Housing affordability and homelessness – monthly digest: Dec 2020/Jan 2021

Jan 28, 2021

The latest instalment of a monthly digest of interesting articles, research reports, policy announcements and other material relevant to housing stress/affordability and homelessness.

Insights into the difficult plight of those in the rental sector [AHURI insights collection, Dec 2020].

This edited collection of insights by 20 leading thinkers from housing, economics, policy, urban planning and epidemiology is based on surveys conducted in mid-2020 on 15,000 renting households across all states and territories (comprising the “Australian Rental Housing Conditions Dataset”). All respondents were in private rental and public or community rental housing.

Joint editors Emma Baker and Lyrian Daniel (both from University of Adelaide) point out that rental is Australia’s fastest-growing tenure – roughly one in three Australians are renters. According to AHURI’s managing mirector, Michael Fotheringham, private rental has grown by 36% over the past 10 years, twice the rate of household growth, and more than a quarter of all Australian households (some 2.1 million households) are private renters:

“This growth is set to continue as home ownership declines, particularly amongst younger and middle-aged Australians faced with rising prices and a shrinking housing sector.”

Baker and Daniel observe that the rental sector displays fairly widespread problems, including poor dwelling conditions, tenure insecurity, limited tenant rights, and unaffordability – problems that will almost certainly be exacerbated by the pandemic and its reverberations. Existing inequalities between renters and homeowners will also likely be amplified by Covid-19.

The insights in this collection cover a number of key themes, including the lack of available and affordable private rental housing, the financial impacts of the Covid-19 pandemic and associated shut-downs, the relationships between renters and landlords, the health effects of unsuitable housing, social isolation and mental health impacts of Covid-19 restrictions and the aspirations of renters to enter home ownership.

Amongst the 20 contributions to this series, Baker and Daniel observe certain “echoes”:

  • Children, particularly those living with a sole parent, are a group of particular concern, as households with children are, for example, more likely to live in poorer quality housing (eg. with damp, plumbing and wiring problems). Children are also at high risk of living in households where the family has difficulty keeping warm in winter.
  • The mental health effects of lockdown are substantial and widespread, with almost half of all renters reporting a decline in their mental health during Covid-19 – loneliness and isolation being key concerns, especially for older renters.
  • The economic effects on households are yet to be fully realised because they are currently hidden by temporary solutions such as access to savings and superannuation, or interventions like JobKeeper, rent deferment, and eviction moratoriums. University of Adelaide Professor Emma Baker, one of the publication’s joint editors, notes that the pandemic “has provided a stark reminder of how we are housed – where we are located, the quality, security and amenity of our housing – impacts on our health, wellbeing and economic productivity”.

NZ’s housing crisis poses big test for Jacinda Ardern [Australian Financial Review, 6 Jan]
More than three years after Jacinda Ardern became NZ Prime Minister in October 2017, on a platform that included tackling the housing crisis and inequality, many experts believe NZ’s housing crisis has only become worse. Among the problems are a widening wealth gap between homeowners and renters, a fall in home ownership to 64.5% in 2018 (a 70-year low), more than half of new mortgage holders in Auckland in 2020 borrowing more than five times their incomes, surging house prices (a rise of almost 20% in the 12 months to October 2020), a tripling of the social housing waiting list and a 30% rise in median rents since 2015.

The homelessness rate is claimed to be the highest in the OECD, though definitions of homelessness vary across the OECD. Victoria University Professor Arthur Grimes attributes part of the crisis to general economic factors such as low interest rates, but also points to the government’s failure to adequately tackle longer-term challenges such as insufficient housing construction and high immigration.

The NZ government has considered, but so far failed to implement, significant reforms that might have helped tackle the crisis, including demand-side measures such as banning foreign buyers and requiring investors to pay capital gains tax on properties sold within five years of acquiring them. Another key policy disappointment has been the Government’s now abandoned NZ$2 billion “KiwiBuild” scheme, launched in 2017 with the objective of building 100,000 affordable homes within a decade for first time buyers. Just 602 homes had been delivered by August 2020.

Amazon pledges US$2 billion toward affordable housing in three hub cities [Yahoo! News, 7 Jan]
Amazon has followed the lead of its major tech counterparts, Apple, Microsoft, Facebook and Google, in pledging a substantial sum (in Amazon’s case, more than US$2 billion) to help tackle affordable housing problems in its key employment areas. The Seattle-based giant intends to use its Housing Equity Fund to help build and preserve 20,000 affordable homes, using a range of funding mechanisms, including low-cost loans, lines of credit and grants to public agencies and minority-led organisations to support families earning between 30% and 80% of the median income in each employment area.

Initiatives of this type by the major tech companies are, at least in part, an acknowledgement that their high employment and wealth generating capacity can drive up the cost of housing in the areas surrounding their operations – a phenomenon that many consider a downside of the “gentrification” process that is so often observed in the poorer parts of major cities as they are re-developed. Similar major tech company initiatives were also mentioned by this author in P&I on 29 November 2019 and on 24 July 2020.

“It’s just horrible”: Community sector dismayed by homeless “tent cities” in WA [ProBono Australia, 15 Jan]
Freemantle, Western Australia, has recently witnessed its short lived equivalent to Sydney’s Martin Place Tent City, about which the late Susan Ryan wrote so eloquently in P&I in August 2017.

Freo’s tent city was established on Boxing Day as a temporary food and shelter option for vulnerable people, at a time when homelessness services were under pressure. Shelter WA chief executive Michelle Mackenzie recognises that despite the goodwill of concerned members of the community who tend to the needs of the occupants of such tent cities, they are not a sustainable solution to the problem of homelessness.

Mackenzie points to the key causes of the crisis as “a lack of social housing and inadequate funding for the homelessness service system”, with a shortfall across WA of more than 39,000 units of social housing, and more than 19,000 affordable homes. Lamenting the fact that a wealthy state such as WA should be facing a homelessness crisis, she says the state needs an additional 2,500 affordable homes each year for the next four years.

In the face of the Freo’ tent city episode, the WA government has sought to defend its homelessness record, with WA Premier, Mark McGowan, claiming that the organisers of Freo’s tent city were on an “ego trip”. The State Government took over control of the situation from Freemantle Council on or around 24 January, arranging for the police to pull down the tents and ensure that rough sleepers were no longer allowed to stay there.

With WA’s state election only two months away, Freo’s short-lived tent city will undoubtedly focus the minds of leading political contenders, and hopefully serve to sharpen relevant election promises. See also Blame game, boiling tensions and criminal charges overshadow housing plea at “tent city” [The Age, 22 Jan], WA authorities to shut down homeless camp [The West Australian, 22 Jan] and WA government dismantles homeless camp[yahoo! news, 23 Jan].

New Productivity Commission data prompts calls for more housing investment [ProBono Australia, 20 Jan]
According to the Productivity Commission’s Report on Government Services 2021 (Section G (Housing and Homelessness)), 50.2% of low-income households who are privately renting face rental stress – defined as paying more than 30% of their income towards rent. Mission Australia executive Ben Carblis says Australia’s housing system is “in urgent need of repair and investment”, citing a “severe shortage of social and affordable homes”.

Mission Australia renewed calls for the government to build 30,000 social houses over a four-year period through the $7.2 billion Social Housing Acceleration and Renovation Program (SHARP) proposal. The PC Report also highlights the positive impact of the temporary doubling of welfare payments through the coronavirus supplement, which saw substantial decreases in June 2020 in the number of households experiencing rental stress, compared to the same period in 2019. See also Progress on homelessness stalls as property market booms [The New Daily, 20 Jan].

Housing crisis: Canberra is Australia’s most expensive city to rent [Canberra Weekly, 25 Jan]
According to Domain’s December 2020 rental report, Canberra is the most expensive city in Australia to rent houses and units. Less than 5% of accommodation on the market is affordable, and supply is not keeping up with demand. The ACT Council of Social Service claims the price of rentals is causing severe housing stress.

Last year, 43% of low-income rental households in the ACT spent 35% of their income on accommodation, materially above the 30% (rule of thumb) threshold beyond which those on lower incomes are deemed to be in housing stress. The ACT has a shortfall of some 30,000 social housing dwellings and more than 2,700 people are waiting on average 3 ½ years for social housing.

Last year, almost 1,600 Canberrans were homeless, albeit only a small proportion of those were rough sleepers. The article details what the ACT Government is doing to tackle the housing crisis. The territory government claims it provides the highest rate of public housing in Australia.

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