Monthly digest on housing affordability and homelessness – Oct/Nov 2020

Dec 3, 2020

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.

Mould and damp health costs are about 3 times those of sugary drinks. We need a healthy housing agenda[The Conversation, 26 Oct] University of Melbourne Professor, Rebecca Bentley, and University of Adelaide Professor, Emma Baker, highlight the pernicious effects of poor housing conditions on people’s health, and in particular the impact of mould and damp. To illustrate this, they estimate that the health cost (measured in disability adjusted life-years) due to respiratory and cardiovascular disease that can be attributed to mouldy or damp housing is about 3 times the cost attributable to sugary drinks in Australia. This health burden does not even factor in the important role housing plays in mental health. The authors say that Australia is behind the eight ball on healthy housing, lagging behind jurisdictions such as the US, UK and New Zealand, all of whom have major policy initiatives focused on this. One of the hurdles in Australia is that housing is not embedded in our general preventative health strategy. This issue has of course been brought into sharp focus as a result of the Covid-19 pandemic, which reinforces the urgent need for reform. The authors have previously estimated that more than 2.5m Australians are living in unhealthy housing, a number they say is rising. Their practical recommendations for a preventive health strategy include minimum rental housing standards, good quality public housing, help with fixing maintenance problems (including mould removal), and better home insulation and temperature controls. Their article includes a series of key questions for a healthy housing agenda, which they are currently researching via the NHMRC funded Centre for Research Excellence in Healthy Housing.

Builders, developers eye social and affordable housing [AFR, 28 Oct] AFR Senior Reporter, Michael Bleby, points to early signs that builders and developers of large scale residential property are looking more closely at developing social and affordable housing, including by partnering with community housing providers (CHPs). This is partly on the back of a trend for people in search of more affordable housing to consider moving to the outer suburbs of our big cities and to the regions. A new survey by the National Housing Finance and Investment Corporation (NHFIC) shows that CHPs are increasingly being approached by developers and investors attracted by the CHP sector’s stable revenues, which in turn are supported by Commonwealth Rental Assistance payments and the shortage of affordable housing, where rents are set at up to 80% of market rates. NHFIC is continuing to explore new ways of financing low-cost rental housing, where lower rents and returns remain a challenge, but where low interest rates and generally depressed investment return expectations make the return equation a bit more attractive for private sector investors.

NAB strengthens $2b affordable housing commitment by joining the constellation project [NAB press release, 27 Oct] NAB has recently announced that it will be joining The Constellation Project (TCP) as an Alliance Member, building on the bank’s existing $2b affordable housing commitment. NAB Group Executive, David Gall, has expressed NAB’s shared vision “to end homelessness within a generation” and pledge to contribute financial support and expertise to TCP, starting with the “More Homes” pillar, designed to increase the supply of safe and affordable homes for people in Australia on very low to moderate incomes. NAB also plans to contribute to discussions on national policy issues that could help increase the number of affordable housing dwellings, including through land use planning initiatives, such as mandatory inclusionary zoning.

$1 billion per year (or less) could halve rental housing stress [The Conversation, 2 Nov] Curtin University Professor, Rachel Ong, and UNSW Professsor, Hal Pawson, along with colleagues from their respective universities, have penned this article as a companion to their 29 October AHURI report, Demand-side assistance in Australia’s rental housing market: exploring reform options. The article’s main message is that Commonwealth Rent Assistance (CRA) is much lower than it should be, and that the CRA that is paid is badly targeted. It is pointed out that ACOSS wants a 30% increase in the maximum rate of CRA, while the Grattan Institute has called for a 40% increase. Even the Productivity Commission wants a 15% increase, to restore what’s been lost over the past decade. The authors’ accompanying AHURI report finds that in 2017 some 23.4% of the renters who received CRA weren’t in housing stress, while 17.5% of renters in housing stress didn’t receive CRA. They offer three suggestions to better match CRA to housing stress, and calculate that adopting these suggestions would not only more accurately target payments to need, but also result in savings to the public purse – though they acknowledge that their proposals are subject to resolution of some regulatory and other hurdles, which they think are soluble. See also Improved targeted rent assistance needed for low-income tenants [The Fifth Estate, 29 Oct]

Domacom punts fractional investment in affordable housing [AFR, 9 Nov] In what is being promoted as a new model for bringing capital into the affordable housing sector, ASX-listed Domacom and community housing provider BlueCHP are embarking on a $10m, 20-home pilot project, under which Domacom’s retail investors will provide 60% of the capital and BlueCHP the other 40%, possibly using low-cost funding from the federal government’s National Housing Finance and Investment Corporation (NHFIC). Tenants, including essential workers such as teachers and police, will rent the dwellings at 75% of market rental rates. Unlike the Rudd-era National Rental Affordability Scheme (or “NRAS”), the Domacom scheme will not be supported by tax incentives for investors. Domacom can simply buy housing stock from developers, taking advantage of discounted interest rate finance from NHFIC and depressed price property (due to Covid). Domacom will set up a fund for each home, with units in the fund representing ownership of the home. Tenants will receive 1% of the equity in the fund when they move in and a further 1% for each year of their occupation, up to a maximum 5%. Each home will be sold after 10 years, and the profit distributed to owners of the units in the fund, including the tenant. Properties will be valued annually and investors will be able to buy and sell units during the 10 years.

Social housing could power our economic recovery from Covid-19 [The New Daily, 12 Nov] One of the more encouraging bits of news in recent times, heralding a broadening consensus around the need for more social housing, is the formation of the “National Affordable Housing Alliance”, which brings together a range of social welfare groups (Homelessness Australia, ACOSS and National Shelter), industry peak bodies (CHIA, Property Council of Australia, Master Builders Australia and Industry Super Australia) and the ACTU. Rod Fehring, who used to run Australand (now called Frasers Property Australia), is leading the charge, and wants to see the amount of social housing built annually in Australia “multiplied by 10”. He sees this time as “an opportunity to harness capital and apply it to a social good for enduring long-term benefit”, partly thanks to a combination of record-low interest rates and the amount of capital looking for a return. The article mentions, amongst other benefits, the “multiplier effects” in the economy of more investment in social housing, including the fact that people who move out of housing stress can play a greater role in society. See also Heavyweight group to propose affordable housing solutions [ABC’s The Money, 12 Nov], which includes a panel (amongst whom, Rod Fehring) discussing the National Affordable Housing Alliance initiative.

NSW Budget missed opportunity to address increasing homelessness by investing [Homelessness NSW Press release, 17 Nov] Some social welfare groups see the recent NSW Budget as a missed opportunity to invest more significantly in social housing, particularly given the backdrop of homelessness in NSW having increased by 37% from 2011-16, compared to a national increase of 14% over that period, as well as the fact that the Covid-19 pandemic has made life even more difficult for homeless people. The NSW Budget provides new stimulus spending of $812 million for social and Aboriginal housing across NSW, including $400m for new social housing properties, $200m for maintenance to and upgrades of social housing and $212m for new and upgraded Aboriginal housing. The aggregate $812m represents a somewhat puny contribution to low-cost housing, particularly when compared to the Victorian government’s recently announced $5.3b investment in 12,000 new social and affordable dwellings over 4 years, including 9,300 additional social housing units (for further details, see below). See also NSW’s new $812 million social housing package doesn’t go far enough, advocates say [SBS News, updated 18 Nov] and Stamp duty not the only conversation we need to have [SMH, 18 Nov]

Homelessness eradication program to grow in Australia [ProBono Australia, 18 Nov] The Australian Alliance to End Homelessness (AAEH) has partnered with US organisation, Community Solutions, to grow the “Advance to Zero” movement across local communities in Australia. The first step in Advance to Zero’s methodology is to build real-time lists (“by-name lists”) of people experiencing homelessness in the community. This helps service providers understand how many people in the area need housing support, who they are and what their needs are to be housed. AAEH CEO, David Pearson, says that the partnership with Community Solutions will help expand the impact and geographic reach of steps already underway towards implementing the Advance to Zero program around Australia.

Victoria’s $5.3b Big Housing Build: it is big, but the social housing challenge is even bigger [The Conversation, 18 Nov] In what is one of the most encouraging signs of government action to address shortages in social housing in recent years, the Victorian Government has announced a $5.3b Big Housing Build initiative to build more than 12,000 new social and affordable homes over 4 years, including 9,300 social housing units (replacing 1,100 old housing units) and 2,900 new mainly affordable and low-cost homes, close to jobs and transport. The package also includes funding to accelerate the public housing capital upgrade program, including enhanced gas heater servicing. The Big Housing Build initiative will be delivered through partnerships with the community housing sector, private sector construction, industry and other investors. To put the initiative into perspective, Victoria’s social housing stock grew by only 12,500 dwellings over the past 15 years. The Andrews government’s initiative is eclipsed only by the Rudd government’s $5.6b Social Housing Initiative in 2009, in response to the GFC, which resulted in the creation of 19,700 social housing dwellings, and the repair of 12,000. The author of this article says the Victorian initiative, while big, is not enough to overcome the shortfall in social and affordable housing in Victoria (cited as around 164,000 in 2018, based on University of Melbourne research) and not free of criticism in its design. Victoria’s Big Housing Build aims to increase social housing dwellings in Victoria to an equivalent of about 3.5% of all housing, still less than the Australia-wide average of 4.2% and well below the OECD average of 6%. One of the interesting features of this program is that it includes the spot-purchase of homes from the private sector (as has been done in Canada and the US state of California), which will deliver social housing quickly and capitalise on Covid-19 induced lower house price levels. See also Victorian Government aims to create 43,000 jobs with $5.3b public housing spend [ABC News, 15 Nov]; Victoria puts $5.3b into massive social housing construction initiative [The New Daily, 15 Nov]; Pressure piles on federal government after Victoria’s record social housing drive [The New Daily, 15 Nov]; and Investing in public housing will help the homeless and the economy [The Age, 19 Nov]

The lived experience of COVID-19: housing and household resilience [AHURI final report, 19 Nov] Key findings from this research report are in some respects intuitive and therefore unsurprising. Examples include that housing has taken on increasing significance with Covid-19; and that the pandemic has exacerbated sensitivities and vulnerabilities such as social isolation, poor housing quality and location, housing affordability, energy poverty and a range of social, mental and physical health conditions. Perhaps less obvious is the finding that digital literacy, inclusion and confidence – together with concerns about online security – reveal uneven capabilities and access to support to achieve social connectedness online. One of the key takeaways from this report is that housing provides a key hub for control measures instituted to control a pandemic like Covid-19, and therefore assumes even greater significance to society now than was previously thought. However, just as housing provides sanctuary and security for most of us, the report acknowledges that it can also be a place of domestic violence and fear for some, particularly when we are confined to our homes by a threat like Covid-19. The report goes on to discuss a range of policy development options that help build resilience amongst more vulnerable or sensitive cohorts. See also Post pandemic landlord-renter relationships in Australia [AHURI final report, 12 Nov]

Renters are in trouble – one of 5 key takeaways from the Retirement Income Review [The New Daily, 20 Nov] This article by the Grattan Institute’s Household Finances Program Director, Brendan Coates, and Grattan senior associate, Matt Cowgill, summarises their key learnings from the federal government’s recently publicized Retirement Income Review, led by senior bureaucrat Mike Callahan. For the purposes of this Digest, the most relevant learning is that, according to Grattan, renters – particularly low-income renters – are at real risk of having an inadequate retirement income. Callahan’s report found that 60% of single retirees who rent their home are in poverty, compared to about 10% of single home-owner retirees, a situation which is likely to get worse as homeownership falls. Grattan’s recommended solution is a 40% increase in the rate of Commonwealth Rental Assistance, though they acknowledge that even that would not be enough to meaningfully close the gap in retirement incomes between renters and homeowners. See also Housing is ‘the big elephant in the room’ [AFR BOSS magazine, 23 Nov], which also makes observations on how disadvantaged renters are, compared to homeowners, in the context of retirement income, and provides further comparisons about the incidence of income poverty among different retiree groups.

Why social housing is good stimulus [Grattan Institute podcast, 23 Nov] In the context of the Victorian government’s recently announced $5.3b “Big Housing Build” initiative (as to which see further above), the Grattan Institute’s Brendan Coates explains why social housing not only is good social policy but is also good for the economy.

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