Housing stress takes a toll on mental health. Here’s what we can do about it

Australia’s housing crunch is no longer just an economic issue. Research clearly shows^[1] people who face housing insecurity are more likely to experience mental ill-health^[2].

For this reason, secure housing must sit at the heart of any mental health plan.

Australia’s housing shortfall

Rents rose so fast in 2024 that Australia’s Rental Affordability Index^[3] now labels all major cities and regional areas “critically unaffordable” for people relying on benefits such as JobSeeker or a pension.

Vacancy rates hover near 1%^[4], the lowest in decades. Mortgage costs chew the biggest slice of income since the mid-1980s^[5].

On Census night in 2021^[6], 122,494 Australians were homeless. Of these, more than 7,600 people slept rough, and nearly one-quarter were aged 12–24.

Data from homelessness services^[7] and headcounts of rough sleepers^[8] since 2021 suggest today’s figure is higher.

Read more: Why is it so hard for everyone to have a house in Australia?^[9]

Housing stress quickly turns into mental distress

In a national survey^[10], four in five renters said they spend more than 30%^[11] of their income on housing.

This 30% threshold^[12] is important. A 2025 study^[13] that followed more than 10,000 Australian renters found mental health drops fast once housing costs exceed the 30% mark. Missing a rental payment was linked to a further drop in mental health.

Earlier research^[14] has similarly found that among low- to moderate-income households, when housing costs exceed 30% of income, mental-health scores fall compared with similar households who spend less than 30%.

Another recent Australian survey^[15] found 38% of private renters feel their housing circumstances harm their mental health, versus 23% of owner-occupiers. This is driven by a mix of housing insecurity (such as short leases and eviction risk) and poor housing conditions (for example, cold homes or mould).

Meanwhile, helplines have reported^[16] cost-of-living pressures, including housing insecurity and homelessness, are driving an increasing number of calls.

Who is at highest risk?

In a sense, the housing ladder doubles as a mental health ladder.

Homeowners, with long-term security, sit on the top rung^[17].

Private renters arguably ride the roughest road. Six-month leases, “no-grounds” evictions and “rent bidding^[18]” (where applicants may feel compelled to offer above the advertised rent to beat other applicants) keep people on edge.

Social housing residents often start with bigger challenges (43% live with mental health issues^[19]), but low rent and fixed leases steady the ship.

People with no stable home^[20] face the steepest climb. One review^[21] looking at people experiencing homelessness in high-income countries found 76% had a current mental illness.

This is likely linked in a large part to a feeling psychologists call “learned helplessness^[22]”. After the tenth rejected rental application – or the 15th, or the 20th – people ask “why keep trying?^[23]”. Motivation drops, and depression rises.

What’s more, a stable home makes it easier to do things like hold down a job or finish TAFE. Housing insecurity can therefore compound other problems such as unemployment^[24], which are also linked to poor mental health.

What can we do about it?

Mental ill-health already drains roughly A$220 billion from Australia’s economy each year^[25] in lost productivity and health-care costs.

Housing stress piles extra costs onto the health-care system^[26]: more GP visits, more ambulance call-outs, more pressure on emergency departments.

Meanwhile, homeless shelters^[27] turn people away daily because beds are full.

This is without even accounting for the physical health effects^[28] of poor quality housing, including illnesses caused or exacerbated by problems such as mould, damp and cold.

All this means fixing the housing crisis^[29] is likely to generate savings for the health-care budget.

There are several ways we can do this.

1. Build more social housing

As of June 2024^[30], about 4% of Australian households lived in social housing, equating to roughly 452,000 dwellings nationwide.

The National Housing Supply and Affordability Council’s State of the Housing System 2025 report^[31] recommends boosting social housing to 6%^[32], with a long-term target of 10% of all homes. This would be a major step to cool the market and cut mental distress.

2. Protect renters

This should include ending no-grounds evictions, capping rent hikes to wage growth, and lifting Commonwealth Rent Assistance^[33].

3. Link housing to health policy

On this point, Australia can take lessons from abroad. Finland^[34], for example, has made “Housing First^[35]” national policy. This approach gives people experiencing long-term homelessness a permanent apartment and access to support. It has cut rough sleeping^[36] significantly.

Meanwhile, Aotearoa New Zealand’s Homelessness Action Plan^[37] aims to make homelessness “rare, brief and non-recurring” by funding Housing First in every region.

A trial in Canada^[38] gave more than 2,000 participants across several cities experiencing homelessness and mental illness a permanent home plus access to voluntary support.

Evidence from Canada shows Housing First keeps people housed and reduces demand on emergency and hospital services. Pilots in the United Kingdom^[39] are indicating similar benefits.

While there have been some promising programs^[40] in parts of Australia, there’s more to do.

Secure housing targets should sit inside the National Mental Health and Suicide Prevention Agreement. On the flip side, Australia is currently drafting a National Housing and Homelessness Plan^[41]. Mental health goals should be incorporated into that plan.

Just as clean water prevents disease and seat belts cut road deaths, a stable, affordable home is vital for mental health. Without bold action, we face a long-term social crisis^[42].

This article is part of a series, Healthy Homes.

References

1. ^{^} clearly shows (doi.org)
2. ^{^} mental ill-health (www.smh.com.au)
3. ^{^} Rental Affordability Index (sgsep.com.au)
4. ^{^} hover near 1% (sqmresearch.com.au)
5. ^{^} biggest slice of income since the mid-1980s (www.abc.net.au)
6. ^{^} in 2021 (www.abs.gov.au)
7. ^{^} homelessness services (www.aihw.gov.au)
8. ^{^} headcounts of rough sleepers (www.nsw.gov.au)
9. ^{^} Why is it so hard for everyone to have a house in Australia? (theconversation.com)
10. ^{^} a national survey (everybodyshome.com.au)
11. ^{^} more than 30% (www.abc.net.au)
12. ^{^} 30% threshold (www.aph.gov.au)
13. ^{^} 2025 study (doi.org)
14. ^{^} Earlier research (doi.org)
15. ^{^} recent Australian survey (www.ceda.com.au)
16. ^{^} helplines have reported (www.lifeline.org.au)
17. ^{^} sit on the top rung (bennettschool.cam.ac.uk)
18. ^{^} rent bidding (www.nsw.gov.au)
19. ^{^} mental health issues (doi.org)
20. ^{^} no stable home (www.aihw.gov.au)
21. ^{^} One review (doi.org)
22. ^{^} learned helplessness (www.simplypsychology.org)
23. ^{^} why keep trying? (www.abc.net.au)
24. ^{^} unemployment (doi.org)
25. ^{^} A$220 billion from Australia’s economy each year (www.ranzcp.org)
26. ^{^} health-care system (assets.csi.edu.au)
27. ^{^} homeless shelters (homelessnessaustralia.org.au)
28. ^{^} physical health effects (theconversation.com)
29. ^{^} fixing the housing crisis (www.ahuri.edu.au)
30. ^{^} June 2024 (www.aihw.gov.au)
31. ^{^} State of the Housing System 2025 report (nhsac.gov.au)
32. ^{^} boosting social housing to 6% (homelessnessaustralia.org.au)
33. ^{^} Commonwealth Rent Assistance (www.servicesaustralia.gov.au)
34. ^{^} Finland (ym.fi)
35. ^{^} Housing First (endhomelessness.org)
36. ^{^} cut rough sleeping (www.theguardian.com)
37. ^{^} Homelessness Action Plan (hud.govt.nz)
38. ^{^} in Canada (mentalhealthcommission.ca)
39. ^{^} the United Kingdom (www.gov.uk)
40. ^{^} promising programs (aaeh.org.au)
41. ^{^} National Housing and Homelessness Plan (www.dss.gov.au)
42. ^{^} long-term social crisis (www.smh.com.au)