Pearls and Irritations

The latest monthly digest of articles, research reports, policy announcements and other material about housing stress/affordability and homelessness.

Making housing more affordable Brendan Coates, Economic Policy Program Director at the Grattan Institute, has authored a Submission to the Victorian Legislative Council inquiry into the protections within the Victorian Planning Framework. Coates argues the case for increasing the supply of housing as a means of improving housing affordability and articulates the role he believes the Victorian Government should play in boosting supply. He says Victoria’s current planning framework is too restrictive, and that the government should allow more medium-density housing in established suburbs that are close to jobs and transport. He favours a shift towards a system of planning controls which allow “as of right” development along key transport corridors, with height limits set up-front, and housing supply targets (set by the state government) which local councils would be mandated to meet. Failing the meeting of such targets, he says, the state government should transfer development assessment responsibility to independent planning panels, as has already happened with some success in Sydney. 

Coates notes that heritage protection controls need to be balanced by an acknowledgement of the costs of preserving heritage sites “which includes stymieing the supply of housing in areas where people most want to live”. He reiterates The Grattan Institute’s call for more government support to reduce homelessness and help house vulnerable Victorians, including through measures such as Grattan’s recently proposed Federal Social Housing Future Fund. Interestingly, Coates is not a fan of schemes that build more affordable housing, as he believes such schemes are not well targeted towards people at high risk of homelessness and that they create a “lottery” that favours some at the expense of others – not necessarily in line with need. He believes a boost to Commonwealth Rent Assistance is a fairer and more cost-effective way to help the large number of low-income earners who are struggling with housing costs.

Options for increasing the supply of social and affordable housing at scale and in perpetuity The National Affordable Housing Alliance (NAHA) recently released a policy options paper outlining a set of initiatives designed to create a sustainable and scalable pipeline of new social and affordable housing, one which importantly leverages non-government sources of capital, including institutional investment through the superannuation industry. NAHA brings together a range of groups representing different perspectives of the housing spectrum, including groups representing labour (the ACTU), the housing industry, the superannuation sector and CHIA and other not-for-profit housing organisations. The options paper cites estimates by the National Housing Finance and Investment Corporation (NHFIC) of around $290 billion over the next two decades, to create an additional 30,000 social housing dwellings and an additional 15,000 affordable housing dwellings. NAHA acknowledges that there are no silver bullets in addressing the ongoing shortage of such housing, and that the scale of investment necessary means that all levels of government, plus the private sector and not-for-profit organisations need to be part of the solution. 

NAHA emphasizes that the policy options they advocate for are just a starting point. Their estimate is that such policy options could add between 11,500 and 14,950 homes per annum, in addition to the new supply already being created by state and territory governments. Of this, they say a minimum of 25% should be dedicated to social housing, with rents capped below 30% of household income. The policy initiatives advocated by NAHA include: a Housing Capital Aggregator (developed by The Constellation Project in collaboration with CHIA, Industry Super Australia and National Shelter); a Social and Affordable Housing Future Fund (developed by the Grattan Institute); an affordable version of a Build-to-Rent housing model; and re-prioritisation of a small proportion of existing residential development contributions for social and affordable housing delivery. See also NAHA’s 4 policy proposals address Australia’s growing affordable housing crisis.

A Federal Housing Advocate for Canada – lessons for Australia? The Government of Canada has recently announced the appointment (for a 3-year term) of Marie-Josée Houle as Canada’s first ever Federal Housing Advocate (FHA), a position that will be housed within Canada’s Human Rights Commission. The FHA’s role is to promote and protect housing rights in Canada by independently conducting research, consulting with individuals with lived experience of housing need and/or homelessness, working with vulnerable groups and civil society organizations as well as reviewing and assessing submissions on systemic housing issues under Canadian federal jurisdiction. The announcement confirms that Canada’s government has recognized the right to adequate housing as a fundamental human right. The FHA will put particular focus on those with the greatest housing need, including women and children fleeing domestic violence, seniors, Indigenous people, the homeless, people with disabilities, those dealing with mental health and addiction issues, veterans, young adults, racialised groups and newcomers to Canada.

Sydney’s new metro train lines to play a big role in housing growing population SMH Transport and Infrastructure Editor, Matt O’Sullivan, reports on NSW government plans to use Sydney’s expanding metro rail infrastructure as a means of housing a substantial part of the city’s growing population in the coming years. Transport projects such as Sydney’s various new metro train lines make up more than two-thirds of the NSW government’s $109 billion infrastructure budget over the four years to 2024-25. The government has forecast greater Sydney’s population will grow to about 6.6 million in 2036, from about 5.4 million today, and the NSW Department of Planning has estimated that Greater Sydney will need 1 million extra homes by 2041, or about 30,000 to 40,000 homes each year between now and then. 

An Ipsos survey for the Committee for Sydney found strong support for increased urban density near train stations, particularly if it means the government can improve open spaces in suburbs. Committee for Sydney chief executive, Gabriel Metcalf, is cited as saying the new metro train lines offer an opportunity to solve the city’s growth and land use problems. Metcalf estimates Sydney could easily fit half of the population growth forecast for the city over the next 20 years around new train stations, an estimate with which NSW Infrastructure, Cities and Active Transport Minister, Rob Stokes, apparently agrees.

New report on ending homelessness in Australia The Centre for Social Impact, the Australian Alliance to End Homelessness and Neami National recently launched a new report outlining ways in which they believe Australia’s homelessness can be ended. The report – Ending Homelessness in Australia: An evidence and policy deep dive – presents findings from the ‘Advance to Zero’ homelessness database, covering over 20,000 people experiencing homelessness in Australian cities. Key findings include: on average, those surveyed had experienced homelessness for 3.8 years, with around 40% of respondents reporting many years of homelessness; an incidence of long-term serious medical and mental health conditions which is very significantly higher than that seen across the general population; a large proportion of respondents reporting time in out-of-home care and/or juvenile detention; an estimated average annual cost totalling over $42,000 per year for rough sleepers in terms of ambulance, accident and emergency department an in-hospital care. 

The report puts forward five key actions to end homelessness in Australia, namely: a national strategy to end homelessness and leadership at a federal level; an increase in the supply of social and affordable housing; comprehensive application of “housing first” programs; targeted prevention and early intervention programs to ‘turn off the tap’ of people becoming homeless; supportive systems and programs, such as advocacy, effective service integration, culturally safe and appropriate service delivery and improved data quality, evaluation and research.  See also Putting homelessness on the map.

Victoria pledges $150 million to ease tenfold rise in Aboriginal homelessness Jack Latimore, Indigenous affairs journalist at The Age, reports that the Victorian Government will provide $150 million in funding to provide more than 400 new homes for Aboriginal households on the Victorian Housing Register and to contribute to the state government’s goal of increasing the state’s social housing stock by 10 per cent by 2024. The $150 million funding commitment comes on top of $35 million announced in 2020 to upgrade existing Aboriginal affordable housing and is part of the Victorian government’s $5.3 billion ‘Big Housing Build’ scheme for increasing social and affordable housing within the state. While the latest initiatives are welcome, it is noted that Victoria has a lot of catching up to do, as it still lags significantly behind the 4.5 per cent national average of social housing as a proportion of total housing stock, following Victoria’s decades of under-investment in social housing, at a time of record population and economic growth. The 2021 Victorian Aboriginal Housing and Homelessness Framework annual report identified a tenfold increase in the rate of Aboriginal people presenting to homelessness services compared to a decade ago. The report also found that one in six Aboriginal people in Victoria requires assistance for homelessness.

Could a national shared equity scheme level the housing playing field for the young and poor? Grattan Institute Economic Policy Program Director, Brendan Coates, outlines his proposal for a national shared equity scheme to help arrest declining rates of home ownership among poorer Australians of all ages. Between 1981 and 2016, home ownership rates among 25- to 34-year-olds fell from more than 60 per cent to 45 per cent, and among the poorest 40 per cent of that age group, it halved, from 57 per cent to 28 per cent. Home ownership is also falling among poorer older Australians, dropping from 71 per cent four decades ago to just 55 per cent now, amongst the poorest 40 per cent of 45- to 54-year-olds. The main hurdle for aspiring homeowners, particularly younger, poorer Australians, is the time required to save for a 20 per cent deposit (now almost 12 years, versus 7 years in the early 1990s), unless the would-be homeowner is fortunate enough to be able to rely on the “Bank of Mum and Dad”. Under Coates’ proposed national shared equity scheme – which he suggests being trialled over 3 years, with 5,000 places a year – the National Housing Finance and Investment Corporation (NHFIC) would co-purchase up to 30 per cent of the home value, taking a proportionate share of any profits when the home is sold. 

Purchasers would borrow the remaining funds from a private lender, provided they have at least a 5 per cent deposit. Homeowners could buy out NHFIC’s equity stake – in 5 per cent increments – at the prevailing market price. NHFIC would not charge rent or interest to participants. However, purchasers would be required to cover all costs associated with buying or selling the home, such as conveyancing costs and stamp duty, as well as ongoing costs such as council rates and maintenance. The scheme would be restricted to people purchasing their principal place of residence, and participation would be restricted to singles with incomes below $60,000, and couples with combined incomes below $90,000. Regional price caps would mean participants could buy only below-median priced homes in their city or region. Coates notes that several states already have shared equity schemes, but argues that a national scheme is needed, in part because existing state schemes are typically small and often limited to public housing tenants or to purchasing homes solely from government run developers. See also Shared home equity could help some older women escape poverty and Why it’s time for a national shared equity scheme.

Andrews abandons proposed new Victorian social and affordable housing development levy SMH journalists, Josh Gordon and Paul Sakkal, report that the Victorian government is set to abandon its controversial proposal to require property developers to pay a 1.75 per cent levy (or tax) on the expected value of all newly built developments with 3 or more dwellings, an initiative which aimed to raise $800 million per year to fund an extra 1,700 social and affordable homes a year. Industry critics claimed it would add almost $20,000 to the cost of a typical new home. The Andrews government’s abandonment of this initiative comes only a week or so after it was announced, via a media release from the Victorian State Revenue office. See also Victorian government set to back away from new property tax plan.