2 May 2022

Housing crisis response needs more pillars than same bankrupt policies

| Ian Bushnell
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Housing development.

Housing supply is not keeping up with demand and rents are increasingly unaffordable. Photo: Michelle Kroll.

Both of Australia’s main political parties have responded to the latest figures showing a housing crisis in the country by declaring it a priority issue that requires every idea on the table …

Just kidding.

Despite the alarming latest Anglicare report showing rental affordability and vacancy rates at record lows, it’s really just more of the same on offer and likely to produce the same failed outcomes.

Labor has promised to fund 30,000 new social housing dwellings, but it has buried and cremated any move to reform the tax settings that favour property speculation that many economists say has fed home prices and, subsequently, rents.

And while 30,000 may sound a lot, spread across the country, it certainly won’t be anywhere near a solution.

The Coalition’s focus, as ever, is on home ownership with its Home Guarantee Scheme, guaranteed to help a few and boost prices even more, and of course, Labor will have its version pitched at regional residents.

Labor has also proposed its Help to Buy scheme for 10,000 eligible middle-income homebuyers, in which the government provides an equity contribution of up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home.

Again this will just feed demand and prices, and seems more about votes than fixing the structural problems with Australia’s housing market.

The Coalition does fund housing through the National Housing Finance and Investment Corporation and National Housing and Homelessness Agreement with the states and territories and provides rent assistance.

READ ALSO Tenants on the road to home ownership thanks to not-for-profit real estate agency

But with more people being locked out of buying their own home and the housing supply not keeping up, these measures are not making a dent.

Whole swathes of Australian society on fixed or low to medium incomes live in housing stress or outright poverty, and more people face the prospect of homelessness.

In the ACT, where there is a vacancy rate of just 0.5 per cent and the highest median rents in the country, Anglicare says there are literally only a handful of affordable properties for some welfare recipients and none for others.

This will only get worse with the return of migrant workers and international students.

New research calls for a broader approach to the problem and looks, not surprisingly, at how the Nordic countries run their housing policies.

It says Australia has an over-reliance on just two housing options – private homeownership and private renting – and needs to reinvest in social housing and adopt different housing models if the country is to make any impact on the affordability crisis.

READ MORE High rents, low supply: industry questions timing of rental reform, including minimum standards

In partnership with Deakin University, the Australia Institute’s Nordic Policy Centre says Australia needs to lift its proportion of social housing from 4 per cent – down from 7 per cent in the 1990s – to double digits.

It says Sweden and Norway use the cooperative model, amounting to 22 per cent of the total housing stock, while in Norway, it is 15 per cent, but 40 per cent in the capital, Oslo.

Sweden, Norway and Denmark also have extensive co-ownership whereby individuals own, use, and control their own dwellings but shared spaces and property are owned jointly and managed collectively with neighbouring members of a housing co-operative, which improves affordability.

Finland’s ‘Finnish Housing First Principle’ views housing as the first step to solving a homeless person’s social and health problems which, coupled with the nation’s belief in the notion that people have a right to decent housing and useful social services, has produced an impressive reduction in homelessness.

Finland has less than one homeless person per 100,000 people, compared to Australia’s nearly five homeless people per 100,000 people. In Finland, the government is aiming to eliminate homelessness by 2027.

Centre convenor Professor Andrew Scott says Australian governments needed to rethink their approaches and policies and pointed to the $3.5 trillion tied up in superannuation funds that could fund new housing.

“If we are to have any hope of tackling Australia’s housing affordability crisis, policymakers must stop favouring investors over tenants and shift the priority in housing policy to supporting low- and middle-income earners who simply want a secure place to live,” Professor Scott says.

“It is no secret that housing is expensive in Australia. Buying a house is hard, and being a renter has many of its own problems. Housing policies in Nordic nations prioritise homes to live in, rather than houses as investments.”

He says the Federal Government should require some of the collective capital in superannuation funds to be invested in affordable housing to ensure fund members can have an adequate retirement.

“This will strengthen the presence of ethical, not-for-profit private housing developers of the kind which in Denmark have created a rental co-operative sector which provides security of tenure and affordable housing for one-fifth of the nation’s population,” Professor Scott says.

This calls for a revolution in thinking and the destigmatising of social and public housing because that is where many will need to be accommodated in an economy where wages are so out of kilter with property prices.

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The ACT Government is investigating build-to-rent models and several private sector proposals are in the works that will add to the rental stock, but these are apartments, with most destined to be at the middle to higher end of the market.

A mix of housing to support all needs is required.

The ACT is also in the middle of a public housing renewal program but the social services sector believes the number of dwellings will not be anywhere near enough.

Realistically, a small jurisdiction like the ACT needs federal help, and ideally, there should be national leadership for a coordinated approach.

Simply continuing with the same policies will only reap the same results. The Nordic approaches may not be a panacea, but they are worth putting into the mix.

But the nation will have to get past the election first because ideas that might attract attention are in short supply, just like affordable housing options.

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Government needs to keep making ‘improvements’ as it’s obviously helping

10 years ago there was no major housing problem in Australia, and most Australian citizens were able to find adequate housing. The problem has been caused by excessively high immigration rates and far too many people coming here to live, and wanting housing. There is plenty of supply but far too much demand from people who are not even Australian citizens. Most Australian citizens are fed up with high immigration and overseas buyers buying up Australian land, housing and resources. The government’s priority should be the wellbeing of Australian citizens (and housing for citizens, not people from overseas).

I agree with Edward’s comment below. Supply is the issue. The ‘red’ states in the US are attracting young people because they have a good supply of housing and economic growth is happening in those places to the detriment of the larger east and west coast cities. The suburban housing estates might not appeal to designers wearing black polo necks but they seem to appeal to young couples who want jobs and a good place to bring up their children.

Higher interest rates won’t necessarily solve the problem because when they get to a certain level it will throw many loans over their LVR triggering margin calls or defaults and the RBA won’t let that happen.

The ALP’s home equity scheme is another policy that tries to address cost but it does so without seeking to lower prices. Knowing that the Cth is potentially going to take an equity stake in the house you are selling means you will be pretty confident that you can ask for a high price. The price is paid and money moves from the Cth (ie taxpayers) to the sellers. Incumbent property owners win again.

Again, you need a bolder solution… and that has to be supply surely.

HiddenDragon7:36 pm 02 May 22

From the time of the 19th century gold rushes, the Australian way of doing things is to keep piling on until the bonanza/racket in question implodes or explodes.

The great Australian real estate bubble will be no different, but will be so much more spectacular than previous episodes because just about every relevant instrument of public policy for the last few decades has been directed towards keeping it inflated and then feeding off it.

When it comes to an end (perhaps in the next global financial crisis, when foreign lenders may well decide to stop funding an Australian banking system so highly leveraged to dangerously over-priced homes), it’s good to know that some thoughtful policy work will be there, ready to be dusted off to give people somewhere to call home, and to help to re-build what would be a badly damaged national economy.

Reality check – why would it come to an end? The population is endlessly growing and people always need a place to live. Regardless of who wins government we are set for record immigration over the next decade!

Vinson1Bernie4:30 pm 02 May 22

You cant force super funds to put money into housing as they supposed to balance risk in their portfolio for their members – one assume they would just buy beachside residences to be safe and it would do nothing for areas of need – the govt can set funds that do that or the union super funds for their members??- in fact I believe there are funds that do that. The information about Scandanavian processes is scant and you would need to know more about their tax system including investment Individuals can promote social housing now by investing and choosing tenants that are in need but the tax system would prevent them renting out at below market rates.

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