The Illawarra will need more than 10,000 new social and affordable rental homes for low and middle-income households by 2036.
Analysis from the UNSW City Futures Research Centre says the homes will be needed in order to meet current demand and keep pace with population growth.
Estimating need and costs of social and affordable housing delivery indicates the scale of rental stress across the country means Australia will need 728,600 social housing properties and 295,000 affordable rental homes by 2036.
The analysis includes figures on the housing need in the Illawarra.
According to the data, in the Illawarra the current shortfall of social housing is 4900 homes, while there is a shortfall of 2792 affordable housing properties.
The analysis suggests 6900 social housing homes will be needed by 2036, and 3200 affordable housing properties.
Therefore, the total number of new social and affordable housing properties needed by 2036 is 10,100.
Lead researcher Laurence Troy said 22.5 per cent of all housing growth nationally will need to go towards social housing, while a further 10 per cent of growth needs to be below market affordable rental homes.
One third of all homes – 316,766 – are needed in NSW.
“Our analysis shows that the sheer number of households in rental stress across the country means that if we’re going to meet the need, at least 12 per cent of all our housing by 2036 will need to be social and affordable housing - which is a very reasonable ambition in global terms,” Mr Troy said.
“To cover the backlog of unmet need and future need in Australia two in ten new homes will need to be for social housing over the next 20 years, and a further one in ten for below market affordable rental housing.”
The study shows it will cost governments $8.6 billion a year to deliver the new social and affordable rental homes in tandem with the not-for-profit sector.
“To put that into perspective Australia spends $11.8 billion a year on negative gearing and capital gains tax subsidies,” Mr Troy said.
“Based on our modelling, the best and cheapest way for governments to deliver on our unmet housing need is to fund it through a combination of upfront grants and low interest government supported financing.
“Delivering below market rental housing through the not-for-profit sector, as opposed to the private equity model, will save $3 billion a year by removing developer mark-ups and shareholder returns."
Community Housing Industry Association NSW chair John McKenna said the analysis was valuable data that would help the sector and governments plan housing where it is most needed.