Social housing sell-offs: how state governments created a crisis

The quiet dismantling of public housing

Australia is in a housing crisis. Rents are at record highs, vacancy rates in major cities sit below 1%, and over 169,000 households are on public housing waiting lists nationally. In Victoria alone, the wait for social housing can stretch beyond 10 years. In Western Australia, some applicants have been waiting since the early 2000s.

But this didn't happen by accident. It happened because successive state governments - Labor and Liberal alike - made a deliberate choice over several decades: sell the land, pocket the proceeds, and let the market sort it out.

It didn't work. And ordinary Australians are paying the price.

What actually happened

From the 1990s onward, state housing authorities began shedding their property portfolios under the banner of "urban renewal" and "estate revitalisation." The pitch sounded reasonable: replace ageing public housing towers with modern mixed-tenure developments, increase density, and use the proceeds to fund new social housing elsewhere.

In practice, the numbers rarely stacked up.

Victoria is perhaps the most documented case. The Kennett Liberal government began large-scale sell-offs in the 1990s, but Labor governments continued the trend. Between 1999 and 2019, Victoria's social housing stock as a proportion of total housing fell from around 4% to under 2.9% - even as the state's population surged. The Housing Estates Renewal Program repeatedly promised net new dwellings but delivered fewer social housing units than were demolished, with private apartments filling the gap.

New South Wales followed a similar path. The Communities Plus program under successive Liberal and Labor governments involved selling off well-located public land in suburbs like Waterloo, Ivanhoe, and Telopea. The Waterloo estate redevelopment - one of the largest in Australian history - involves replacing around 750 social housing dwellings with a mixed development of up to 6,800 apartments, most of them private. Residents were promised no net loss of social housing, but advocates have raised serious concerns about the timeline, displacement, and the decades-long gap before replacement stock is built.

Queensland, South Australia, and Western Australia ran similar programs, each framed as modernisation, each resulting in a reduced share of public housing in the total stock.

Who benefits - and who doesn't

The sell-off model has clear winners:

• Private developers gain access to well-located, often inner-city land at below-market or government-negotiated prices
• State treasuries receive short-term revenue that can be pointed to as "reinvestment"
• Property investors benefit from reduced supply of affordable rentals, which supports higher yields

The losers are equally clear:

• Low-income renters facing a market with almost no affordable options
• People with disabilities, mental illness, or trauma histories who depend on stable housing
• Regional and outer-suburban communities where displaced residents are often relocated, away from support networks
• Taxpayers, who will ultimately pay far more to address homelessness and housing stress than they saved from the sell-offs

Australia currently spends over $6 billion per year on Commonwealth Rent Assistance - a subsidy that goes straight to private landlords and would be unnecessary if sufficient public housing existed. Meanwhile, the National Housing Finance and Investment Corporation has estimated Australia needs roughly 750,000 new social and affordable homes over the next two decades just to meet existing need.

Why the policy persists

If sell-offs are so damaging, why do governments keep doing it?

The answer lies in political incentives. Public housing tenants are a small, politically marginalised group. They are less likely to vote, less likely to donate to political parties, and their issues rarely dominate the evening news until a crisis becomes impossible to ignore. Developers, on the other hand, are significant donors to both major parties.

According to the Australian Electoral Commission, property and construction interests donated tens of millions of dollars to Labor and Liberal parties at state and federal levels over the past decade. This doesn't prove corruption - but it does explain why the interests of large landholders consistently seem to outweigh those of people on housing waiting lists.

There's also a structural problem: the costs of selling public housing are diffuse and long-term, while the benefits to governments (land receipts, reduced maintenance obligations) are immediate and visible. Politicians optimising for three-year electoral cycles will almost always choose the short-term gain.

What would voters actually choose?

Here's the thing: when Australians are asked directly about housing policy, their answers look nothing like what governments have delivered.

Polling consistently shows strong majority support for increased government investment in social and affordable housing. A 2023 survey by the Australian Housing and Urban Research Institute found that over 70% of respondents supported the government building more public housing rather than relying on the private market. Polling on specific sell-off proposals - like the Waterloo redevelopment - has shown significant community opposition, which is routinely overridden.

This is a policy area where the gap between what citizens want and what governments deliver is stark, persistent, and deeply damaging.

The direct democracy difference

Under the current system, you can vote out a government every four years - but you cannot vote on specific policies. A party can promise housing investment before an election and quietly continue sell-offs after it. There is no mechanism to hold them accountable on individual decisions.

Direct Democracy changes that. When members vote on policy positions, representatives are bound by those votes - not by donor relationships, party factional deals, or the preferences of a cabinet minister who once worked in property development. Housing policy set by the people who need housing would look very different from housing policy set by people who profit from its scarcity.

The social housing crisis isn't inevitable. It's a choice - one that was made for us, without us. It's time we got a say.

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