Fears that affordable housing for low-income earners will turn neighbourhoods into ghettos or slums are unfounded in 80 per cent of cases, and have little or no impact on property prices.
The most prejudicial campaigns against low-income developments came from politicians, shows new research.
"We found clear and widespread evidence of prejudice against low-income people in the affordable housing by residents and politicians in all three states," said Gethin Davison, a research fellow at UNSW's city futures research centre.
His team examined some of the most controversial affordable housing developments that went ahead despite vocal opposition in Sydney, Melbourne and Brisbane.
"When the opposition was whipped up into a frenzy, invariably a local council was involved. Unbelievably, they were involved in agitating and whipping up opposition to advance their interests," said Dr Davison.
Opposition was fiercest, most organised and effective in the wealthier suburbs.
Often politicians, councillors and residents were confused about what affordable housing was. They envisaged high-rise towers like the Redfern and Waterloo public housing towers, built in the 1960s, but most modern affordable housing is medium- or low-rise, and mixed with other housing.
In 2010, Parramatta's then lord mayor Paul Garrard erected three-metre-high signs - saying "Unsupported Development: Brought to You by the State Government" - outside planned affordable housing sites. Politicians claimed these developments would "destroy neighbourhoods" and create "clusters of marginalised groups".
To see if these fears were realised, the researchers analysed more than 727 written submissions opposing developments in Parramatta, NSW, Port Phillip in Victoria and in two Queensland projects, in Brisbane and Cairns.
They then went back to these areas to interview residents who had been worried about the impact. Opposition had usually faded, and about 78 per cent of residents living near controversial projects said there was little or no effect. In some cases, residents reported concerns relating to parking, noise and problem tenants.
In Queensland, the researchers modelled the impact of developments on property values to see if they'd had any effect. They found little or none, said Dr Davison.
These results have been borne out in Fotheringham Street, Enmore, where 19 people on low-incomes have lived in housing provided by the NSW government for as long as current residents can remember.
Mary Natta, 61, who was badly hurt in a hit-and-run accident when she was in her 20s, has paid 25 per cent of her disability pension in rent since she moved into the street in 2008. Her one-bedroom single-storey home sits in a tidy garden which is full of geraniums and herbs like oregano, basil and rosemary.
Only a few doors away, a three-bedroom terrace was sold recently for $968,000, which was about $100,000 more than the vendors paid for it just months earlier.
While some residents in the government housing have mental illnesses - one often walks down the street with his shirt tucked neatly into his undies because he has forgotten to put on trousers - long-time neighbour Hannah Rodrigues said it was nice community.
"None of the residents in the street talk about it, or see it as an issue," said Ms Rodrigues, who is Sydney regional president of the St Vincent de Paul Society.