OLIVER FRANKEL AND SUSAN RYAN. Monthly digest on housing affordability and homelessness – Mar/Apr 2019Apr 12, 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.
Why are young people receiving CRAexperiencing housing affordability stress? (AHURI Brief, 7 Mar) The 2019 Productivity Commission report into Government Services reveals that young people in receipt of Commonwealth Rental Assistance (CRA) are more likely to be in housing affordability stress than any other age or special needs group. For example, amongst all those in receipt of CRA, the cohort aged 24 or less is around twice as likely to face housing stress as those aged 75 or more. The likely reason? Lower Newstart and Youth Allowance benefit payments compared to age or disability support pensions.
Build social and affordable housing to get us off the boom-and-bust roller coaster(The Conversation. 15 Mar). A major new report by UNSW’s City Futures unit, commissioned by CHIA NSW and Homelessness NSW, shows that even since the recent downturn in residential values, market supplied rental housing cannot meet our basic housing needs, particularly rental stress faced by the most vulnerable in our community. The report predicts that to meet the backlog of currently unmet and future rental housing needs, some 20% of all new homes built over the next 20 years would need to be for social housing and a further 10% for affordable housing. This equates to a need for an extra 1 million new social and affordable homes by 2036.
Youth homelessness efforts get a lowly 2 stars from national report card. (The Conversation, 18 March) A recently updated national report card on youth homelessness in Australia provides a sober assessment on the progress (or lack of it) since the 2008 report of the National Youth Commission. Under-investment, a continuing absence of early intervention and the lack of a coordinated national strategy are identified as being amongst the key obstacles.
Australia’s largest social bond tackles affordable housing shortage. (Probono Australia, 25 March) The largest social bond ever issued in Australia ($300m), recently announced by Australia’s new “bond aggregator”, National Housing Finance and Investment Corporation (NHFIC), offers community housing providers (CHPs) loans at an interest rate of less than 3%. Although NHFIC is a welcome innovation – expected to reduce interest costs, and generate better cash flow and greater financial certainty for CHPs – the reality is that substantial government subsidy will still be needed if we are to increase the supply of social housing to any material extent.
Rent or buy: does the British obsession with home ownership pay off? (The Conversation, 4 April) “Unlike the Germans, who are a nation of renters, the desire to be a homeowner is firmly rooted in the British psyche”. Just as it has long been in Australia. The UK study referenced in this article demonstrates that, purely in financial terms, buying was a sounder choice than renting across the UK between 1975 and 2011, even in the face of recession. The deep-seated home-ownership aspirations of Britons appear to have paid off, at least during this period. Good news, at least for those few who can afford to buy.
Housing affordability pressures triggering “key worker” shortage. (Mortgage Business, 9 April) According to a recent commissioned report by PwC Australia, home ownership constraints in Sydney and Melbourne could be triggering an exodus of “key workers”, including nurses, teachers, paramedics, ambulance officers and emergency services personnel. Almost 80% of a sample of key workers surveyed in those capital cities believe that home ownership is not achievable for them, requiring some 12 years to save for a 20% deposit. Sydney and Melbourne prices would need to fall by some 50 to 60% to reduce to 5 years the time needed to save for a deposit. Almost one in four such key workers is looking to either relocate or change careers.
Dark secret of Hong Kong, home to the richest people in the world. (news.com.au, 9 April) This article is based on a story by Marc Fennell, aired on SBS’ Dateline program, and describes a tale of “two cities”, that both happen to be Hong Kong. It is the city with the worst record of housing affordability in the world. The story contrasts the well documented lives of the super-rich with the lesser known misery (including housing stress) faced by those less well off. It’s a useful reminder of the pitfalls to society as a whole as the income/wealth gap widens.
Older women are fastest growing cohort of homeless Australians. According to a recent report released by Australia’s Age Discrimination Commissioner, Dr Kay Patterson, women 55 and over were the fastest growing cohort of homeless people between 2011 and 2016, increasing by 31% in that period. At the same time, there was a 63% increase in the number of such people accessing specialist homeless services. The report discusses causes of the problem, and canvasses various options to incidence and reduce the risk of homelessness amongst this vulnerable group in society.
Budget 2019: The 2 April Federal Budget offers $1.7b to support state-based efforts to tackle the problems of housing affordability and homelessness, but little in the way of new initiatives. The Coalition may feel that recent falls in residential property values in the main urban markets, particularly Sydney and Melbourne, have already done some of the heavy lifting. That is however little comfort to first home buyers facing still high entry stakes to the property ladder, or those struggling with rental stress.
If Labor wins government at the forthcoming Federal election, it will seek to introduce a range of initiatives designed to improve housing affordability and reduce speculative investment in residential property, including by reforming the rules around negative gearing (limiting it to new properties) and halving the CGT discount.
Amongst other initiatives, Labor has indicated it wants to encourage more institutional investment in “build-to-rent” residential property (by lowering associated tax rates), and it also plans to build 250,000 new affordable homes over a decade, as described in an article in P&I by Professor Hal Pawson in December 2018.