Is ‘informal’ housing an affordability solution for expensive cities? Evidence from Sydney, Australia

Abstract

Does ‘informal’ housing offer more affordable choices for low-income renters in expensive cities? This paper investigates this question with reference to Sydney, Australia, where planning reforms have sought to deregulate housing development including ‘informal’ and low cost market accommodation, in response to chronic housing affordability pressures. Examining rental advertisements, housing supply and affordability data, and through interviews with local government personnel, we find that informal secondary units and room rentals dominate Sydney’s lower cost market, but rents remain high relative to incomes. Further, and despite reforms to encourage new secondary dwellings and low cost rental supply, substandard and non-compliant housing persists, exposing tenants to serious risks. The findings suggest that in high cost cities such as Sydney, the informal sector occupies an important and unrecognised role in housing low-income renters, but that more systemic reforms beyond the planning system are needed to improve housing outcomes for disadvantaged groups.