Australia’s property market is seeing a new wave of affordable rental options aimed at low-paid essential workers, introduced by an unexpected source: build-to-rent (BTR) operators. Contrary to the international trend where BTR developments often command above-market rents, these operators are now offering subsidized apartments for critical sector employees.
In Melbourne, Mirvac has launched its LIV Aston BTR complex in Docklands, featuring 20 affordable apartments. Similarly, Local Residential has opened its Kensington complex with 42 affordable and social impact units. This marks a notable shift in the BTR sector, which typically involves a single entity managing a large building of rental units, and has seen a global trend of charging higher rents.
The Docklands complex includes 474 purpose-built rental apartments, with 20 units offered at a 50% discount for essential workers earning moderate incomes—approximately $70,000 annually in Melbourne. This initiative was partly driven by a planning decision for the project. Angela Buckley, Mirvac’s BTR general manager, emphasized the importance of affordable housing in maintaining the productivity and sustainability of cities. “Essential workers are crucial for the thriving of our cities, whether they are in hospitality, healthcare, childcare, or other vital sectors,” Buckley noted.
This development addresses a growing issue where essential workers, priced out of neighborhoods near their workplaces, face long commutes, complicating efforts to attract and retain staff. In addition to Melbourne, Mirvac plans to include 99 affordable homes in its first Brisbane BTR property, Liv Anura, scheduled to open later this year. The Queensland government will subsidize rents for these affordable units under a pilot program.
The broader rental market in Australia continues to experience strain. PropTrack reported a national rental vacancy rate of just 1.47% in July, down from historical levels of 2-3%. Rental prices have surged by 10.3% year-on-year, with the median weekly rent reaching $640. Anne Flaherty, senior economist at PropTrack, noted that the rental market remains tight due to low vacancies and rising demand driven by population growth.
While the rental market has cooled somewhat compared to last year’s explosive growth, housing advocates stress the urgent need for additional rental housing. The federal government has proposed tax incentives to encourage more purpose-built rental properties, but these changes have faced opposition in the Senate. Meanwhile, developers like Villawood Properties are responding by committing to affordable housing projects, such as the Aldinga development in Adelaide, where at least 25% of the 800 homes will be affordable.
This shift towards providing affordable rental options in the BTR sector represents a significant development in Australia’s housing landscape, offering hope for essential workers struggling with escalating rental costs.
