Ben moved 28km for cheaper housing. There he found a hidden cost

Ben Kreunen has moved further away from Melbourne over the years to maintain affordable rent as the rental crisis has escalated.

“I lived in share houses to start out with, and I lived closer to the city. It was easier with multiple wages. But as time went on, the closer areas started becoming more expensive, and I gradually moved further out,” the 59-year-old tech support worker said.

Ben Kreunen has been pushed further out of Melbourne chasing affordable rent. But his costs have increased in other ways.Credit: Simon Schluter

New research lays bare the scale of hidden costs that households are paying as a trade-off for cheaper rents or sticker prices, which are unaccounted for in standard housing affordability measurements.

The most common measure of housing stress in Australia defines it as unaffordable when the lowest 40 per cent of income earners are spending more than 30 per cent of their income on housing.

As a result, housing can appear affordable even though it can cost households in other ways, spanning location, transport costs, energy costs, home size and build quality, a new report from the Australian Housing and Urban Research Institute has found.

In his pursuit of rental affordability, each of Kreunen’s moves to his home in Melbourne’s outer east have cost him in other ways, from increased travel time to the quality of his home.

“I’ve got a 55- to 65-kilometre commute on a bike. We save $10 a day commuting [on a bike versus public transport], but our housing costs $20 a day to heat because it doesn’t have good insulation,” said Kreunen, who now lives about 28 kilometres from central Melbourne.

“We live in a house that cooks in summer and costs a fortune to heat in winter. Our energy bills are basically another 20 per cent of our rent. That’s a fairly significant chunk of expenditure.”

Despite ever-escalating rents, Kreunen said the quality of homes has not matched rising asking prices, and it was difficult to find a reasonably energy-efficient rental.

Dr Adam Crowe, the new report’s lead author and a Curtin University research fellow, said the current housing affordability metric was insensitive to a broad range of trade-offs and their associated costs, that households make to keep housing costs affordable.

More affordable housing can have hidden costs, the Australian Housing and Urban Research Institute has found.Credit: Justin McManus

“It’s insensitive to factors such as household size, so how many people are living in that house … it’s very insensitive to the quality and condition of housing and also locational and neighbourhood characteristics,” said Crowe, who also noted the operational costs and what it would be like to live there.

“So that’s not only proximity to the major employment CBDs … but also to amenities and essential services and resources like access to good food, good transport. Those factors, they intersect, they compound and they impact households unevenly.

“The key finding of our research is that they lead to misleading conclusions of what is truly affordable.”

Crowe said the trade-offs were felt by lower- and middle-income households, especially essential workers, and resulted in material deprivation and poverty.

Not only were there health and wellbeing implications, he said, but also social exclusion due to the cost of commuting to work or to see friends, as well as other hardships such as energy rationing.

Crowe called for mandatory disclosure of energy and thermal performance on rentals and homes for sale in line with the ACT.

Joel Dignam, the executive director of advocacy group Better Renting, said the real cost of the housing crisis was not captured in the raw data.

“A key option [for tenants] is renting something that is lower quality,” he said. “Sometimes it means it’s less nice, but it can also mean shifting costs to other parts of their life. One of those examples is higher heating costs and transport is another part of that.”

He said many renters are pushed to the urban fringes and households bear huge economic and time costs.

“We often treat the time of lower-income people as it has no value. Whereas it has real value to them. Also for our broader society, it’s not a good situation if someone is forced to use a whole bunch of their day in traffic.”

NSW Tenants’ Union chief executive Leo Patterson Ross called for a more comprehensive housing affordability measure so policymakers could better plan for housing.

“It is really important that we recognise that housing is very central to a range of elements in our lives,” Patterson Ross said.

“There is a clear relationship between energy costs and the cost of rental. Lower quality housing is generally more energy inefficient so it might appear you’re paying less rent but if your energy bill is higher than that rent cost saving is upped out.

“That means for very low-income households, we can better recognise that they don’t have enough to pay for food and health care even after sliding under the 30 per cent, and in particular when we start adding energy costs as a housing cost.”