Monthly digest on housing affordability and homelessness – Aug/Sept 2020

Sep 30, 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.

Like so many, I am deeply saddened by the recent, sudden death of Susan Ryan, my collaborator of the last several years, both in the production of this monthly digest, and in contributing to P&I’s debate about the vital issue of housing. It has been a privilege to have worked with her. Susan encouraged me to help draw attention to homelessness and the lack of housing affordability, and what could be done about these problems. I was always inspired by her thirst for reform. She yearned for an Australia in which everyone has a safe, secure and affordable place to call home. Vale Susan, you will be sorely missed.

Nightingale: Comprehensively sustainable apartments [Architecture & Design, 2 Sept] The so-called Nightingale Model is a set of systems and processes that provides more affordable architecturally designed medium-high density housing in Australia. Initially developed by Jeremy McLeod of Breathe Architecture – via his award-winning sustainable apartment project, The Commons, in Melbourne’s suburbs – the Nightingale Model is one in which profits are capped, most marketing costs are removed, operating and maintenance costs are reduced through good design and, importantly, a covenant on resale ensures lower housing prices are “heirloomed”. A balloting system, rather than highest bidder, determines winning homeowners. Project costs, governance and decision-making processes are all kept transparent. Nightingale projects are situated close to public transport, which negates the need for off-street parking. Communal areas include shared laundries and gardens.

Slight improvement to housing affordability, according to latest REIA survey [REIA press release, 1 Sept] The latest REIA Housing Affordability Report, covering the quarter ending 30 June 2020 and the year to that date, showed slight improvements to housing affordability across Australia, due mainly to a reduction or stabilisation of rents during the June quarter, except in the ACT, where rents increased. A fall in average variable standard interest rates helped reduce average loan repayments. Relative affordability varies of course across Australia, with NSW remaining the least affordable state or territory in which to buy a home. The proportion of income required to meet loan repayments in NSW is 7.8% higher than the national average.

How will stalled net overseas migration impact housing demand? [CoreLogic research, 3 Sept] Corelogic research, drawing on recent Treasury forecasts, points to a substantial slowing of annual population growth across Australia, amounting to a forecast reduction of 56% in the 2020/21 financial year, relative to 2019 levels. Most of this reduction is due to stalled net overseas migration (NOM) – mostly Covid-19 induced – which has since 2016 comprised more than 60% of population growth. Population growth is one of the key drivers of underlying housing demand, though its impact varies according to the composition and geographic distribution of migration flows. Sydney and Melbourne have been the hardest hit by falls in NOM, particularly in their CBD and inner suburbs. The greatest sectoral impact from the fall in NOM is likely to be weaker rental demand. Such demand has also been diluted by weaker labour market conditions, mostly in sectors heavily impacted by the pandemic, as well as the Covid-19 related trend towards remote working. Falling rental demand and increased vacancies may have been bad for investors, but it has at least benefited renters, for the time being.

Cross-sector push for investment in housing [Property Council of Australia press release, 3 Sept] In the lead-up to Queensland’s October State Election, it is heartening to see a cross-sector push for the creation of 53,000 new social and affordable homes in the next 10 years, to deliver both economic and social benefits to the State. The Property Council of Australia is joined in this initiative by the Queensland Council of Social Service, CHIA Queensland and the Community Services Industry Alliance. The 53,000 target comprises a tripling (to 15,000) of the target for new social housing dwellings, and a commitment to incentivise delivery of 38,000 new affordable homes. This cross-sector initiative includes a 10-step plan to make social and affordable housing a key pillar of Queensland’s economic recovery.

CEFC finance helps social housing tenants get home energy systems through Australia’s largest virtual power plant [cefc press release, 4 Sept] The Clean Energy Finance Corporation (CEFC) is investing up to $30m on behalf of the Australian Government in an innovative program to deliver home energy systems to social housing tenants in South Australia. It involves the installation of solar and battery storage systems across more than 3,000 residential buildings, driving down energy bills while delivering Australia’s largest virtual power plant (VPP). The Tesla designed and operated VPP will bring together a centrally controlled group of solar-powered battery-backed homes to act as a single “power plant”, with the ability to send excess lower cost renewable energy to the South Australian grid. Housing SA tenants who sign up for a special low electricity tariff will have 5kW in rooftop solar and a 13.5kWh Tesla Powerwall system installed in their home at no cost to them, and will benefit from an exclusive low rate electricity tariff which is 22% lower than the Default Market Offer in South Australia.

Housing all Australians – a new paradigm [ProBono Australia, 9 Sept] Rob Pradolin, the founder of private sector for-purpose organisation, Housing All Australians, attempts in this introduction to his new 12-part series to explore the role that housing can and should play within Australian society and why it is important to our economy that we house all Australians, rich and poor. Pradolin starts by declaring that he does not believe that housing is a human right. However, he goes on to say that no one can deny that the provision of shelter is a fundamental human need and that without that need being met, we have unintended social and economic consequences that span generations. We are reminded of the immediate adverse public health impacts of rough sleeping and overcrowding in the midst of the Covid-19 pandemic, for example within the Melbourne public housing towers, and of course the health and other impacts on those most directly affected. Pradolin makes the case for adequate investment in public, social and affordable housing, recognising that this requires a mix of public funding and other support, but also private sector involvement. He accepts that there is no silver bullet in solving this housing challenge.

After COVID, we’ll need a rethink to repair Australia’s housing system and the economy [The Conversation, 11 Sept] This article draws on both a new report from the NSW Productivity Commission (NSWPC) and from newly published research from UNSW’s City Futures Research Centre. The authors point to Australia’s housing system as having produced “triple crises of rising homelessness, growing queues for non-market, affordable housing and the pervasive affordability problems for middle- and lower-income households who depend on the private housing market”. They call-out ever-increasing house prices as having been a driver of wealth inequality, a problem linked to rising mortgage debt and potential economic and financial instability. And they note, Australia’s private housing debt is amongst the highest in the world. Rising costs of city living have, they say, harmed productivity. For the increasing cohort of renters, excessive rents and insecure tenure can damage children’s educational attainment and prospects, and compound general household stress. The referenced UNSW research points to a “battery of other economically harmful impacts” arising from Australia’s “dysfunctional” housing-system, and it proposes a wide-ranging housing and productivity research agenda. The article quotes an eye-catching estimate from an April 2019 Grattan Institute estimate that home-ownership rates for the over-65s will fall by 19% by 2056, with significant impacts on retirement incomes.

Thousands of affordable homes would boost economy, homelessness groups say [SMH, 15 Sept] Australia’s Community Housing Industry Association (CHIA) has made a strong case for the Federal Government to use the forthcoming October federal budget as an opportunity to provide economic stimulus by means of much needed investment in social housing – including both maintenance work on existing stock and the creation of new stock. CHIA’s initiative, called the “Social Housing Acceleration and Renovation Program” (SHARP), has been based on modelling from SGS Economics and is supported by Homelessness Australia, National Shelter and Everybody’s Home, as well as Federal Labor. SHARP has been compared to the former federal Labor Government’s Nation Building Economic Stimulus Plan for social housing during the GFC. See also this articlein P&I, from May 2020, by Wendy Hayhurst and Bill Randolph; and this article dated 31 August in ProBono Australia.

Can Australia turn affordable housing into an asset class? [The New Daily, 18 Sept] This AIST sponsored article signals a measure of support from superannuation institutions for large-scale investment in affordable rental housing, subject to receipt of an appropriate level of support from federal and state government. See also this article in P&I, from May 2017, by Damien Webb.

If we realised the true cost of homelessness, we’d fix it overnight [The Conversation, 22 Sept] It has been claimed before, but bears repeating, that savings to the public purse resulting from fixing homelessness – by for instance adopting the so-called “housing first” model – can outweigh the costs of allowing homelessness to persist. See, for example, some of the evidence contained in this AHURI Brief. This is without even counting the considerable personal benefits to each homeless person who is permanently housed. It is this sort of thinking that underlies the research of these two UTS academics, who have done a global scoping review of research since 2009, examining the value of providing a secure, stable home for formerly homeless people and the wider taxpaying community. Amongst the (perhaps) not so well-known public costs of persistent homelessness are costs to the public health system and costs to the criminal justice system. A clear economic case exists for governments to eliminate homelessness, without even counting the human cost of those who suffer from this blight.

Warm, cool and energy-affordable housing policy solutions for low-income renters [AHURI Report, 23 Sept] Too often, Australians in the private rental market find themselves paying a significant percentage of their income for housing that offers inadequate protection from temperature extremes during summer and winter. Efforts to achieve satisfactory heating and cooling result in elevated energy usage and higher costs for an already financially disadvantaged population – leading to some households suffering adverse impacts on their health and quality of life. This AHURI report presents the findings of an Investigative Panel that examined the prevalence and experience of energy hardship, in its different forms, within Australia’s rental housing market. Amongst the findings are that exposure to energy hardship is particularly likely when vulnerable people live in dwellings that are in poor condition; that the responses required to improve thermal efficiency and reduce energy hardship need to be tailored to different tenant cohorts; that a portfolio of reform measures is needed, including mandatory building standards, targeted financial or material assistance for very vulnerable households and investment in the public housing sector, the setting of minimum standards for energy performance of rental properties, and the development of a consensus on what constitutes “safe” housing and tenants’ rights to it.

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