OLIVER FRANKEL AND SUSAN RYAN. Monthly digest on housing affordability and homelessness – Aug/Sept 2019

This is 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.

Infrastructure Australia recognises social housing as key infrastructure [AHURI news, 23 August]. The recently released Australian Infrastructure Audit 2019 has for the first time been expanded to cover the challenges and opportunities in providing Australia’s social infrastructure, with a focus on social housing as an important part of that infrastructure. This will hopefully help focus the minds of policy makers on the importance of boosting the supply of social housing.

Growth in lower income rental households outpaces other households [AHURI Brief, 23 August]. Recently released ABS housing occupancy and costs data shows that the number of lower income households grew almost twice as fast as the total number of households over the 10 years to 2017–18. Over the same period, the number of lower income rental households suffering housing affordability stress (i.e. spending more than 30% of their income on housing costs) grew by around 54%. The rises in housing stress were most pronounced in Queensland, WA and the ACT, with Victoria not far behind. NSW’s rate of increase in housing stress was significantly lower than the other major states.

Fall in older Australians’ home-ownership rates looms as seismic shock for housing policy [The Conversation, 27 August]. Mortgage free home ownership in later life is no longer a given and the financial wellbeing of Australia’s retirees is reduced as a consequence. According to the authors of this article, summarising the findings of an AHURI Report by the same researchers, home ownership rates amongst older Australians (aged 55-64) dropped from 86% to 81% between 2001 and 2016, while those in that age category lucky enough to own a home faced higher mortgage burdens, with a reduction from 80% down to 56% in the proportion who were mortgage free. Mortgage indebtedness has grown materially even for those aged 65 and over.

The Report’s authors expect these trends to continue in the 15-year period to 2031, with a projected 42% fall in the number of outright owners aged 55-64. The Report predicts a growing proportion of older Australians will, during retirement, still be paying off their mortgage or trying to meet rents from fixed incomes. This will in turn place higher demands on the heavily burdened and clearly inadequate public system – including Commonwealth Rent Assistance – and further lengthen waiting lists for public housing.

National Housing Conference 2019 [Darwin, 27-30 August]. Copies of presentations from keynote speakers at this highly successful (sold-out) conference can be accessed using this link from AHURI.

Why waiting lists don’t tell the full story on social housing demand [ProBono Australia, 4 Sept]. A Discussion Paper from Compass Housing Services – titled “Estimating Current and Future Demand for Housing Assistance” – suggests that the demand for social housing in Australia could be more than 300% higher than waiting lists suggest, albeit that waiting lists are already large. The new research assesses latent demand according to eligibility for social housing, on the basis of income and asset data and modelling predicting the structural impact of automation and artificial intelligence (AI) on long-term unemployment rates and wages across a range of industries, and the consequential detrimental effects on household incomes. Report author Martin Kennedy estimates that the number of households eligible for social housing but not currently living in it is equivalent to about 23% of all renting households in Australia.

Grattan Institute savages Rudd government scheme to create affordable rental accommodation [The Age, 8 Sept]. The National Rental Affordability Scheme (NRAS), set up in the early days of the first Rudd government and axed by the Abbott government in 2014, has received a scathing assessment by the Grattan Institute, on the basis that it handed developers and landlords a windfall estimated by Grattan at more than $1 billion, or roughly one-third of the total cost of the scheme. Grattan Institute report joint author, Brendan Coates, says the NRAS scheme set the government subsidy far higher than was required to provide the intended 20% rental discount to eligible tenants. Grattan criticises NRAS not only for being expensive, but also for being what it assesses as inefficient and poorly targeted.

According to Grattan, any future government efforts in this context should be focused on building more social housing, with a bigger rental subsidy, targeted at those most at risk of becoming homeless. Other Grattan recommendations include a 40% boost in Commonwealth Rent Assistance, indexed to changes in rents rather than general inflation. For a different view of NRAS, see this article in The Conversation by University of Melbourne Associate Professor Marcus Spiller, who supports the idea behind NRAS type schemes (as part of a suite of policy measures) while accepting that NRAS’ actual implementation during the Rudd era may have been flawed.

Housing data dashboard helps inform planners [Government News, 8 Sept]. A new “one-stop-shop” interactive housing dashboard, developed by the Australian Institute of Health and Welfare (AIHW) together with Commonwealth Treasury, enables town planners to view 7 million data points from 29 national housing and homelessness data sets in one place. Centralising all of this data allows local councils, amongst others, to have more nuanced insights into housing, something which Luke Howarth MP, Assistant Minister for Community Housing, Homelessness and Community Services believes should help “identify shortfalls and oversupply in order to address housing and homelessness across Australia”.

Housing affordability dives for younger Australians [The Canberra Times, 11 Sept]. In its 2019 Report, the Australian Health and Welfare Institute (AIHW) has shown that the rate of home ownership among young people aged 25 to 29 declined from 50% in 1971 to 37% in 2016. For those aged 30 to 34, the rate dropped from 64% to 50% over the same period. Not only are more and more young people renting, but the number of older renters is also increasing, albeit more modestly. The AIHW study also evidences an increase in rental stress, notably among low-income households, and the blight of homelessness – including the most common type, namely people living in severely overcrowded housing.

Assets rather than employment status is the key driver of inequality [University of Sydney, 13 Sept]. The Sydney University social scientists behind this research (“Class in the 21stCentury: Asset inflation and the new logic of inequality”) frame their case in terms of changing class distinctions, arguing that it is no longer adequate to think of a person’s class in terms of their employment status or wage. They say that employment-based class classifications should be replaced by an asset-based classification, particularly tuned to property ownership, a theory they intend to develop in subsequent research. They point to the house price boom in particular as one of the main drivers of their proposed reclassification of class, highlighting Sydney as “exemplary of a dynamic that has unfolded across the Anglo-American economies”, and which “explains how residential property was constructed as a financial asset and how government policies helped to generate the phenomenal house price inflation and unequal capital gains of recent years”.

Rising inequality in Australia isn’t about incomes: it’s almost all about housing [The Conversation, 19 Sept] According to these Grattan Institute researchers, the real problem in Australia is housing inequality, not income inequality (which is close to the OECD average). Rising house prices have driven rising inequality in wealth, and in turn disposable income, particularly as between homeowners and renters. It is the young and the poor who are the main ones missing out, at the expense of those able to cash in on the property boom, or those lucky enough to access the ‘bank of mum and dad’. The authors of this article argue that addressing inequality must factor in rising housing costs, and should include: a 40% boost to Commonwealth Rent Assistance (indexed to changes in rents paid by low-income earners); an increased and well targeted supply of social housing; and reformed residential land-use planning and zoning, allowing increased density in our major cities, particularly in middle ring suburbs of our major cities, where infrastructure and services, as well as jobs, are more accessible.

For another view, see this blog in MacroBusiness by the self-styled “Unconventional Economist”, in which the author claims that Grattan’s “supply-side” solutions are like a mouthpiece for the property development industry.

Families flock to rental market as they’re priced out of home ownership [SMH, 24 Sept]. Citing data from a recent Productivity Commission Report (“Vulnerable Private Renters: Evidence and Options”), the SMH’s Shane Wright quotes refers to the obstacles faced by ordinary wage earners wanting to become home owners, and the rental stress faced by many who are forced into long-term renting because they simply have no hope of buying. Although none of this should come as a great surprise, given the surge in house prices in recent years and the extent of coverage already given to the housing crisis, the data is nonetheless sobering. Long-term renting, with all the uncertainty that short-term tenure that implies, is becoming the norm for the young and the relatively less well off. A quarter of low-income households spend more than half of their income on rent, with 7% spending more than 75%. Almost one in five such households are left with less than $250 a week to live on after rent is paid. And all of this in an environment in which the public safety net in terms of social and affordable housing, and Commonwealth Rent Assistance, remains patently inadequate.

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