Monthly digest on housing affordability and homelessness: Feb/Mar 2021

Mar 30, 2021

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.

Can I have a pet and be housed, too?  It all depends… [The Conversation, 23 February].

This article by six housing experts spanning five universities, liberally illustrated with drawings, depicts the outcome of a study of pet ownership policies affecting housing, and options for reform, claiming to be the first of its kind internationally. The underlying study assesses actual and potential reform of such policies, at both a state and territory housing level, across the private rental sector, social housing, homelessness services, strata title, aged care and caravan parks.

One key takeout is that despite more than 60% of Australian households having a pet, laws and policies remain restrictive and inconsistent across many housing sectors in Australia (particularly in private rental). This is despite what existing evidence tells us about the positive health and social impacts of more animal-inclusive housing and urban policies – especially for those in precarious living situations (such as domestic violence and homelessness).

Sydney named third worst city in the world for housing affordability [Savings.com.au (Alex Brewster), 25 February].

It’s certainly nothing to be proud of, but once again Sydney has been ranked as one of the most unaffordable housing markets globally, coming in third (behind Hong Kong and Vancouver) in the 2021 edition of the Demographia International Housing Affordability report, an annual survey of the rates of middle-income housing affordability across 92 major housing markets in eight countries.

The major housing markets in Sydney, Melbourne, Brisbane, Perth and Adelaide are all rated as “severely unaffordable”, and the report rates Australia’s national housing market as the third-worst of those surveyed. Melbourne is rated sixth most unaffordable city, behind Auckland and Toronto, but ahead of San Francisco, London and Honolulu.

The report finds a strong correlation between higher overall costs of living and higher housing costs. A separate OECD report has found that housing is the main driver of rising middle-class expenditure, with house prices growing three times faster than household median income over the last two decades.

The pandemic has of course made things worse, as house prices escalate (particularly in regional areas which are now seen as more viable for those capable of remote working) despite incomes dropping among middle-income households. The Demographia report cites Griffith University urban planner, Tony Matthews, as saying: “The move out of cities is on; we’re not going backward from this…. The most important connection had been the train line; now the most important infrastructure is a decent broadband connection.”

Experts say this is what Australia needs to do to solve the housing crisis [ABC News, 27 February].

The ABC asked four housing policy and economics experts for their views on what we can do about rising housing inequality and intergenerational poverty, made worse by soaring property prices and rental shortages in some parts of Australia. Although overall homeownership rates have not fallen dramatically in recent years, the position for some age and income demographics (eg. under 40s) has deteriorated much more markedly.

The experts consulted by the ABC identified some key policy reforms they say would make a significant difference. High on the list of priorities, according to UNSW Professor Hal Pawson, would be a national housing policy, which Australia hasn’t really had since 1945. Curtin University Professor, Rachel Ong, identified reform of the laws governing private rental (including better security of tenure) as an important focus, as well as better targeting of Commonwealth Rent Assistance.

Economist Cameron Murray noted the political obstacles to any policy reform that might reduce house prices, particularly given the importance of housing as a repository of wealth (for those fortunate enough to own their home). He pointed to the success the Singaporean government has had in promoting homeownership. Some 80% of Singapore’s population has been able to buy a government-subsidised home. Most of the experts agreed on the importance of increasing the stock of social housing, which has stagnated in recent decades, let alone kept up with rapid population growth.

Swinburne University Professor, Wendy Stone, warned that continued economic polarisation within Australian society, including that from housing inequality, would undermine our economy in the longer term.

Submission regarding NSW Treasury’s proposed property tax reforms [Tenants’ Union of NSW, March].

The Tenants’ Union of NSW, a peak body representing the interests of tenants in NSW, has made a submission in response to NSW Treasury’s proposals for reforms to our tax system, notably Treasury’s proposal to replace stamp duty with a broad-based land tax.

The Tenants’ Union has long supported a move towards land tax as a more efficient tax collection tool with minimal negative impacts relative to other taxes, and significant positive impacts. Their submission is unsurprisingly focused on safeguarding and enhancing the interests of renters, who collectively represent an already large (around one-third) and increasing proportion of the residential property market.

Landmark Victorian Inquiry into Homelessness report: What’s in it for young people? [ProBono Australia, 5 March]

Associate Professor David Mackenzie (from the University of South Australia), and his Upstream Australia colleague, Dr Tammy Hand, comment on some key takeaways from the recently tabled report of this inquiry.

A key message is that “homelessness is one of the most complex and distressing expressions of disadvantage and social exclusion in our society and requires immediate attention by government”, and that “Victoria can solve homelessness”.  The report strongly favours early intervention (eg. focused on child/youth homelessness) and the provision of more long-term social and affordable housing. See also Homelessness: better prevention and more housing are key, says inquiry [The Mandarin, 8 March]. Here’s a link to the full report.

Count confirms fewer rough sleepers in Sydney’s centre [City of Sydney News, 8 March]

The recent City of Sydney street count, conducted on 23 February 2021, showed fewer people sleeping rough in inner-city Sydney this summer, compared to the same time in 2020, before the onset of Covid-19. Crisis and temporary accommodation also showed lower occupancy levels than the previous year.

Commenting on the recent count, Lord Mayor Clover Moore commended the NSW Government for its $65m Together Home project, which she believed had helped the situation via securing private rentals and funding. It remains to be seen whether the improvements are short-term (thanks to Covid-19 temporary initiatives) or sustainable.

The City of Sydney conducts two street counts a year, one in summer and one in winter. See also Covid-19 measures reduced rough sleeping but will the change be permanent [The Age, 8 March]

Build-to-rent surge will change apartment living for Australians, but for better or worse? [The Conversation, 11 March]

Megan Nethercote, an ARC DECRA research fellow at RMIT’s Centre for Urban Research, reviews Australia’s emerging (“booming” by some accounts) build-to-rent (BTR) sector, and its promise and prospects.

There is little doubt about the momentum for BTR, given that 15,000 units worth more than $40 billion are apparently in the BTR project pipeline, across most of Australia’s major housing markets, but with Melbourne currently commanding over 50% of the market. BTR is already well established overseas, particularly in the US and in the UK, boosted in the latter case by government support. It accounts for one in five new homes in England and one in four in London. In the US, BTR makes up almost two-thirds of the rental stock in many of the largest cities, with large corporate landlords operating as many as 400,000 units each.

BTR presents an enticing vision, including flexible long-term tenancies, client-centric onsite management and allowances for pets and other tenant preferences, including painting and decoration. Nethercote says, “For cities, the model promises high-amenity, well-located, purpose-built rental apartments that cater to diverse and changing housing needs” and she notes that BTR’s proponents see it as a win-win, and salve for various housing woes, including concerns about housing rental supply, affordability and apartment quality – not to mention its beneficial stimulus to the construction sector.

She comments that the rise of BTR sets in motion two important structural shifts, namely:
(1) Institutionalising the private rental sector (away from “mum and dad” landlords) and;
(2) diversifying residential development models.

Nethercote asks the big question: “Could build-to-rent be a catalyst for more progressive tenancy reforms, leading towards tenure neutrality/equality where ownership isn’t seen as automatically superior to renting?” This is an important question as one in three Australian households now rent their housing.

She closes her article by sounding a note of caution as to whether the growth of BTR will be all good, particularly if this new model is left unchecked, and observes that BTR properties in Australia look set to attract rents of about 10% to 15% more than comparable non-BTR housing, as has apparently occurred in London. And she says that without government subsidies, market-rate BTR will not provide more affordable housing. Maintenance of good design standards for rental housing must also be safeguarded.

Calls for human right to shelter in Australia [Sydney Morning Herald, 14 March]

The SMH’s Paul Sakkal reports that Josh Burns, Labor MP for McNamara, has authored a report for the Labor-aligned think-tank, the McKell Institute, calling for the Australian government to legislate a human right to housing, thereby legally requiring it to take responsibility for homelessness and to provide enough social and affordable housing for the vulnerable.

Sakkal notes that both France and Scotland have established a legal right to housing and, in Britain, local authorities are responsible for ensuring no person is evicted unless they have secured alternative accommodation.  UQ Professor Tamara Walsh is quoted as saying that this sort of legislation can make a difference and marks a “recognition that people need to be respected and cared for as a rights-bearer rather than a problem case”.

Josh Burns has proposed a shared equity model where the government provides a proportion of the upfront cost of a home, taking on an equity share in order to reduce the amount homebuyers need for a deposit.

The McKell Institute report also suggests industry-specific subsidies for essential workers such as teachers and paramedics. The report claims that more than 74,000 homes would need to be built to cater for everyone on housing waiting lists and that the Commonwealth has reduced housing stock by 11,000 homes since 2018.  See also Calls for legislated human right to housing as rental market fails low-income Australians [The New Daily, 15 March]

By targeting house prices, NZ shows the way [AFR, 15 March]

In an opinion piece syndicated from the UK Financial Times, Ruchir Sharma (Morgan Stanley Investment Management’s chief global strategist and author of ‘The Ten Rules of Successful Nations’) reminds us that NZ’s central bank was the first to commit, back in 1989, to a specific target for consumer price inflation, then the biggest threat to the world economy.  The initially unpopular idea caught on and soon most central banks had adopted CPI style targets, in order to put the lid on runaway prices for consumer items.

It seems that NZ is once again leading the way in terms of central bank policy objectives, this time with a view to taming asset price inflation, and with a specific focus on the cost of housing. Home prices in NZ rose 19% in the 12 months to the end of January 2021, with the price of a typical Auckland home soaring past NZ$1m (A$920,000), to the embarrassment of Prime Minister Jacinda Ardern, who made it one of her key commitments during the last NZ election campaign to address affordable housing.

The Ardern government has now ordered NZ’s central bank to add stabilising home prices to its remit effective from 1 March 2021.

Sharma describes why housing bubbles are the worst type of investment bubble and that: “In general, recessions that follow debt-fuelled housing booms are the longest and deepest”. He acknowledges that Ardern’s move may not slow the housing boom soon, due to the strength of supply and demand dynamics, but thinks that ordering the NZ central bank to make housing price stability a higher priority is a start and could inspire others to rethink the role easy money has played in driving financial instability.

Homelessness in the US rises prior to the pandemic [Affordable Housing Finance, 18 March]

It is cold comfort to know that we in Australia are not alone amongst wealthy industrialised nations in facing the chronic and often worsening problem of homelessness.

Donna Kimura writes that US homelessness has risen for the fourth consecutive year, according to a recently released report by the US Department of Housing and Urban Development (HUD), which estimated that, in 2020, 580,000 people across the US were living in shelters, transitional housing or on the street, up 2% from 2019, or 7% in the number of unsheltered individuals.

Recently appointed HUD Secretary, Marcia Fudge, said “What makes these findings even more devastating is that they are based on data from before COVID-19, and we know the pandemic has only made the homelessness crisis worse.” The numbers in the HUD report are based on counts conducted in January 2020, before the pandemic took hold in the US. The report reveals that chronic homelessness increased 15% between 2019 and 2020 and that in 2020 just under 172,000 people in families with children were homeless (unchanged from 2019). Unsurprisingly, African American and indigenous peoples were considerably over-represented among the homeless, compared to the overall US population.

Nan Roman, President and CEO of the US National Alliance to End Homelessness said: “The 2020 report provides a deeply troubling accounting of homelessness in the United States.” As Kimura notes, President Joe Biden’s recently approved American Rescue Plan includes significant funding for housing and homeless programs, including US$27.4 billion for emergency rental assistance and US$5 billion for homelessness assistance.

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