OLIVER FRANKEL AND SUSAN RYAN. Monthly digest on housing affordability and homelessness – June/July 2019Aug 1, 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.
AHURI final report calls for additional 730,000 social housing dwellings AHURI’s significant “Final Inquiry Report” (26 June) into social housing as infrastructure finds Australia’s social housing system “under-resourced and manifestly unable to meet demand” despite being a form of “essential social infrastructure that warrants public investment”. It estimates a need for some 730,000 additional social housing dwellings across Australia over the next 20 years (including 430,000 right now), with procurement costs varying from $146,000 to $614,000 per dwelling, depending on a range of factors. The Report advocates needs-based capital investment by government, supplemented by NHFIC style efficient financing, and discounts as substantially more expensive the model of zero upfront capital investment with commercial financing funded by an operating subsidy. In short, it says demand side subsidies alone won’t cut it. The report points to the need for more sophisticated and holistic cost-benefit appraisal methods, recognising the need to account for non-monetised ethical considerations such as need, distributional equity and environmental sustainability. Importantly, the report also calls for the creation of a new National Housing Authority to inform, coordinate and fund the expansion of new social housing supply. See also the AHURI report authors’ related article in The Conversation
Social housing pathways across Australia In this first (11 July) of three reports designed to understand and reimagine social housing pathways, AHURI addresses the question of how pathways into, within and out of such housing are conceptualised and translated into policy. It describes the significant transformation in recent years of the way in which social housing is targeted, including changes in allocation processes and eligibility criteria, as well as changes in tenure, household form, experience and attachment, and the impact of changing social housing operational policies.
The links between mental health, housing and homelessness This AHURI brief (8 July) – which references particularly the Journeys Home Survey– notes the two-way correlation between mental health and homelessness (or stress brought on by lack of housing affordability), especially for those in the bottom 40% income bracket, and for those relying on the private rental market, which aside from often being relatively unaffordable usually provides renters little security of tenure. See also this article in The Conversation, focusing on how Victoria’s mental health system is failing the homeless.
The “residualisation” of social housing This AHURI brief (4 July) discusses the somewhat contentious concept of “residualisation” and its implications. The concept describes the tendency in more recent years for Australia’s historic underinvestment and chronic shortage of social housing to leave what remains (of our limited social housing stock) targeted at our poorest population groups – those in “greatest need”, who rely on government benefits and cannot afford to pay market rents. One key implication of residualisation and its associated lack of investment in expanding social housing is that “lower-need” households who are participating in the workforce are no longer able to access public housing and must therefore face housing affordability stress in the expensive private rental market.
Build-to-rent could shake up real estate but won’t take off without major tax changes UNSW Professor Hal Pawson’s article in The Conversation (8 July) discusses the opportunity in Australia for “build-to-rent” (BTR), a new type of housing as yet little-known here but quite common in some overseas jurisdictions, including the US and UK. BTR refers to apartment blocks “built specifically to be rented, usually at market rates, and held in single ownership as long-term income generating assets”. While acknowledging that BTR is no silver-bullet solution for our housing affordability stress, Pawson considers BTR to have potential in widening housing diversity, enhancing building standards and providing a better-managed more secure form of private rental housing – not to mention its prospective value as a counter-cyclical component in our volatile residential construction industry. Pawson notes some early signs of BTR in Australia, but that for it to flourish here will require adjustment to certain tax settings. He also says that for BTR to contribute to our affordable housing crisis (eg. by including a component of affordable housing in BTR schemes), major government funding or planning concessions will be required. The subsidy could come in the form of allocating sections of government owned redevelopment sites to community housing providers at discounted rates.
IKEA gets green light to build affordable homes in UK The Guardian Australia has reported (26 June) on a collaboration between UK Council Worthing and Swedish firm BoKlok (jointly owned by IKEA and construction firm Skanska), on the delivery of 162 low-cost apartments. BoKlok, which has already built 11,000 homes across Sweden, Finland, Denmark and Norway, adopts a “left to live on” affordability model under which property prices are set so that buyers have enough money left to live on after paying their housing costs (which should account for typically no more than 1/3 of take-home pay). Worthing will license BoKlok to use Council owned land (rather than selling it off) and charge it an annual ground rent, in return getting 30% of the properties to use as affordable housing to rent to locals – the remaining 70% being available for BoKlok’s “left to live on” model.
New Assistant Minister wants to put a “positive spin” on homelessness in Australia It must surely go down as one of most unfortunate reflections of the Morrison government’s attitude to homelessness. Luke Howarth, the newly appointed Assistant Minister for Community Housing, Homelessness and Community Services, was being interviewed on 9 July by ABC RN’s Hamish McDonald, ahead of a 2-day summit at which Australia’s Lord Mayors proposed to step up the pressure on the Federal Government to do more to solve our worsening homelessness crisis. Mr Howarth concluded the interview by telling Hamish: “It is important to put a positive spin on it [ie. the state of homelessness in Australia]”. One can only hope he is better briefed for the next interview. The above hypertext link includes RMIT ABC Fact Check analysis of Mr Howarth’s claims.
Home ownership is no longer a one-way street An article in The Conversation (15 July) by Professor Rachel Ong, based on her paper at the July 2019 Australian Conference of Economists, illustrates important changes between 1990 and 2015 in the incidence and nature of home ownership in Australia. In each of the 3 age groups studied, the study points to markedly more renting and less ownership than there used to be. Among owners, outright ownership has shrunk, with much more high debt across all 3 age cohorts, including those aged 55 to 64. The study finds a 20% incidence of “leavers” (ie. owners returning to renting, due to mortgage stress, relationship breakdown and poor health) or “churning” (ie. moves back and forth between ownership and renting). It predicts that mortgage stress in old age will become more common, as too will lifelong renting.
2.5 million Australians live in homes harmful to their well-being and health This is one of the more startling findings by the authors of this article in The Conversation (22 July), findings based on household, income and labour data collected by the Melbourne Institute. The article contrasts the recent high level of media attention on defective new high-rise apartment buildings with the relative lack of focus on “a greater systemic problem: the fact that hundreds of thousands of Australians are forced into inadequate or unhealthy housing by high housing costs…” The authors blame market failure and a culture in which we think too much about rising prices, and the wealth they generate for owners, and not enough about the downsides of booming housing markets. They call for more government funded low-cost housing.
NHFIC announces first construction loan to a CHP, at rate of less than 4% The National Housing Finance and Investment Corporation (NHFIC) has just announced its first ever construction loan to a community housing provider (CHP). The recipient, BlueCHP, will use it to help finance 93 new affordable homes in Sydney, at an interest rate (less than 4%) which will save the borrower more than $600,000 a year. NHFIC financing is welcomed by the CHP sector, but acknowledged to be inadequate to close the funding gap required to be bridged if overall social housing stock is to be increased meaningfully. Only government investment can realistically close that gap.
Why building more public housing will help all Australians In this article in The New Daily (18 July), Robert Pradolin, former GM of Frasers Property Australia and founder of Housing All Australians Limited, puts the case for housing to be treated as economic infrastructure, vital to the economic health of our cities, and adds his voice to calls for government to help plug what he terms the “dire shortage of affordable, social and public housing”. He advocates the establishment in Australia of a property sector asset class around social and affordable housing, as exists in the US, and notes the beneficial multiplier effects of more public investment in this sort of housing.
How do we make housing more affordable and accessible? This is an audio recording of a “State of Affairs” event presented by the Grattan Institute on 26 June, with speakers Adrian Pisarski, Executive Director of National Shelter, and John Daley, CEO of the Grattan Institute and moderator Scott Stephens, co-host of the ABC’s “The Minefield”.
Communal living – a solution for some to housing affordability This article in Pro Bono Australia (9 July) discusses a new guide based on research by UTS for the Institute of Sustainable Futures, which canvasses the nature and merits of communal living (in its various different forms), noting that “collaborative housing encourages participation, sharing and community-building, while still allowing privacy, security and financial autonomy between households”. It can be particularly beneficial for older people, and can improve housing affordability, as well as sustainability and connectedness. This sort of housing is already popular in some parts of Europe and the US, though still in its infancy in Australia.