Australia’s housing affordability expected to worsen and homelessness soar under fossil-fuelled future

Global heating could worsen housing affordability, push up rents and quadruple homelessness in a decade without fairer housing policies and action to reduce emissions, new research has found.

Home prices and rents in Australia are influenced by a complex mix of factors, from incomes and mortgage rates to insurance premiums, available land and population.

University of Sydney researchers modelled the housing market system, using two decades of public data, and tested its response under different climate scenarios, publishing their results in Cities.

They found climate change affected housing and rental affordability under both high and low-emission scenarios, but vulnerable households were worst-hit under a fossil-fuelled future.

Homelessness could be four times higher by 2036 under a high-emissions future, as homes become more expensive and rents rise relative to incomes.

The scenarios were based on five plausible social and economic pathways developed by the Intergovernmental Panel on Climate Change. The low-emissions scenario describes a future where collective action leads to a more sustainable future consistent with the Paris agreement goal to keep global heating below 2C and aim to limit the increase to 1.5C, whereas fossil fuel resources continue to be exploited under the high-emissions path.

Australia, together with other countries, has committed to the Paris agreement and has set targets to cut emissions to 43% below 2005 levels by 2030, and 62-70% by 2035 and “net zero” by 2050.

Associate Prof Nader Naderpajouh from the University of Sydney said the impacts of global heating on housing were “very unequal” and particularly affected renters and people experiencing homelessness.

Climate change does not feature prominently in housing policy discussions, he said, but it should. “We’re showing that climate change has an impact, and the impact is very divergent, [it] increases the gap.”

“We cannot address the housing system by one blanket policy,” he said. Policies or interventions should prioritise and tailor support for renters on low incomes, and to address homelessness.

The federal budget’s investment in social housing for more than 4,000 young people was an example of a targeted measure, Naderpajouh said, but a “drastic increase” in social housing was needed.

Measuring progress was important, he said, as well as ensuring any housing delivered was high quality and secure.

“The pressure is already on for Australians in the housing market and we see worsening social inequities in the future. We need to design fairer housing policies or this is the trajectory we’re heading towards,” said Peyman Habibi-Moshfegh, lead author of the paper.

“Our findings show that any new housing policies need to undergo climate-change simulations to make sure they don’t deepen inequality.”

Economist Nicki Hutley, a councillor with the Climate Council, said climate change “should be front and centre” as a consideration of housing policy, both in terms of emissions reduction – through energy efficiency and better building standards – as well as the resilience of homes, livelihoods and communities to extreme weather.

The federal government’s recent national climate risk assessment “laid bare some pretty uncomfortable truths about the level of risk our homes are at”, Hutley said.

Among its many findings, the risk assessment said 10% of residential housing would be located in areas considered very high risk by 2030, and that longstanding inequalities were being worsened by the climate crisis.

Hutley said the housing and tax changes in the budget showed the federal government was capable of acting on issues beyond one electoral cycle.

“We need them to take the same approach to climate change.”