Australian SMEs are facing an unexpected challenge that’s affecting their bottom line: the housing affordability crisis. As property prices and rents continue to climb across the country, businesses are discovering this isn’t just a social issue—it’s directly impacting workforce stability and operational costs. According to KPMG, housing affordability has risen from fifth to first place in its list of critical challenges.

The problem is particularly acute in capital cities and regional hubs, where workers increasingly cannot afford to live near their workplaces. For businesses requiring on-site staff, this creates significant recruitment and retention challenges that directly affect your competitiveness. Lengthy commutes, rising living costs, and scarce remote work options are driving skilled employees to reconsider their roles or seek opportunities elsewhere. Housing stress can also significantly impact staff morale.

A domino effect is evident, with childcare centres struggling to find staff, limiting their capacity to offer more places for working parents. The significant and widespread crisis in childcare places continues across the country.

The impact on SMEs is multifaceted:

• Staff turnover: Workers are leaving roles when commutes become unsustainable, with some businesses reporting up to 30% of new hires departing within six months
• Recruitment difficulties: Positions requiring physical presence are harder to fill, especially in hospitality, healthcare, trades, and retail
• Wage pressure: Businesses face demands for higher compensation to offset employees’ increased housing and transport costs
• Reduced productivity: Long commutes lead to fatigue, tardiness, and decreased employee performance

While large corporations can offer substantial incentives like sign-on bonuses and comprehensive benefits packages, most SMEs lack the cashflow to match these perks. However, forward-thinking small businesses are finding creative solutions:

1. Flexible arrangements: Implementing hybrid models, staggered shifts, or compressed workweeks where possible
2. Local partnerships: Collaborating with nearby businesses on shared transport solutions
3. Professional development: Offering career growth opportunities to compensate for location challenges
4. Community engagement: Strengthening local connections to build employee loyalty beyond compensation

As a business owner already balancing multiple challenges, the housing crisis adds another layer of complexity to your operations. The right risk management approach, including appropriate insurance coverage, can provide a safety net during workforce disruptions and help maintain business continuity.

If you’d like to know more about protecting your business from housing-related workforce challenges CLICK HERE, or contact us today.