Affordable living is more than just cheaper housing.

Since COVID-19, many businesses and industries have had to dramatically re-think how they operate with the lucky ones able to work remotely. However, for many businesses, remote working is just not possible.

Australia’s economy has been hit hard, sliding into its first recession in three decades. But our households – especially the most vulnerable, those in the first two income quintiles – have been hit the hardest. Many workers whose weekly income falls within the bottom two quintiles work in retail, hospitality and accommodation, health care and social services, manufacturing, and electricity, gas, water and waste services – jobs that as a general rule, simply cannot be undertaken remotely. Many of these workers will have been stood down for a period or worst still, will have lost their job all together.

Did you know?: Young people have been the most affected by job losses during the pandemic.

Many of these households are already under significant financial stress from the rising cost of living in our major cities. Housing costs are a key component of living affordability – Melbourne and Sydney in particular have some of the most unaffordable housing markets in the world. But focusing on housing costs only tells part of the story – that’s why we built KPMG’s Affordable Living Index (ALI).

The ALI is a tool that captures housing costs and transport costs – two of the most significant factors that influence living affordability. The ALI combines typical housing and transport costs for first two income quintile households in an area to generate a score. This score is used to compare the proportion of household income dedicated to housing and transport costs across a city. From this analysis, it is apparent that the urban form of a city shapes living affordability.

Did you know?: More than half of all single mothers live in households in the first two income quintiles.

For example, when the ALI is applied to Melbourne, it is apparent that it is expensive for our most vulnerable to live in the outer suburbs. This is counter intuitive as the cheapest housing is often further from the city centre. But, these suburbs are poorly connected by public transport and households rely on private vehicles (usually more than one per household) for their daily commutes. Despite the availability of cheaper housing, transport costs are very high making overall living affordability very poor in these suburbs.

A typical supermarket worker living in Casey is only left with $198 per week after accounting for housing and transport costs. $198 to cover the cost of fresh food, visits to the doctor, heating, school equipment such as textbooks, and connection to the internet. Forgoing such critical items can significantly affect a household and risks entrenching disadvantage in certain pockets of our community.

While we begin to turn our minds to what a post-COVID world looks like, it is important to acknowledge that for some households the COVID-19 pandemic is aggravating existing financial pressures. To support households to recover, to make them more resilient to future shocks and to create a more equal society we must broaden our focus and seek to better understand the systemic drivers of financial pressure.


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