A new kind of real estate agency opened in Melbourne this week. HomeGround Real Estate, a non-profit venture, will offer affordable rentals only. Given that rent on a one-bedroom flat in Preston (yes, Preston) is approaching $600 a fortnight, it's an idea that has truly come at the right time.

About 25 per cent of Australians now rent privately, compared to 18 per cent in 1994-95. They are renting for longer and they are getting older. But amid our property extravaganza, government policies effectively treat renters as second-class citizens.

Gentrification has pushed many renters (and first home buyers) further out, dividing the city. And the divide between renters and the rest is worsened by tax and welfare policies that favour home owners and property investors, the Grattan Institute says in a recent report. Such policies include negative gearing and the exclusion of the family home from the pension assets test.

Negative gearing, it says, has pushed up house prices, increasing demand yet doing little to boost supply. It is often seen as politically untouchable because lots of voters (and, no doubt, politicians and journalists) own investment properties. But renters vote too. Maybe they need to unite and form a more powerful lobby group because expressing awe at surging property prices is virtually a national pastime.

It's a culture that engulfs and seduces. Last year, as a panelist at a Wheeler Centre forum on homelessness, I lamented our obsession with property values. Days later, I breathlessly told a friend that an old shop in her street was selling for $750,000: "You must be sitting on a goldmine."

This idea of housing as a path to a windfall has become deeply ingrained.

Between 2002 and 2012, reports the institute, average rents increased 76 per cent for houses and 92 per cent for other dwellings. (Average earnings increased by just 57 per cent.) Still there's a touch of Groundhog Day to the affordable housing debate. A Senate committee is examining the issue – just six years after the last one did.

Most renters are under 45. (Seventy-five per cent of older people own their homes outright.) But between 2006 and 2011, the number of over-55s in private rentals rose by 44 per cent, according to the Housing for the Aged Action Group. It says pensioners pay, on average, 63 per cent of their income on private rental, even after rent assistance, and face discrimination from agents.

Most are women, says spokesman Jeff Fiedler. And most will forgo buying food to avoid going into arrears. The private rental market is set up to benefit investors, he says. "For anyone who wants long-term, stable, affordable housing . . . it's the antithesis of that, really."

Owning a home can bring great solace. And those who bought in Melbourne 20-plus years ago are probably sitting pretty today, even if they endured high interest rates. Historically, home ownership enabled people of modest means to accumulate wealth. But the property boom has made things less equal.

Prices in sought-after suburbs are ludicrous. Rents have soared and mortgage deposit amounts can be prohibitive. Yet incredibly, the state government has almost halved spending on public housing.

About 5 per cent of stock here is social housing, according to Australians for Affordable Housing. In England it is about 20 per cent and in the Netherlands, it is around 30 per cent. In Britain, interestingly, Kevin McCloud, the uber-smooth host of Grand Designs, has become a developer of affordable housing projects.

We need to think differently about housing here. For instance, as more people rent privately – either by choice or necessity – they surely deserve more security. In Germany and the Netherlands, leases are typically indefinite. In Ireland, they're for four years. In Australia, most last just six to 12 months.

Home Ground's embryonic real estate venture is a great step and this week, one of its landlords, Philip Endersbee, spoke movingly about why he's letting two East Kew flats at below market rates. "I just thought this could be just the break this guy needs," he said of one new tenant, a father with a young son.

There's a lot of goodwill out there – and recognition that something needs to give. So why do state and federal governments lack the political will to act?

Suzy Freeman-Greene is a senior writer at The Age.