housing affordability Archives

Housing loomed large in the campaign debate running up to the recent Australian federal election. In fact, rival plans for first-time buyer assistance were central to the rival pitches of the two main parties in the final week of the contest.

The overarching context for this is the concern provoked by declining owner-occupancy rates in a country that still thinks of itself as a home ownership nation. By UK standards, the overall downward trend has been quite modest – the past 20 years has seen owner occupation drifting down by around 3-4 percentage points to 67 per cent. But that conceals much faster rates of decline among young adult cohorts.

Again, as in Britain, falling home ownership worries have been aggravated by the unexpected COVID house price boom which has seen prices jump by 30% since 2019 – a substantially more marked increase than the UK’s equivalent market climb.

Add to that, the recent spike in rent inflation greater than at any time since 2008, and it’s obvious that the pandemic significantly aggravated Australia’s longstanding housing affordability challenge.

So, in this battle that ended with the centre-left Labor Party (yes, that’s the correct spelling) regaining power after nearly a decade in opposition, what exactly were the rival housing plans pitched by the two main parties?

With Labor having retreated from significant reforms to private landlord tax breaks pledged in the previous two elections, there was actually less distinction between the housing offers of the main protagonists this time round. Even so, the difference between Labor’s 2022 platform and that of the Liberal/National governing coalition remained notable.

The home ownership offers

The main area of contest was of course home ownership. Both parties committed to expanding the existing national low deposit mortgage scheme for first-time buyers predicated on a government guarantee enabling downpayments of 5% rather than the standard 20%. This may now be made available to around half of all those entering home ownership.

Beyond this, and targeting much the same group, Labor pledged to initiate a national shared equity programme. Complementing existing state government schemes in Victoria and Western Australia, and subject to applicant income and property price caps, this would see the federal government taking an equity stake of up to 30% in an existing dwelling and up to 40% in a newly built home. The model is very similar to the UK Government’s Help to Buy scheme in both content and name.

Deriding Labor’s approach as one in which ‘the government wants to own your home’, on the ropes in the opinion polls, and clearly seeking a point of difference as the campaign neared its end, the Prime Minister further ramped up the debate by pitching a new and novel proposal. Aspirant first-time buyers would be enabled to draw on otherwise inaccessible pension (or ‘superannuation’) savings for home purchase.

Although widely criticised as inflationary, as well as inequitable, the ‘super for housing’ proposal was considered by some a political masterstroke, since it leveraged a libertarian sensibility across the electorate at no (immediate) cost to government. It also served the partisan aim of attacking the pension industry disliked by conservative Australians not only because of its compulsory contributions but also because some funds are union-linked.

Social housing

While featuring comparatively minimally in election media coverage and debate, a number of other potentially significant housing commitments were aired in the contest – mainly by Labor. These included Labor’s pledge for a national social and affordable investment program to generate 30,000 dwellings over six years.

Considering that Australia has been latterly constructing only around 3,000 social housing units annually, with the federal government making a near zero contribution, this is notable – yet also modest. Factoring in expected population growth, it would be enough to slow, but not to reverse, the longstanding decline in social housing representation in the housing system (now only just over 4% of total occupied dwellings).

The most novel aspect of the social and affordable housing investment proposal is its financing through investment returns from an ‘off balance sheet’ future fund. The attraction of such a structure is that, under relevant accountancy conventions, the cost would not score as government debt. Some readers may detect parallels with the long-running UK debate on the accounting treatment of council housing investment.

As far as social housing is concerned, the Liberal/National election platform extended only to expanding the quantum of community housing debt guaranteed by government – a facility of only very limited value without the matching subsidy that the Coalition declined to offer.

Institutional reform and strategy

Finally, and once again, with a very low media profile, Labor’s election pitch included some significant institutional reforms which, with the Party now installed in government, we can expect to take shape in coming months. These include, firstly, the creation of a National Housing Supply and Affordability Council (NHSAC), a body charged with analysing housing needs and provision – a remit similar to the UK’s erstwhile National Housing and P lanning Advice Unit (NHPAU).

NHSAC will sit within a new national housing agency, Housing Australia. This will absorb the former administrative roles of the National Housing Finance and Investment Corporation (NHFIC) for first-time buyer assistance schemes, as well as the housing future fund. Perhaps opening up more far-reaching possibilities for the future, Housing Australia will also take responsibility for a ‘National Housing and Homeless Plan’. This, it would be hoped, will cement the federal government back into an active an ambitious role in the national housing system – something unseen for more than a decade.

Until Labor can find the stomach to revisit fundamental tax reform many of us would argue that the scope for fixing Australia’s dysfunctional housing system will remain extremely limited. At the same time, the incoming government’s program contains some housing green shoots that are still worth celebrating.

Hal Pawson

Professor Hal Pawson, is based at the City Futures Research Centre, University of New South Wales, Sydney

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England’s housing system has failed. We need to press the reset button on housing – let’s start with planning.

Rampant house price inflation. Hundreds of thousands of people trapped in unsafe buildings. Tens of thousands of families made homeless during a global pandemic. Our housing system is broken.

You would think given the state of things, that fundamental reform of housing would be top of the political agenda and an obvious vote winner. Yet this isn’t the case and we’ve seen no substantive policy action in decades, with the supply of new homes per year now well below the housebuilding highs of the 1960s and 1970s. Despite being badly needed, the popularity of the ‘not in my backyard’ mantra has made housing reform politically untenable, with devastating consequences.

This problem is most obvious at the local level. While many voters are often sympathetic to the problems of housing affordability and homelessness, they too often oppose the construction of new homes, including affordable homes. Building more homes would help tackle such problems by directly increasing the supply of affordable homes and expanding the number of housing options available to people more generally.

England’s housing crisis is a product of multiple local housing crises. In many of the areas where opposition to new homes is strongest, affordability problems are often the worst. Of course, the ramifications of this crisis are not felt equally. It is often the younger and less well-off residents who are eventually priced out of their own communities.

Building more and better homes is not a panacea. But we must acknowledge it is part of the solution. As Geoff Meen, one of the UK’s foremost housing experts has pointed out, it’s ‘perfectly possible for there to be both an absolute shortage of homes and a distribution problem’. In essence, we are not building enough homes in England, and we do not have the right policies to create more sustainable credit conditions or ensure fair access to housing for people on all incomes.

Once we acknowledge that building more homes is part of the solution, then the next question we must answer is ‘how do we build more’? Part of the answer lies in the way we deliver homes through England’s planning system. While the government’s proposed reforms aren’t flawless, they do present a vision. Significant questions about what these reforms could mean for the delivery of affordable housing persist and they certainly don’t go far enough in tackling high land values.

The answer to these weaknesses is better reforms, not no reforms. We must imagine a better alternative to our current planning system if we are to tackle the root causes of the housing crisis.

To show their credibility on housing issues, political parties must better sell a vision for a planning system that delivers the homes we need and in doing so, stops people from being priced out of their communities. That requires putting aside the short-term gains of winning immediate votes by objecting to local development and instead explaining why we need to build more homes in this country. Making the case for more homes nationally while opposing them in their backyard reduces the credibility of any national message politicians might have on housing.

The widespread opposition to the government’s planning reforms suggest that they were dead on arrival. That is not a reason to abandon attempts to address the housing crisis. At the moment, our planning system reinforces England’s broken housing market because land that obtains planning permission increases exponentially in value. This makes it increasingly difficult to build homes at affordable prices. Despite this, suitable policy solutions such as the introduction of zoning policy find few advocates and instead, the dysfunctional status quo persists.

We need to build a new consensus on housing. It is time to move beyond the short-term gains and quick wins that come from opposing new homes. Instead, politicians must present a bold and radical vision for how they will address England’s housing crisis. Now is the time for radical and ambitious vision that would improve the supply of high-quality and affordable homes, while also tackling the unfair distribution of homes. The myriad of problems facing the housing market – from the building safety crisis to rampant unaffordability – will only get worse without action to deliver better quality and more affordable homes.

The longer the housing crisis goes unfixed, the more damage it does. Progressives must not fall into the trap of opposition for opposition’s sake. Instead, they should articulate a clear vision that that explains why the housing market is broken, why we need radical action to fix things and how a fairer society can be created if we get things right.

Jonathan Webb

Jonathan Webb is a Senior Research Fellow at IPPR North. He tweets @jrkwebb.

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