To fix the housing affordability problem, we need to agree on what the problem is

It’s great the federal government and opposition parties have finally acknowledged the cost of housing is too high – and in fact, many Australians cannot find housing to buy or rent anyway. It raises hope, when the government says the federal budget will be a ‘housing budget’ . It’s reassuring to see state strategies that have recently been announced or released (see Victoria, NSW, Queensland, for starters). 

But – are we clear, and do we agree, on what the specific problems are and what would be satisfactory solutions? I don’t think we are. And these problems are not necessarily as easy to agree on as they might seem. But it’s only by wrestling with these questions, and reaching an agreed goal, that we can chose effective measures that might have some effect in improving the security of housing for all.

 

 

You might have noticed that the cost of housing’s become a topical issue lately – and even though renovation and home decorating shows, magazines and apps continue to be popular, the shift is towards saving and minimising. There’s a more concerned edge to the conversation, to the point that the politicians have started to take notice too.

After decades where the price of housing has continued to outstrip wage growth (with corresponding predictions that the housing bubble will burst – which hasn’t happened YET, but maybe soon?), purchasing a home (whether a house, apartment, townhouse or one bedroom granny flat) has become less and less achievable for many people.

Rental accommodation has become more of a challenge as the rental market is stretched, in many places increasingly expensive and, as noted in the recent report CHOICE report ‘Unsettled: Life in Australia’s Private Rental Market’, increasingly insecure.

And for those who’ve been supported by the public system, the waiting lists can be long, and homelessness is sometimes the result.

The conversation at a political level is shifting.

 

Why are we suddenly concerned about housing?

This might seem a strange question – after all, I’ve outlined a range of issues above. But these aren’t problems which have suddenly emerged. Property and housing costs (for all forms of housing) have been steadily increasing since the late 1990s – and predictions that the bubble will burst have been made for almost as long. Rental properties at different times become in very short supply.

More to the point, we’ve always had people who are struggling. For a long time, we’ve had homeless people, with the waiting time for public housing being long. Advocate and support groups have been agitating for improvements, and there has extensive research into housing affordability over the years. Until now, governments were largely able to ignore these issues.

What changed?

I’m not entirely sure, but I think it’s because an increasing number of us are now affected. We are either finding it difficult to buy or rent, or we have people close to us who are. Plus, we can’t pretend we don’t notice the implications, when taken to the furthest extent. We are much more confronted with the problems that homelessness creates – and many of us are appalled at the solutions that places like the City of Melbourne have come up with – to move them on (not to mention the fact it’s seen as a breech of human rights, as declared by the United Nations recently).

We are no longer able to look at this issue as something that affected ‘other’ people. We’re involved.  We need to try and fix this. Whatever ‘this’ is. 

 

What are we trying to achieve by ‘addressing’ housing affordability?

I’m not completely sure, to be honest. I feel like, depending on your agenda, you’ll identify different problems with housing availability and affordability. These problems potentially clash with one another – to solve one problem, another might be created or become more extreme.

What do I mean? Well, let me explain with two examples:

1. As a society, (in theory) we have a system of ensuring that those who are not able to meet their basic needs are assisted.  A safety net is provided in terms of basic health, income and housing, amongst other things. The government (well, all levels of governments really) needs to make ongoing decisions about where to set this safety net, who falls into the criteria of ‘needing’ it, and how this need will be met.

Making these decisions isn’t necessarily straightforward, and nor is actually implementing them. However, these are matters governments should be able to sort out. Everyone should have the right to secure housing.

2. BUT.

It’s a big but, because we’ve got ourselves into a pickle (I think – maybe someone can correct me on this, which would be great), it’s not that easy to provide for others. Because someone has to pay. And we don’t like to pay – especially if paying makes us feel less secure ourselves.

Housing is expensive − the Victorian government has estimated an expenditure of around $2 billion dollars on social housing, which will go some way towards addressing the problem (but not address it completely). More to the point, the current demand for housing is creating an inflation in the price of property (which makes it seem like a more valuable asset). There is a potential that housing prices might drop if we properly address housing needs. While this is great for those who wish to enter the market, it can be the cause of stress for those who are property owners.

As Australian citizens, we’ve been encouraged over the past thirty or forty years to be less reliant on others where possible, especially the government, for our needs into the future. Government finances will be stretched, and we need to plan for our own future needs. We need to make wise financial decisions, including making safe investments that we can draw on. One of the prime areas for this investment is in real estate. Housing isn’t just shelter – it’s a market, a means of creating wealth. And these two elements create their own tensions.

Governments of all persuasions have encouraged us to see housing as an investment, through issuing grants (first home owners’ grant, anyone?), tax concessions, sale of government land for housing developments (not necessarily waiting until the highest value was reached), approaches to capital gains tax and stamp duty and … (the list goes on. Which is quite interesting, when some of these governments are ‘free market proponents’. But I digress).  And even if we don’t own property ourselves, our superannuation funds, or our banks and other institutions, are probably highly dependent on the value of property increasing. When it does, those who own these assets feel more secure about the future.

Finally – what’s the solution?

I don’t know. I mean, I know part of it is that we need to invest in more social housing. And in meeting the needs of the homeless, specifically (and if you needed more reasons than just compassion, it makes good economic sense, as this report shows).

But I also know there will be a lot of resistance if effective financial tools are used to bring down the costs of housing for those who won’t directly benefit from social housing decisions.

I think the politicians are well aware of this – and that’s why, to date, actions have been half hearted and often counter productive. And that’s why I think it’s important to acknowledge this aspect of the housing affordability equation (and there are more aspects, I know). Without raising them – even as briefly as here – they will continue to get in the way of real solutions being achieved.

One of the major issues that needs to be addressed is that of trust. How do we (as a community) make a bit of a shift away from providing for ourselves, as we so often see it, and have more of us see the value in trusting again in the common good? How do we ensure that, for some, their mistrust is legitimate (for instance, the elderly ‘asset rich and income poor’) and making sure we don’t leave others behind in the process? How do we continue to hold governments accountable, to deliver on their commitments around housing (and ongoing maintenance)?

 

Part of it is ensuring that putting more into the common pool actually does mean we will all benefit. Not necessarily in terms of financial gain – maybe it’s more important to have security in the adequacy and stability of our homes? (Just a thought). And it’s trusting that those in charge – in this case, the government of the day – will use that common pool of funds more wisely.

 

 

Maybe a good start would be seeing the politicians themselves lead by example. Wouldn’t it be refreshing to go through a period where there were none found to have misused their working time (or failed to declare), the purchase of negatively geared properties, for instance? We can only hope.

 

 

 

 

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