The cost-of-living crisis was a key issue for voters in the Dunkley by-election, as housing affordability shapes up as a critical area in the next general election.  

Labor Party candidate Jodie Belyea won the by-election in Melbourne's southeast on Saturday, beating her main opponent Liberal Party candidate Nathan Conroy. 

But the poll, with more than 75% counted, also recorded a 3.6% swing towards the Liberal Party compared to the 2022 election, which was won by the late Labor MP Peta Murphy. 

Cost of living and housing affordability have been major issues in Dunkley, where more homeowners are paying off a mortgage than the national average, according to the most recent Census.

In Dunkley, more than 41% of homes were owned with a mortgage in 2021, compared to the national average of 35%.  

The by-election has been labelled a test of the Labor government’s recent stage three tax cut changes, with many voters likely to benefit from the policy change.  

The tax changes were a clear back-track on the government’s 2022 election promise, but the government justified the change by the need to provide cost-of-living relief for low- and middle-income earners.   

Household incomes in Dunkley is slightly less than the national average, with residents earning a median weekly income of $1,718 in 2021. 

Prime Minister Anthony Albanese and Labor Dunkley candidate Jodie Belyea campaigning in Frankston. Picture: Diego Fedele-Pool/Getty

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Hal Pawson, professor of housing research and policy at UNSW Sydney, told realestate.com.au that housing wasn’t explicitly a major bone of contention in the by-election. 

“But to the extent that it’s a big part of the cost-of-living crisis, it will have been a huge background factor,” he said.  

“Outer suburban areas like Dunkley typically contain large numbers of recent first-home buyers – just the group who will be doing it toughest at the moment in terms of higher housing costs compared with a couple of years ago.  

“Maybe Labor’s quite solid vote share suggests most in this group have sufficient confidence in Labor’s handling of the economy that they’re hopeful of interest rate reductions being now within sight." 

Cost-of-living is a major concern for Dunkley voters. Picture: Michael Dodge/Getty

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He said the Coalition has put up strong opposition towards the government's flagship housing agenda, while offering "little or no alternative housing policy" to lure voters back from the government fold.

Housing a 'top tier issue' for federal election

The federal opposition remained optimistic after the by-election loss, pointing to the swing against the government as a win in itself. 

“The people of Dunkley have sent Anthony Albanese a really strong message and it’s not 'happy birthday',” federal opposition deputy leader Sussan Ley told media.  

“It’s ‘do something about the cost-of-living crisis.’”  

Prime Minister Anthony Albanese, who marked his birthday on the same day as the by-election, said the government was focused on cost-of-living.  

“On cost-of-living, we will continue to look for what measures we can put in place to take pressure off cost-of-living without putting pressure on inflation,” he said.  

However, Menzies Liberal MP Keith Wolahan, who helped campaign with Mr Conroy in Dunkley, said more needed to be done to help young people into home ownership. 

“After cost-of-living, housing is a top tier issue,” he said.   

Opposition Deputy Leader Sussan Ley said the federal government wasn't doing enough on cost-of-living. Picture: Martin Ollman/Getty

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“I’m convinced that whoever can offer a credible solution to young Australians affording a home of their own will have a pathway to government.”  

ABC election commentator Antony Green said the Labor party vote had held steady since the last election, while the Liberal Party vote was boosted by the absence of One Nation and the United Australia Party, which didn’t contest the by-election.  

He said the two-party preferred vote swing reflected the historical by-election average.  

Swing against the Greens

The Australian Greens have been fighting the federal government on housing, calling on the government to do more to address the housing crisis. 

The Greens are currently blocking the government’s Help to Buy scheme in exchange for changes to negative gearing and capital gains tax benefits for property investors.  

Dunkley has more home owners with mortgages than the national average. Picture: Getty

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The party previously held up the $10 billion Housing Australia Future Fund last year, but eventually struck a deal after extracting more funding for housing infrastructure.  

But the Greens’ Dunkley candidate Alex Breskin recorded a swing against the party at the by-election, down to 6.3% from 10.3% in 2022. 

“Consistent with the Greens vote slump, it would seem that their pretty singular focus on more strongly regulating the private rental market didn’t cut much ice,” Mr Pawson said. 

“Or perhaps some voters were wise to the fact that this isn’t a federal power. 

Greens MP and housing spokesperson Max Chandler-Mather wants the federal government to invest more in housing. Picture: Getty

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“At the margin, especially in a seat like this, the Greens’ more recent antipathy towards the government’s Help to Buy shared equity home ownership scheme might not have done them much good.”  

The government's Help to Buy scheme would help homebuyers with deposits as low as 2% get a foot on the property ladder by providing an equity contribution of up to 40% for new homes and 30% for existing homes.   

The seat of Dunkley has changed hands over the years, having been held by the Labor Party since 2019. Prior to that it was held by the Liberal Party since 1996.  

The by-election was caused by the death of Ms Murphy, who lost her battle with breast cancer last December.  

Dunkley includes the suburbs of Frankston, Mount Eliza, Seaford, Carrum Downs, Skye, Sandhurst and Langwarrin.