In 1943, former Victorian premier Albert Dunstan said a home owner’s outlook on life was immediately changed when the first nail was driven into “his castle”. “The home owner feels that he has a stake in the country, and that he has something worth working for, living for, fighting for.”

Seventy-nine years later, the Great Australian Dream is becoming increasingly unattainable for many, with house prices hitting record highs since the onset of the pandemic. Melbourne is the fifth-least affordable city in the world to buy a home, according to Demographia’s International Housing Affordability 2022 edition, with the median house price 12 times the average household income.

That and a scarcity of housing across Victoria have driven rents through the roof. Little wonder that, through our Victoria’s Agenda project, many of you told us you wanted politicians to talk about affordable housing and the cost of living at this state election. “Everyone’s talking about that,” said Leanne Petrides, who we met in Cranbourne, “especially housing stress and homelessness.”

Leigh Bamford, a carer from Shepparton who pays $195 a week for a two-bedroom unit, said the biggest issues for him were taxes and the skyrocketing cost of rent. “You are paying such a high rent in such a little place.”

And Bush Meleparambil, a Shepparton resident and business owner, told us migrant workers were being prevented from reaching the town because of the costs, making it difficult to do business. “They should be firstly talking about the rental market, there’s a lot of immigrants here working. It’s really hard to find anything on the rental market,” he said.

A survey of 5439 readers revealed that 39 per cent of 18- to 44-year-olds and 29 per cent of those aged over 45 would like to see more coverage from us on the cost of living and how it is affecting Victorians.

How much has the cost of living increased in Victoria?

The cost of living is the amount of money it takes to afford basic and necessary expenses such as housing, food, transport, healthcare and utilities.

One of the ways the Australian government evaluates the cost of living is through the Consumer Price Index, which measures the change in the value of goods and services such as food and healthcare. This rose 6.1 per cent in Melbourne over the 12 months to the June 2022 quarter, largely due to higher dwelling construction costs and fuel costs.

In the last quarter alone, high levels of building construction combined with shortages of materials and labour resulted in the cost of new dwellings increasing by 6.9 per cent.

The oil price shock caused by the Russian invasion of Ukraine and the easing of COVID-19 restrictions meant that fuel prices increased by 4.7 per cent. And floods in Queensland and NSW saw the cost of vegetables soar by 7.7 per cent.

The surge in inflation means wages are suffering their largest fall in real terms on record. And that’s before we even get to housing, which some economists argue is not adequately captured in the Consumer Price Index because it excludes the purchase of existing dwellings and the cost of land.

Why is housing such a big issue for Victorians?

In April last year, the median house price in Melbourne broke through the million-dollar mark for the first time. In this year’s June quarter, it was $1.08 million, up from $805,000 in the June quarter of 2019.

House prices also soared in every corner of Victoria after city dwellers sought a lockdown tree change and capitalised on the greater capacity to work from home. The median house price in the regions rose from $412,000 in June 2019 to $625,000 in June this year.

We are now starting to see a drop in house prices after the Reserve Bank lifted the cash rate to 2.6 per cent early in October, its sixth consecutive monthly increase. But renters are also feeling the squeeze.

“[I] gave up my job, my apartment, my independence – everything – to care for these kids ... And I live here, in a little concrete box.”

Melbourne median house rents jumped to $490 a week in the June quarter, up from $450 in June 2019. And workers in regional Victorian towns are being forced to sleep in tents, cars or caravans due to a dire shortage of rental homes. The median house rent in the regions has risen from $335 a week in June 2019 to $400 in June this year.

Meanwhile, there are 64,304 households on the social housing waitlist. (This includes 55,097 new applications and 9207 transfer applications.)

Gail Lancaster, who cares for her three grandchildren and a foster child, lives in overcrowded public housing. She has been waiting for a priority public housing transfer for almost three years. She says the government needs to build more public housing – and in the outer suburbs, not the inner city.

“[I] gave up my job, my apartment, my independence – everything – to care for these kids ... And I live here, in a little concrete box, and it’s horrible.”

What are the biggest pressure points?

About 11 per cent of Victorians live in persistent poverty.

The Victorian Council of Social Service says many more are on the brink, struggling with debt, rising rents, mortgages and the ballooning costs of essentials such as food, medicine, clothing and energy.

RMIT Emeritus Professor David Hayward says the Reserve Bank rate rises have sent more people into mortgage stress. “You’ve got people who have taken on big mortgages when interest rates were low. Interest rates are still negative, they are still less than the inflation rate, it’s just that people borrowed so much their living costs have gone through the roof.”

So does the state government also have a role to play?

The cost of living is seen as primarily a federal government issue. This is because the Commonwealth has some big levers at its disposal, such as tax reform and social welfare.

The federal government could alleviate the cost of living pain by raising the tax-free threshold, for example, or increasing welfare payments such as JobSeeker and Commonwealth Rent Assistance. It could also change tax concessions for property investors, such as negative gearing tax breaks or the capital gains tax discount, which some argue have driven housing inequality.

But the state also has power. The government is building 9300 new social housing dwellings over four years – but will it commit to more? What about something else that could help with housing affordability: scrapping stamp duty?

NSW is planning to allow first-home buyers to choose between paying the lump sum of stamp duty or an annual land tax – perhaps Victoria could adopt a similar model? Or could it provide more one-off payments, such as the $250 bonus for those who seek a better energy deal?

And would the appointment of an independent cost of living commissioner make our hurting hip pockets a state priority?

These are the questions that, on your behalf, we will be putting to political candidates in coming weeks.

Petrides, who is the executive officer at Community Information and Support Cranbourne, a centre for people in financial distress, believes this is one of the most critical issues of the election.

Her question for political candidates is: “How are they going to make sure that everyone has equal access to safe, affordable and accessible housing?”

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