Pearls and Irritations

The following is the latest instalment of a monthly digest of interesting articles, research reports, policy announcements and other material relevant to housing stress/affordability and homelessness – with hypertext links to the relevant source.

Victorian Budget’s big social housing plan lacks public housing pillar [The Age, 25 Nov] This article by two academics from RMIT and one from the University of Melbourne queries the extent to which the Victorian government’s recent and much-lauded “Big housing build” initiative, cost at around $5.3b, meets the State’s need for new state-owned and directly provided “public housing”. The authors say: “The only new public housing – which is owned and managed by the state, caps rent at 25% of a tenant’s income, provides secure tenure and prioritises the people in greatest need – replaces housing that has already been demolished as part of another program.” They go on to estimate that two-thirds of the package will go to “community housing” – which they claim is less cost-effective and provides less security of tenure than public housing, and only 75% of which is allocated to those in greatest need. The authors say international research provides clear evidence that directly-provided public housing is what is needed for a fair housing system.

Australia’s rental affordability crisis remains despite COVID welfare boost [ProBono Australia, 2 Dec] The latest Rental Affordability Index (RAI), covering the period to 30 June 2020, reveals ongoing moderate to extreme “rental stress” – where more than 30% of a household income goes towards rent – even after accounting for the coronavirus supplement to JobSeeker payments. The reduction in that supplement in September 2020 and the further reduction proposed for late December 2020 make the situation even harder for those facing rental stress.

What did COVID do to rental markets? Rents fell as owners switched from Airbnb [The Conversation, 2 Dec] A group of academics from the Universities of Sydney and NSW, writing in connection with the release on 1 December 2020 of their related AHURI research report, Marginal housing during COVID-19, has found that even modest reductions in Airbnb listings – as accommodation owners have switched to longer-term rentals as a result of COVID related travel restrictions and a sudden drop in tourism – increased the supply of these properties for long-term rental, thereby resulting in lower local rents.

The research focused primarily on Sydney and Hobart – cities in which Australia’s rental affordability pressures have been amongst the most extreme – during the period from March to May 2020, in the midst of COVID-induced lockdowns. It includes analysis of which renters are most at risk, particularly during COVID, including those living in substandard and/or unsafe rental housing, or who have precarious rental tenure, or who are living in overcrowded housing with shared facilities.

The authors comment that the difficulties lower-income renters face in Australia’s major cities reflect a chronic undersupply of social and affordable housing, a problem made worse by the rise of short-term accommodation platforms such as Airbnb, which have drained rental properties from permanent rental supply.

To preserve permanent housing supply in high-demand markets and increase the security of tenure for tenants (and improve accommodation standards), they advocate for the States to impose controls on short-term Airbnb style rentals, as well as higher regulation of the private rental sector – citing New Zealand’s “healthy homes” standards framework for inspiration. Increasing the supply of social and affordable housing would also help, as it would reduce dependence on the precarious and marginal private rental market.

Eliminating most homelessness is achievable. It starts with prevention and “housing first” [The Conversation, 3 Dec] Angela Spinney, a Lecturer/Research Fellow at Swinburne University of Technology, profiles the nature and extent of homelessness in Australia, and its varied causes, and summarises the findings of a 1 December 2020 AHURI research report, Ending homelessness in Australia: A redesigned homelessness service system, of which she is one of the co-authors. That research proposes a reform path, based on emerging international trends, towards reorienting homeless service systems away from larger crisis response and towards prevention and long-term solutions.

The key is what is known as the “Housing First” approach, which involves investing resources into first getting people into long-term accommodation, and then providing support to address the various reasons they find themselves homeless in the first place and related issues (eg. helping prepare them for employment or deal with drug and alcohol rehabilitation, domestic and family violence and mental health problems). Spinney cities Norway’s positive outcomes in deploying a Housing First approach over the past 12 years. She points to the need for an integrated national strategy and leadership, including coordinated federal and state funding for an adequate supply of affordable and social housing and an enhanced role for universal welfare services. Providing crisis accommodation should be the solution of last resort.

Social housing: helping the vulnerable and the economy [bluenotes.anz.com, 4 Dec] It is refreshing to see economists from one of Australia’s major banks (ANZ Bank) shining a light on the very significant undersupply of social housing in Australia, and on the long-term social and economic benefits of increased investment in social and affordable housing. This article also summarises key social housing and homelessness policies introduced during COVID-19, by state, and assesses the effectiveness of Commonwealth rental assistance (CRA) in alleviating rental stress.

Homeownership and super are far more entwined than you might think [The Conversation, 11 Dec] Monash University Professorial fellow, Deborah Ralston, notes that the home is the largest form of voluntary saving and is far more entwined with super and the pension than might be thought. Some 76% of retirees own the homes they live in, about 12% rent and a further 11% either live rent-free with family or in residential care or another arrangement. This current unusually high rate of homeownership (by international standards) benefits both the individuals concerned and also the public purse.

However, homeownership is declining and the proportion of homeowners retiring with an outstanding mortgage is increasing. As wealth tied up in housing is exempt from the age pension assets test, it is for many a preferred form of retirement saving. This can and often does result in retirees being “asset rich and income poor”, with one-fifth of age pension expenditure going to the wealthiest two-fifths of retirees. Non-homeowners are much less fortunate and among those most likely to experience poverty in retirement. Commonwealth Rent Assistance (CRA) is much more targeted than the age pension, with 90% of CRA going to the poorest fifth of retirees, though it has over time become increasingly inadequate, and now covers less than half the rental costs of its recipients.

Boosting CRA would of course help, but is only part of the solution, which should include increasing the supply and affordability of housing (including public housing) and making it easier for renters to obtain long-term secure rentals. Ralston runs through the various ways in which super supports homeownership (including through the so-called “wealth effect”) and estimates that for a typical homeowner at retirement, home equity represents about two to three times as much of their wealth as does super, something which ought to make accessing the equity in the home through schemes such as the government’s Pensions Loans Scheme attractive. She says these schemes are at last becoming more popular, and she encourages their use. She concludes that homes are a critical part of the retirement system – not only a place to live but also a substantial part of householder wealth.

“The worst is yet to come”: Growing number of indigenous women seeking homelessness support [ProBono Australia, 14 Dec] A new report from the Australian Institute of Health and Welfare (AIHW) shows the rate of Aboriginal Victorians seeking homelessness support is growing twice as fast as the rate for non-Indigenous people. The report finds that 260 people were turned away from specialist homelessness services every day throughout the 2019-20 financial year, with women and girls making up two-thirds of that figure. In Victoria, that year saw a 6% increase in Indigenous people using such services, compared with a 3% increase for the non-Indigenous population.

Kellyanne Andy, CEO of Elizabeth Morgan House, an Aboriginal-run refuge and crisis support centre for Indigenous women and children who have experienced family violence, has warned that in the months ahead we are likely to see things become even more difficult for Indigenous people, as we begin to see the impact of people exiting crisis accommodation hotels and motels. The Victorian government’s $5.3b “Big housing build” initiative is considered a welcome commitment, as about 10% is targeted for Aboriginal families. The Council to Homeless Persons believes this should be matched by co-investment in social housing by the federal government, and a boost in social housing, managed by Aboriginal Community Controlled Organisations, from all levels of government.

Aussie housing demand to plunge as COVID shocks population growth: report [The Australian, 15 Dec] The newly formed research team of the National Housing Finance and Investment Corporation (NHFIC) has, in its first report (published on 15 December), State of the Nation’s Housing, provided a picture of the projected Australian housing supply and demand balance to 2025. A key finding of the report is that COVID-19 has caused the biggest shock to population growth since early last century, triggering a forecast plunge in new demand for Australian housing over the coming years. It is forecast that by 2025, almost one million fewer people than previously expected will be living in Australia.

However, low-interest rates and government stimulus have boosted construction activity, and new supply is expected to exceed new demand by around 127,000 dwellings in 2021. Cumulative new supply is expected to be around 93,000 higher than new demand by 2025, though sensitivity analysis around difficult-to-predict key assumptions (including earlier than expected opening of borders and a resumption of high levels of migration) could reduce or even eliminate cumulative excess supply over a medium to longer-term horizon.

Excess supply results is a silver lining for renters, as higher vacancy rates should push down rental rates and improve affordability, but the position of low-income renters and prospective first-home buyers is unlikely to improve materially in the long term, given the trend of declining affordability, particularly in central parts of larger urban areas.

“Double Return” from investing in social housing – reduced homelessness and boost to economic recovery [Equity Economics report, 15 Dec] In this new economic study, commissioned by the Everybody’s Home campaign, economic consultancy Equity Economics details rising levels of homelessness and housing stress in recent years, and forecasts further increases in the period ahead, by region. For the period from February 2020 (pre-pandemic) to June 2021, significant increases are forecast in the number of Australians experiencing housing stress (+24%) or homelessness (+9%). The report describes the merits of a Housing First approach to reducing homelessness. Just as importantly, it explains why housing matters to the economy and why increased government investment in social housing is not only good for those in desperate need of it, but also for the economy and employment generally, particularly at a time when we are looking for ways to boost economic recovery in the wake of the COVID pandemic.

“Same old housing” not right for modern Australia [University of Sydney news, 16 Dec] This article accompanies the 16 December 2020 AHURI research report, Urban regulation and diverse housing supply, which finds that new homes being built in Australia are failing to meet the changing needs of Australia’s diverse population in terms of the size and form of dwellings, tenure options and their affordability. The research, which was led by Dr Catherine Gilbert, included as co-authors a group of academics from the University of Sydney, Curtin University, the University of Adelaide and the University of Melbourne. The authors note that land-use zoning laws can obviously have a significant impact on whether diverse housing types (eg. medium-density housing) are permitted and/or financially viable and that the high cost of land, particularly in accessible locations, presents a significant challenge for projects that are directed towards non-market-based residential dwellings, such as housing which is affordable to lower-income groups.

This implies the need for governments to play a leadership role in encouraging the development of more diverse housing products, particularly those aimed at vulnerable members of the community whose needs are not automatically met through market mechanisms. Government is uniquely placed to leverage desired public policy outcomes in relation to large-scale government-owned land parcels, where it can condition its sale or lease of such land on outcomes that market forces alone do not guarantee. Mandatory inclusionary zoning is an obvious tool for these purposes. Government leadership can also take the form of long-term funding to support affordable housing supply, as well as a requirement for a more appropriate mix of housing types and tenures (including lower cost or affordable housing).

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