issues are the focus of my current research, particularly in Western Sydney.

The New South Wales government has set up a parliamentary select committee to inquire into options for essential worker housing. It’s bringing much-needed attention to the housing crisis affecting key public sector roles.

Tackling these issues through targeted housing solutions has many benefits. It can help create more sustainable communities, reduce recruitment and retention difficulties for employers and ease the strain on infrastructure and services.

The key takeaway from the UK and other countries is the importance of long-term, sustainable solutions that do not shift the focus away from those most in need of housing. Australia has the opportunity to strike this balance. We need to ensure essential workers can afford to live near their workplaces while not sidelining everyone else in need of affordable housing.