Australia's rental affordability has hit a new low this year, and the contrast with one European capital could hardly be starker. In Vienna, roughly half the population lives in secure, affordable housing provided by the city government. Meanwhile, social housing makes up just 2 per cent of dwellings built each year in Australia, down from 22 per cent in the 1950s.
This gap between two developed democracies raises an uncomfortable question: how did Australia go from building one in every five new homes as social housing to barely one in fifty?
Fifty per cent of Vienna's population live in some form of social housing, either government-owned or government-subsidised properties, and some sit in the heart of the old town alongside iconic tourist attractions. A young couple living in one such apartment pays around a quarter of their monthly income on rent. By contrast, Australian tenant households now dedicate a record high 33.4 per cent of their pre-tax income to pay rent.
The Viennese model emerged from pragmatism, not ideology. Built between World War One and Two during what became known as the city's Red Vienna period, the government pledged to construct 65,000 new apartments to address overcrowding when most people shared very poor substandard apartments without running water, toilets, proper heating or electricity.
That commitment never wavered. Vienna's annual budget for social housing hovers above €400 million, exceeding those of bigger EU capitals like Rome, Madrid or Lisbon. Critically, unlike Berlin and other European cities, the former capital of the Austro-Hungarian Empire never sold off its public land. This long-term ownership and investment created a structural advantage that persists today.
Australia's trajectory tells a different story. The share of households renting has increased from 25 per cent in 1981 to 31 per cent in 2021, partly driven by a growing shortage of affordable owner-occupier housing that forced many households to become or remain renters. More than half of lower-income renter households were in rental stress in 2023, with 60 per cent of those in rental stress experiencing two or more consecutive years of rental stress.
The numbers expose the scale of underinvestment. Only 177,000 homes were built in 2024, far below the 223,000 the National Housing Supply and Affordability Council says was needed to meet demand. More telling: the supply of social and affordable housing is accelerating, reflecting an increase in government investment, yet from a base so small it barely dents the problem.
There are legitimate questions about what Australia can learn from Vienna without importing a system designed for a different era and different political context. Vienna's model works partly because taxes have funded it consistently for a century, and because Austrian politics have supported it even through recent shifts to the right. Building a comparable system in Australia would require decades of sustained funding and political commitment across election cycles.
Yet Vienna's existence proves that a developed economy can house its population affordably if governments treat housing as a public good rather than a market commodity. Australia made a deliberate policy choice in the 1950s to step back from social housing construction. For decades, that choice was subsidised by cheap land and rising incomes. That subsidy has run out. Systemic reform and ongoing investment from government and industry are urgently needed to ensure that housing in Australia is affordable, fit for purpose and secure for households of all incomes and in all locations.
The question facing Australian policymakers is whether they can muster the will to rebuild what their predecessors dismantled. Vienna didn't solve housing affordability by accident. It did so by deciding, repeatedly, over more than a century, that housing was too important to leave entirely to market forces. Australia is only now beginning to ask whether it was wrong to abandon that approach.