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Are we seeing a sustainable housing market recovery?

Posted by on March 5th, 2021 · Affordability

By Hal Pawson, City Futures Research Centre.

At the start of the pandemic, when it became clear that extensive economic disruption lay ahead, there was alarm about the possible housing system damage that could result. In Australia, one of our largest banks projected a possible 32% hit to house prices. Most other forecasts at this time anticipated a major downturn in property prices and construction.

In fact, after only a short pause, house price inflation has come back with a roar in the later months of 2020 and into 2021. Forecasters are now projecting a general increase of at least 5% over the coming year with some predicting 10-20% over the next 2 years.

Negative trends in housing demand fundamentals

It’s striking that this is taking place in defiance of what we could call housing demand fundamentals. Although less serious than originally expected, unemployment is substantially higher than a year ago. It’s officially expected to peak during this year at well above 7% with only a slow recovery thereafter. And for those still in employment, there’s little prospect of significant wage growth.

Most importantly, migration into Australia, traditionally a key driver of housing demand, has not just reduced, but reversed. Instead of a net annual inflow to Australia of over 200,000, the government is now predicting a net outflow of 70,000 in the current year.

How the market is defying housing demand fundamentals

So what we’re seeing is that – at least for the moment – the negative effect on housing demand from all of these ‘fundamentals’ is being outweighed by more powerful factors.

Probably the most important is that base rate cuts by the Reserve Bank and global access to cheap money saw typical mortgage rates cut by over 0.5% in response to the pandemic to stand just above 3% at the end of 2020. More than that, the Reserve Bank stated late last year that base rates would remain at their record low levels until at least 2023. New borrowers are therefore feeling quite insulated from short term risk in this respect.

The effect of cheaper borrowing has been compounded by government programs offering taxpayer funded grants to private individuals building or renovating homes. Under its HomeBuilder program, grants of up to $25,000 have been made available by the Federal Government, with total program expenditure now estimated at $2 billion. In combination with state government grants, some beneficiaries have been able to land a no-strings attached subsidy totaling over $50,000 – more than 10% of the total purchase price of a newly built home in many parts of the country.

A third important factor is the longer term trend that has seen housing becoming an increasingly attractive low risk asset class over the past 10-20 years, as returns on other asset classes like commercial property and equities have either fallen back or become more volatile. The financialisation of housing is being given another twist by the wider economic uncertainty that has resulted from the pandemic.

In combination, mortgage rate cuts and government homebuyer subsidies are fuelling the renewed house price inflation Australia has been seeing since late last year. And, of course, market psychology and the fear of missing out that is always a factor in housing markets, is now kicking in.

Is this sustainable?

How long this situation can, or will, persist is debatable. At the moment housebuyers and their advisers are effectively predicating their decisions and behaviour on assumptions about the recovery of fundamental housing demand drivers – especially the population growth that results from high immigration rates.

At the moment, though, there is still no certainty on when international travel will be able to resume at any level. And even when we know that, there will still be questions about whether demand for migrating to Australia will return to pre-pandemic norms. Considering the currently frosty relations between Australia and China, there are particular doubts about the international student part of this equation. Beyond this, it’s not certain whether pre-pandemic immigration policy measures will be resumed exactly as before.

A second batch of uncertainties on housing demand fundamentals surrounds the economic impact to be seen when temporary employment subsidies are ended at the end of March. If employer subsidies are withdrawn as planned many businesses helped to remain in existence since March 2020 may go bust, adding some unknown – but probably significant – number of workers to the unemployment register. That may have a depressing impact on housing demand.

Thirdly, there is no certainty on the ‘additionality’ of the demand stimulation resulting from the HomeBuilder program. Past experience suggests that demand subsidy initiatives of this kind can have the effect of bringing forward housing expenditure decisions rather than triggering actions that would otherwise not have occurred. The corrollary is that when the program ends, there can be a damaging vacuum effect and a rapid decline in activity.

All of which means it may be a good idea to avoid premature celebration that Australian housing has ‘dodged the bullet’ in terms of a pandemic-triggered market downturn. If it has, and Australia instead undergoes a further round of asset price inflation, and an accompanied further widening of wealth inequality, this should be of at least equal concern to government.

States housed 40,000 people for the COVID emergency. Now rough sleeper numbers are back on the up

Posted by on February 11th, 2021 · Uncategorized

By Hal Pawson and Chris Martin. This article is republished from The Conversation under a Creative Commons license. Read the original article. Read the full report, ‘COVID-19: rental housing and homelessness impacts – an initial analysis‘.

Australian governments acted to protect homeless people from COVID-19 in 2020 on an even larger scale than previously thought. In the first six months of the pandemic, the four states that launched emergency programs housed more than 40,000 rough sleepers and others.

The states were anxious about rough sleepers’ extreme vulnerability to virus infection and the resulting public health risk to the wider community. New South Wales, Victoria, Queensland and South Australia acted fast to provide safe temporary housing, mainly in otherwise empty hotels.

Drawing on previously unreleased official statistics, our newly published international comparative research reveals the people these programs helped in Australia outnumbered the 33,000 rough sleepers and others housed in England by the equivalent Everyone In initiative. Australia’s population is less than half that of England.

What happens when emergency housing ends?

The numbers Australia’s emergency housing program needed to shelter showed our homelessness problem is much larger than often imagined. The 8,200 people counted as sleeping rough on census night 2016 were only the tip of the iceberg.

Attempts to transfer people from emergency accommodation to longer-term tenancies have also generally been far less successful than in England. By the end of 2020, England’s local authorities had moved two-thirds of their former rough sleepers from temporary placements to more stable housing. As our research shows, despite determined efforts, Australian state governments managed this for less than a third of rough sleepers departing emergency hotel stays in 2020.

Many will have returned to the streets or to homeless shelters. Rough sleeper numbers once again increased in Adelaide and Sydney after mid-year.

To a great extent Australia’s poor showing reflects our growing social housing deficit, as well as inadequate rent assistance and other social security benefits (at their standard rates). All of these factors are barriers to helping low-income Australians into stable long-term housing.

Eviction bans and rent variations defer problems

Alongside protecting rough sleepers, Australian government actions to shield vulnerable renters who lost jobs and incomes in the pandemic were also relatively effective. These efforts include federal income protection (JobKeeper and Coronavirus Supplement) and state and territory restrictions on evictions.

The short-term success of these measures is clear. Despite a substantial rise in unemployment, there has been – as yet – no sign of any up-tick in homelessness.

At the same time, though, ministerial advice that tenants with COVID-triggered income losses should negotiate rent reductions with landlords came with few ground rules on how to reach such settlements.

Survey evidence shows many property owners refused to reduce rents. At least one in four renters lost income during the pandemic, but no more than 16% (and possibly as few as 8%) got a rent variation. And many variations were only in the form of rent deferrals, not reductions.

The survey data imply at least 75,000 tenants, and possibly as many as 175,000, have been accumulating deferral-generated arrears. These mounting debts could put some at risk of losing their home when eviction moratoriums end. That’s early in 2021 in most states and territories.

Hands-off Commonwealth makes things worse

Our research also highlights the unusually small direct contribution of the Australian government to protecting homeless people during the pandemic. Even in other federations – Canada and the United States – national governments played a significant role.

In Australia, the Commonwealth government made no direct input to covering the substantial costs involved. Nor did it play any part in even monitoring, let alone co-ordinating, the remarkable efforts of the active states.

Canberra has also steadfastly rejected calls for a social housing stimulus program for national economic recovery. This disengagement fits with a now-familiar refrain from federal ministers. Housing and homelessness, they repeat time and again, are constitutional obligations of state and territory governments.

Granted, that’s an accurate statement for housing and homelessness service delivery. But, especially given the Commonwealth’s control of the vital policy levers of tax and social security, the two levels of government must in reality share responsibility for housing outcomes.

The Victorian government’s A$5.4 billion Big Housing Build shows states may commit to investment in social rental housing on a scale far beyond what had been thought possible. But the fact remains that state and territory governments have much less financial firepower than our national government. It’s fanciful to imagine significant programs being widely initiated or maintained without hefty federal backing.

For all of these reasons, when the pandemic has finally subsided, it’s only with federal government leadership that we can effectively tackle the fundamental flaws in Australia’s housing system. These have been glaringly exposed by the public health crisis of the past 12 months. Without purposeful re-engagement by our national government, Australia’s housing policy challenges will only continue to intensify.

Social housing production continues to languish, while demand has soared

Posted by on January 23rd, 2021 · Uncategorized

By Prof Hal Pawson.

Official figures released this week reveal that Australia’s social housing stock actually declined in 2019-20. The combined total of public housing, community housing, state owned and managed Indigenous housing and Indigenous community housing dwellings, dropped from 429,316 to 428,497 over the year (see notes to Figure 1).

These statistics come from the annual Report on Government Services, as published by the Productivity Commission in January each year. Social housing stock changes over time reflect the net impact of new construction, sales and demolitions. But because – problematically – none of these components of change are officially logged or published we can’t know for sure how each contributes to the overall outcome. All we can definitely say about the recent stock decline is that it shows sales and demolitions exceeded new construction over the past year. It’s likely that all of these numbers were fairly small.

Looking back over the past decade, and comparing annual change in social housing stock with yearly population change, it’s clear that the former has been lagging far behind the latter. Nationally, in only two years has social housing expanded by more than 0.5%, whereas in all years bar one (up to and including 2018-19), population rose by 1.5% or more – see Figure 1. Taking the period 2011-2020 as a whole, Australia’s social housing stock grew by only a sickly 2% compared with general national population growth of 15%.

Another way of putting this is to say that, collectively, Australian governments have been woefully failing to grow social housing to keep pace with growing need (assuming that such need has remained at a steady per capita level – a possible understatement). The statistical result of this divergence will have been continuation in the decline of social housing as a proportion of overall national dwelling stock. During the 2020s it will likely fall below 4%.

Sources: 1. Social housing stock – Productivity Commission; Report on Government Services 2021; Table 18A3. Population – ABS Cat 3101.0 Australian Demographic Statistics Table 4: Estimated Resident Population. Notes: 1. Indigenous community housing stock in 2019-20 assumed to be the same as 2018-19; 2. Historically missing Indigenous housing statistics for Northern Territory patched in on the assumption that these were the same as published for the next succeeding year. 3. Community housing statistics included on the basis of ‘dwellings’ rather than ‘tenancies’. 4. See other qualifications of the statistics as noted by the Productivity Commission in the original table.

As shown in Figure 2, in only one jurisdiction – Tasmania – did the state/territory government manage to grow social housing sufficiently to keep pace with population over this period. Even in NSW, where social housing has been expanded most notably over the period (from 143,520 to 154,530), this has fallen substantially short of overall population increase (8% compared with 13% – see Figure 2). It should also be mentioned that a change over time comparison that spans 2016 tends to flatter NSW because from that date (says the Productivity Commission) the state’s ‘community housing’ stock figures included NRAS-funded properties whereas, by implication, such dwellings have remained excluded for other jurisdictions.

Sources: As Figure 1. Notes: As Figure 1 – plus population change based on the period June 2010-June 2019 – statistics for June 2020 not yet published.

Open market sales of public housing constitute one factor explaining the failure to adequately grow social housing provision in most jurisdictions. For example, as recently revealed in The Australian (paywall), the NSW Government sold nearly 4,000 public housing properties in the period 2011-2020. However, even if these had all been retained in state ownership, the state’s provision would have still failed to keep pace with population. In most – or possibly all – jurisdictions, relative decline of social housing is probably mainly the result of inadequate construction, not property disposal.

Capital expenditure on social housing is falling

Related to this story, capital expenditure on social housing (ROGS Table 18A1) has been falling across Australia over the past two years (by 4% over 1 year, by 5% over 2 years). The biggest reduction seen over this time has been in NSW (down 25%) – possibly resulting from the exhaustion of capital receipts from the sale of valuable properties at Millers Point.

(Officially enumerated) demand for social housing is growing

On the demand side, public housing waiting lists have shown recent growth (ROGS Table 18A5). Nationally, the total increased by 4% in 2020 to 155,141 (up by 5% since 2016). Perhaps more significantly, the number of new ‘greatest need’ waiting list applicants has been rising rapidly across the country – up by 11% in 2020, and by 54% over the four years since 2016 (from 37,897 to 58,511). Over the past year particularly marked increases have been recorded in Queensland (26%) and WA (18%).

Taking stock of the demand/supply picture

To the extent that the ROGS statistics provide a reliable basis for judgement (while flawed, they also represent the best evidence that exists), it’s probably appropriate to highlight the Tasmanian Government’s achievement through the 2010s in growing social housing sufficiently to maintain its representation within the state’s overall housing stock (a net increase of over 700 dwellings). Also, of course, Victoria has to be singled out for its recognition of the need to ‘stop the rot’ signalled by its recent ‘Big Housing Build’ announcement.

But over the past decade all of Australia’s other governments – most glaringly, The Commonwealth – have turned a blind eye to the vital need to (at the very least) maintain the provision of social housing in ‘real terms’. And, while acknowledging the small-scale new build initiatives announced by several state/territory governments over the past year or two, all (with the exception of Victoria) very largely continue to do so.

Tracking social cohesion in an evolving neighbourhood

Posted by on December 17th, 2020 · Uncategorized

By Hazel Easthope, Edgar Liu, Sian Thompson & Alessandra Buxton
City Futures Research Centre, UNSW Sydney

Sydney’s inner-south has been growing both in population and in popularity in recent years. As more new residents move to these areas, there is an opportunity for local government to understand how residents interact and what these urban renewal sites need in order to facilitate social cohesion, as well as track how this population growth is being matched with an emerging town centre, new community facilities, street networks and other support services.

Survey Area comprising the Ashmore and Green Square precincts

Urban renewal in key brownfield areas (such as Green Square) and the nearby Ashmore Estate (defined by parts of Erskineville and Alexandria) is a central component of the delivery of compact city policies, which have been promoted by Australian state governments for decades.

Reports recently released by the City Futures Research Centre at UNSW demonstrate some insightful findings vital to informing the continued growth of these communities. The My Place study, based on the results of a large-scale survey sent to all households, was commissioned by the City of Sydney to understand social interaction and social cohesion in these areas. This is the third time the survey has been run in the area, enabling the City to check in with this emerging community since 2014. Tracking social cohesion is a vital sense check for the City of Sydney. It helps inform the sense of community of a neighbourhood, including aspects such as neighbourhood social life, shared emotional connections, and place attachment.

Studies such as this are valuable in understanding how residents experience urban renewal areas as they continue to develop, and how these projects can influence social connectivity and a sense of community.

Most residential properties in both Ashmore Estate and Green Square are relatively new. It is therefore no surprise that the majority of the survey respondents have lived there for 5 years or less, giving them less chance to build a sense of belonging than those who had lived there longer. Despite this, survey participants showed an overwhelming satisfaction with their suburbs. Over 70% of both Green Square and Ashmore residents indicated their desire to stay long term, with 90% of participants in Green Square and 97% in Ashmore agreeing these areas were a good place to live.

To what extent do you agree that this area is a good place to live? (nAshmore = 1179, nGreen Square = 1091)

The research found that residents wish to be involved socially in a variety of ways. The studies indicated that residents of both Ashmore (59%) and Green Square (68%) are eager to build more connections in their local community, with young people and private renters especially likely to desire more local connections.

How would you best describe your level of interaction with other people who live or work in the area? By age. (n = various, 225 – 598)

How would you best describe your level of interaction with other people who live and work in the area? By tenure. (n = various, 497 – 666)

Residents of both Ashmore and Green Square valued local cafés, restaurants and bars in their local area. Most residents already had social interactions in these locations, but the majority of residents, and especially younger residents, indicated a desire for more restaurants, cafés and bars.

Parks were also important locations for social interaction, both intentional and incidental, especially for households with children and for residents over 50. Formal community facilities such as community centres were less frequently used overall, but were important for residents employed part-time and people not in the labour force.

How have you had contact with people in your local area in the last month? (nAshmore = 1192, nGreen Square = 1105)

Residents in both Ashmore and Green Square were concerned about the impacts of ongoing construction and high-density development, demonstrating the difficulties of living in an area undergoing renewal and underlining the importance of delivering density in a way that maximises (rather than reduces) amenity. Traffic, parking and public transport were also areas where residents would like to see improvements.

What do you like the least about living in the area? (nAshmore = 1192, nGreen Square = 1105)

As the survey took place over the period of Covid-19 restrictions in NSW, there was a unique opportunity to understand how social cohesion and social interaction might be affected by the pandemic. Interestingly, there was very little difference in opinion regarding responses received before and after the restrictions were introduced. Residents still overwhelmingly indicated that their areas were a good place to live.

The top five priorities of Green Square residents were:

  1. More cafés, restaurants and bars
  2. Improved traffic management
  3. Landscaping in streets and parks
  4. More evening activities
  5. Better parking

The top five priorities of Ashmore residents were:

  1. Landscaping in streets and parks
  2. Improved traffic management
  3. Better parking
  4. More evening activities
  5. Improved public transport

While these areas will continue to experience change both physically and socially, most residents expressed a desire to make new local connections. Local governments have a unique opportunity to support the creation of a socially cohesive community that is welcoming to new residents in these urban renewal areas. This involves providing opportunities for social interaction by supporting new local businesses, encouraging communication, and introducing new or expanded infrastructure. As renewal projects take multiple years to complete, these opportunities will grow as the community grows.

Dealing with apartment defects: a how-to guide for strata owners and buyers

Posted by on December 14th, 2020 · Housing, Housing conditions, Strata, Uncategorized

By Sian Thompson, UNSW; Bill Randolph, UNSW; Hazel Easthope, UNSW; Laura Crommelin, UNSW, and Martin Loosemore, University of Technology Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.

If you own an apartment – or are thinking of buying one – the recent news about building quality has been worrying. There have been evacuations at the Opal and Mascot apartment towers in Sydney, cladding fires at the Lacrosse and Neo200 towers in Melbourne and the Grenfell Tower tragedy in London. While most buildings won’t have such serious defects, many do have significant problems, and owners must get these fixed so they aren’t a health and safety risk.

Even if the defect doesn’t affect their apartment, this is often the shared responsibility of all owners in the building. It’s essential they have access to good guidance on dealing with defects in strata properties – but this isn’t always easy to find. To help owners, we’ve worked with the Strata Community Association (NSW) to produce a free guide to rectifying defects.

This how-to guide takes current and potential owners through the steps of identifying and rectifying defects, with links to helpful resources. It includes advice on getting a defect report, whether the developer or builder might be responsible for fixing the issue, how to choose and manage building experts, and how to manage communication with owners and workers.

The guide has been developed for New South Wales, but may also be helpful if you have a strata property elsewhere in Australia.

So what key things should owners know?

Each building’s experience with defects will differ. But there are some key principles owners should always keep in mind – these underpin all the advice in our guide.

Ignorance isn’t bliss: as an owner, you are automatically a member of the owners corporation/body corporate. This means you have a legal responsibility to maintain and repair the common property, including dealing with defects.

Information is power: gather all the information you can when investigating defects. For buyers, a good strata report is essential. For owners of new buildings, getting a professional defects report is particularly important. It’s worth the cost.

Focus on potential fire, waterproofing or structural issues. These defects can be hard to see but expensive to fix. They also have major impacts on health and safety.

The early bird catches the worm: you can never start looking for and dealing with defects too early. Be aware of time limits on building warranties.

In NSW, for minor defects, you have two years to start the process of getting the builder or developer to fix the defect. For major defects, you have six years. If your building is outside the warranty period, you may have to fund rectification yourself.

Sharing is caring: make sure you report defects to people who need to know. This will include your owners corporation, but also your insurer(s) and Fair Trading (especially if the defect is major).

Keeping good records is also important. Records are needed in case there are disputes and to show future buyers the building is well-maintained.

Look after yourself: dealing with defects can be financially and emotionally draining. Conflict can occur, and collective decision-making can feel very slow.

To help navigate the process, you want the best experts by your side. They include lawyers, building specialists, strata managers and project managers. And always get a second opinion if in doubt.

What else can be done to improve the situation?

While our guide will help apartment owners and buyers to work through defect issues, state and territory governments could also do more to help out owners.

Since the Opal Tower evacuation, the NSW government has moved to tighten building laws to reduce future defects.

These legal changes are important, but they are unlikely to completely get rid of building defects. And buildings built before the new laws might still have problems down the track.

One way governments can help owners who face such issues in the future is to make it easier for them to get the information they need to deal with defects effectively and efficiently.

Currently, strata buyers and owners suffer from what economists call “information asymmetry” – they don’t have access to all the information they need to make informed decisions about building quality. For example, developers might not give new owners all the details about how their building was built, what materials were used, or which builders and tradespeople worked on it.

Developers should be required to give owners better information, as well as taking more responsibility for fixing defects.

Owners corporations should be encouraged to keep building records on defects up-to-date and make this information available to prospective buyers and relevant authorities.

And governments should support further professionalisation of the strata and building management industries, to make sure owners have the best possible support to navigate defects issues and care for their buildings.

$1 billion per year (or less) could halve rental housing stress

Posted by on November 2nd, 2020 · Affordability, Government, Guest appearance, Housing, Private rental
apichai kleechaya/Shutterstock

By Rachel Ong ViforJ, Curtin University; Chris Martin, UNSW; Hal Pawson, UNSW, and Ranjodh B. Singh, Curtin University. This article is republished from The Conversation under a Creative Commons license. Read the original article.

COVID has shown us what’s possible when it comes to alleviating poverty.

For six months JobSeeker payments were doubled and then maintained at a level 50% above normal.

When the bonus finishes at year end it is likely to be permanently increased for the first time in almost 30 years.

Commonwealth rent assistance could do with the same sort of attention.

Rent assistance is at present added on to other payments such as the pension and JobSeeker and is inadequate, with on our calculations one-third of the people who get it remaining in housing stress even when assisted, while around 18% of the low-income private renters who need it were excluded because they don’t receive one of the government payments to which it is tied.

Productivity Commission calculations suggest the number of private renters in housing stress has doubled over the past two decades, largely because rent assistance has failed to increase in line with rents.

Rent assistance is much lower than it should be

The Australian Council of Social Service wants a 30% in increase in the maximum rate of rental assistance. The Grattan Institute has called for a 40% increase.

Even the Productivity Commission wants a 15% increase to restore what’s been lost over the past decade.

The maximum rates paid are $69.80 per week for single person and $92.68 for a couple with three children.

As any renter knows only too well, these amounts represent only a fraction of the present cost of renting in most parts of Australia.

It’s also badly targeted

Our study for the Australian Housing and Urban Research Institute finds that (in 2017) an extraordinary 23.4% of the renters who received Commonwealth rent assistance weren’t in housing stress. At the same time 17.5% of the renters in housing stress didn’t receive Commonwealth rent assistance.

These calculations were made using the standard definition of housing stress for low income earners which is rent that exceeds 30% of gross income.

We examined three options to better match payments to housing stress:

  • raising the maximum rate of Commonwealth rent assistance by 30%
  • re-balancing the rent thresholds to address higher levels of housing stress among households with no children
  • changing the eligibility criteria to pay rent assistance to low-income private renters facing rents exceeding 30% of their income whether or not they were on other benefits

We found the first and second options would almost halve housing stress, cutting it from 848,500 households to 506,400 and 544,900.

The third option – extending rent assistance to all low income private renters and limiting it only to those fitting the standard definition of low income housing stress – would cut the number of households able to claim to 477,000.

We could cut rental stress and save money

The first option would cost $1 billion per year, the second would save $938 million and the third would save $1.2 billion.

That’s right, the best option would save money and would most accurately target payments to need.

But there’s a problem. Australia’s Constitution appears not to empower the federal government to make stand-alone rent assistance payments, which is why Commonwealth rent assistance is always tied to another payment.

To pay it to a wider group of low-income households, the Commonwealth government would need to either get a new source of constitutional power or to get state governments to administer it for them (as they do with first home owner grants).

And there are other potential hurdles.

Rent assistance acts as a de facto subsidy to community housing providers. Changes potentially affecting their tenants would need to be made carefully.

And there’s concern that increases in rent assistance will be captured by landlords in higher rents – much as appears to happen for first home owner grants.

Most landlords won’t pocket increased assistance

Our research found that in most areas and under most conditions this “subsidy capture” or rent inflation effect won’t be statistically significant.

The exception is disadvantaged areas, where our modelling suggests that a significant proportion of increases in rent assistance payments do flow through into rents, almost 33 cents in each rent assistance dollar.

This is likely caused by relatively unresponsive housing supply in low-value parts of the market. However, even in these areas the “capture” effect is smaller than in similar studies overseas.

This is probably because in Australia rent assistance is paid to tenants, rather than directly to landlords.

Despite these challenges, there are clear benefits to pursuing reform of Commonwealth rent assistance.

Indeed, it ought to be possible to both lift more Australians out of housing stress and save money.

The money saved should be diverted to supporting a broader housing affordability agenda that includes increased investment in public and community housing and tenancy law reform that improves security and other conditions.

This is especially important in more disadvantaged locations where private rental providers are less responsive.

COVID spurred action on rough sleepers but greater homelessness challenges lie ahead

Posted by on October 19th, 2020 · Guest appearance, Housing

By Hal Pawson, UNSW and Cameron Parsell, The University of Queensland. This article is republished from The Conversation under a Creative Commons license. Read the original article. Image by Nathan Larkin.

COVID-19 triggered multimillion-dollar commitments by state governments to tackle homelessness. Our research for the Australian Homelessness Monitor 2020, released today, reveals at least 33,000 rough sleepers and other homeless people have been booked into hotels and other temporary accommodation during the crisis.

Beyond this, several states have pledged funds and support to move beyond this short-term fix and ensure former rough sleepers find long-term housing.

These are commendable actions in a long-neglected policy area, even if largely inspired by public health anxieties rather than concern for the welfare of people without a home.

Still, our research also shows the burst of activity over the past six months builds on several years of stepped-up state government action to tackle street homelessness across Australia.

What prompted governments to act?

Three factors seem to have contributed:

  1. around 2016, rising inner-city rough sleeping apparently crossed a threshold of political embarrassment
  2. people experiencing homelessness challenged official complacency with direct action, including protest camps in Sydney’s Martin Place and outside Melbourne’s Flinders Street Station during the 2017 Australian Open tennis tournament
  3. a new level of activism, often inspired by developments overseas, led to initiatives such as the Everybody’s Home campaign, the Australian Alliance to End Homelessness, the Constellation Project and Adelaide Zero.

In response, several state governments boosted efforts to reduce street homelessness. Measures included expanded outreach services and offers of housing assistance, increased spending on rental subsidies and personal support for former rough sleepers, and leasing of private rental properties as temporary social housing.

Some states even set specific targets to reduce homelessness. New South Wales, for example, pledged to cut rough sleeping on Sydney’s streets by a quarter between 2017 and 2020. Statewide, the aim is to halve street homelessness between 2019 and 2025.

Such targets are a welcome sign of ambition. They could even spur other states and territories to make similar commitments.

Rough sleepers are just the visibly homeless

As our report explains, though, these aspirations raise tricky issues of definition and measurement. And they focus narrowly on rough sleeping. Though highly visible, it’s just one of the forms of homelessness.

This approach risks airbrushing the wider, and much larger, homelessness problem. Of the 116,000 homeless people counted by the 2016 Census some 8,000 were rough sleepers. Homelessness also includes experiences such as as couch surfing and living in badly overcrowded dwellings and short-term, unsafe accommodation like rooming houses.

Crucially, homelessness cannot be overcome purely through better management and co-ordination of existing services. Nor can it be seriously tackled by state/territory governments without federal support.

New wave of homelessness is looming

The most immediate concern now is an imminent surge in homelessness. This is likely in coming months as a result of JobKeeper payments and JobSeeker Coronavirus Supplements being scaled back and bans on evictions lifted.

These protections staved off a new, recession-induced, homelessness crisis through the winter months. But, since mid-year, rough sleeper numbers have been on the rise once again in cities including Adelaide and Sydney. This is almost certainly a problem deferred, rather than a problem avoided.

We know, for example, that many tenants who lost incomes and sought reduced rent have only been granted deferrals. They are building up big arrears.

For their part, many landlords have lost rental income – by negotiation or otherwise. They represent about one-third of the more than 400,000 mortgage accounts on which banks have agreed to defer payments.

The extent of any surge in homelessness will depend on the public health situation, the timing and vitality of post-pandemic economic recovery, and on how quickly eviction bans and income-support measures are withdrawn. However, if unemployment hits 10% as predicted, homelessness could rise by 21% according to one projection for NSW.

For state governments, housing the mid-2020 rough-sleeper cohort has been enough of a challenge on its own. Even with stepped-up assistance programs, the states lack the capacity to cope with a surge of households newly evicted from private rental housing.

The main problem is a lack of homes at rents that low-income tenants can afford. A large part of the reason is decades of official inaction that effectively halved Australia’s supply of social housing since the 1990s. On top of that, the shortfall of private rental properties affordable for low-income tenants grew by 54% in the decade to 2016, as detailed in our report.

What needs to be done?

Lessons from Australia’s success in tackling street homelessness during the pandemic must be integrated with ongoing services. We have to reduce reliance on band-aid interventions that are costly and, at best, only lessen the harm. Homelessness is bad for health and for our society at all times, not just during pandemics.

Governments at all levels must recognise that the growing homelessness problem of the past two decades calls for a comprehensive housing policy rethink.

Yes, governments have partnered with community organisations to get people off the streets during the pandemic, which is something to celebrate. But these successes do not resolve the underlying structural problems.

The federal government has a critical role to play in both policy and funding. It must be far more active in owning and tackling the issue. Essential first steps are to permanently boost JobSeeker payments and the rate of Commonwealth Rent Assistance. And the government should properly index these payments, as it does the Aged Pension.

Beyond this, the Commonwealth must use its greater budget capacity – more than the combined resources of the states and territories – to invest in building new social housing at scale. For almost the entire period since 1996 we’ve been building only 2,000-3,000 social housing units per year. Just to keep pace with a growing population, that needs to be 15,000 a year. It’s essential not just as a stimulus for post-pandemic recovery as proposed, but as a routine national program long into the future.

Such action should be part of a comprehensive national housing strategy to design and phase-in the wide-ranging reforms of taxes and regulations needed to rebalance Australia’s housing system and tackle homelessness at its source.

The authors are very grateful to Peter Mares for his input into this article.

Inquiry into integrated housing support for vulnerable families

Posted by on October 13th, 2020 · Government, Guest appearance, Housing, Indigenous, Social housing

By kylie valentine, Kyllie Cripps, Kathleen Flanagan, Daphne Habibis, Chris Martin and Hazel Blunden. This is an edited extract from the executive summary of the AHURI Inquiry Report. Read the executive summary, the full report and the policy evidence summary here.

Domestic and family violence (DFV), mental illness and problematic alcohol and other drug use are significant risk factors for homelessness. A range of policy responses has been devised to prevent homelessness among those affected by these issues, and to provide support to those who are experiencing homelessness. Evidence is emerging of promising practices that could be expanded. However, there are also indications of existing practices and policies in the housing field that may impede effective responses or worsen the hardships and injustice faced by vulnerable groups.

Vulnerability to homelessness and violence are produced by multiple causes, and integrated responses to address this vulnerability have been identified in a number of strategies and policies as a priority. This Inquiry investigated how policy and program responses are experienced by key population groups in different types of housing tenure. The research focused on how integration is actually operating in different contexts:

  • the integration of housing and other support for women experiencing DFV in different housing tenure
  • integrated support for Indigenous women experiencing DFV
  • the integration of social housing policy with policies to support women affected by domestic and family
  • violence and other especially vulnerable households.

Key findings

The housing and other needs of vulnerable families cannot be met by one sector. This is increasingly recognised in policy and program design. The National Plan to Reduce Violence against Women and their Children, for example, recognises that ‘all systems need to work together’ and aspires to ‘an unprecedented level of collaboration with the broader community and governments’ (Council of Australian Governments 2010: 11).

However, there are gaps in provision to vulnerable families across the housing system, and a need for improved responses in emergency accommodation, social housing, and private rental housing. The interactions between housing and human services, particularly child protection and family support, also work against policy aspirations to improve support for vulnerable families and reduce the risks of homelessness and other adverse events. While areas of strength and effective service delivery are evident, these are not uniformly available to all groups and in all areas.

Refuges, shelters and transitional accommodation remain a vital, albeit necessarily specialised and limited, part of the service system and provide valuable support for many families. However, the lack of secure, affordable and permanent housing is a systemic issue.

Indigenous women and children, especially in regional and remote areas, have very limited housing options and housing pathways in the aftermath of DFV. Acute shortages in crisis, transitional and long-term accommodation mean that Indigenous women and children are routinely turned away from refuges and safe houses because they are at capacity. In these circumstances they become trapped in a revolving door seeking shelter with family/friends or returning to an unsafe home. This is the case even in the context of a significant growth in awareness and resources to respond to families who have experienced DFV. The capacity of the service system away from metropolitan areas, and the cultural safety of services, remain areas where policy development, and resources to build workforce capacity and service quality are needed.

Social housing continues to be an important destination tenure for women leaving DFV. While it does not always offer an ideal living environment for women dealing with trauma or safety concerns, it does provide secure tenure and ongoing affordability. The marginalisation of social housing, through years of underinvestment, means not only is there insufficient housing for all who need it, but the little there is often comes in concentrations of disadvantage, and subject to sharply judgemental conditionality. Social housing legal responses to crime and to non-criminal anti-social behaviour conflict with other policies and practices to support vulnerable families in sustaining their tenancies. Although social housing landlords are generally strongly committed to assisting women leaving DFV, in social housing women are subject to unrealistic expectations about controlling the misconduct of male partners and visitors—and may be evicted because of violence against them. Tenancy termination is a blunt, heavy instrument that especially impacts on women, children, Indigenous persons and persons with problematic alcohol and other drug use.

Social housing was one hell of a missed budget opportunity, but there’s time

Posted by on October 8th, 2020 · Economy, Government, Housing, Social housing, Uncategorized
Yuttana Contributor Studio/Shutterstock

By Hal Pawson. This article is republished from The Conversation under a Creative Commons license. Read the original article.

Tonight Labor will deliver its alternative budget and promise that if it was in government it would be investing A$500 million in fast-tracking repairs to social housing, and urging state governments to match it dollar for dollar.

The federal budget itself, delivered on Tuesday, offered nothing extra for social housing, even though when polled by The Conversation and the Economic Society of Australia more of Australia’s leading economists wanted money spent on social housing than any other stimulus measure.

They are right to place it above investment allowances, wage subsidies and tax cuts as a sure-fire way to boost economic activity and employment.


Conversation Economic Society of Australia survey, September 2020

Unlike those other measures, it has a track record.

The Rudd government’s social housing initiative, introduced as part of the package that staved off recession during the global financial crisis, delivered 20,000 new units on time and on budget while creating 14,000 well-paying jobs.

It was the only Commonwealth public housing or community housing initiative of any size since the Howard government effectively ended routine public home building in 1996.

Pre-tested, pre-prepared

On a per capital basis, social housing supply has halved since then.

At the same time, private rental housing has moved upmarket, making it even harder for low-income Australians to find a suitable and affordable home.

The Community Housing Industry Association put forward a $7.7 billion Social Housing Acceleration and Renovation Program (SHARP) that would have delivered an extra 30,000 homes and renovated thousands more over four years.

Calculations by SGS Economics and Planning in June suggested it would have supported between 15,500 and 18,000 full-time equivalent jobs in each of those years.

Why, in the face of this analysis, did Treasurer Josh Frydenberg turn the option down?

It’s hard to say, but the omission of social housing is consistent with the budget’s lukewarm attitude towards infrastructure investment more broadly.

Adding up everything the government is planning to spend on infrastructure over the next four years, the budget comes up with a total of $6.7 billion, which is rather small beer compared with the four-year spending plan before the crisis, which was $4.5 billion.

Lukewarm on infrastructure generally

It’s also small when compared to the business tax and other incentives, which amount to $26.7 billion.

Kick-starting the recovery via social housing or other infrastructure would have been out of kilter with a strategy focused on creating “private sector-led growth”.

The strategy, spelled out formally in the budget papers, is to, wherever possible, support markets rather than act directly.

It’s thinking that allows the government to distinguish itself from the Rudd response to the global financial crisis in 2008.

But – unlike direct action, such as through social housing investment – the favoured approach relies heavily on assumptions about how market players (firms and consumers) react to incentives.

Those reactions might help bring about the post-pandemic snapback the most optimistic forecasts envisage.

There’s time

If not, there’s an opportunity to try again, even reluctantly. SHARP is ready and pre-tested.

There’ll be an opportunity in the mid-year budget update, due in December (in two months’ time), and next year’s budget (due in seven months’ time).

Regardless, resumption of a routine national social home-building program is seriously overdue.

Australia’s housing system has become increasingly unbalanced – not just in the past six months, but over the past 20 years and more.

The crisis provides an opportunity to fix it.

Why social housing stimulus is a measure Morrison cannot ignore

Posted by on September 29th, 2020 · Uncategorized

By Hal Pawson (UNSW City Futures Research Centre). This post originally appeared on John Menadue’s ‘Pearls and Irritations’ site. Read the original story here.

‘Top economists back boosts to JobSeeker and social housing over tax cuts in pre-budget poll’ declared The Conversation’s Monday headline this week. But not only was social housing (followed by higher jobless payments) the most popular urgent investment choice of 49 top economists, it was far and away more widely favoured than accelerated income tax reductions. While the former was a top four pick from 13 options for 54% of those involved, only 20% chose the latter.

This is not to say that income tax cuts are supported by only a fifth of Conversation panellists. The point is that few leading economic thinkers are convinced by ministerial claims that this is a credible priority when it comes to boosting national recovery. Social housing, by contrast, is backed as the number one stimulus pitch.

Unlike tax cuts, all of the funds invested in social housing construction are directly absorbed in creating a ‘nation building’ asset. Unlike major infrastructure projects, development of this type can be rapidly rolled out in a geographically diverse program with near-instant employment effects. More than 6,000 units could be initiated within six months, using ‘shovel ready’ sites already-identified by not-for-profit community housing providers and state/territory governments.

Modelling by highly respected consultancy, SGS, shows that the 4-year program to build 30,000 social housing units advocated by affordable housing industry bodies would create on average up to 18,000 full-time equivalent jobs annually. And the employment effect would be focused on one of the very sectors likely to be hardest hit by the pandemic – thanks to currently collapsing demand for market housing.

But this not only a matter of an effective ‘bang for buck’ on employment creation, it’s a chance to make a start in redressing a social housing famine that has seen effective supply cut in half since the 1990s. The 52,000 public and community housing lettings made in 1991 equated to 30 for every 10,000 Australians. The 35,000 lettings in 2017 amounted to 14 per 10,000.

For decades after World War 2, public housing made up around one dwelling in every six constructed in Australia. In most years since John Howard effectively ended the national program in 1996, social housebuilding has barely exceeded one in 50 units built.

And the private sector has not stepped in to provide the low cost rental housing needed by millions of low earning Australians. Far from it: the national deficit in private rental units affordable to low income renters has ballooned from 138,000 to 212,000 since 2006. Is it any wonder that homelessness rose by 30% in the past 10 years?

As in its stellar pandemic management, Australia should look to New Zealand for inspiration on how to take decisive action here. In her 2020 budget Jacinda Ardern pledged investment in 8,000 social housing dwellings – a number which might sound modest on the face of it, but scaled to population would imply a program of 40,000 for this country.

An initiative on this scale would make at least modest inroads into our huge backlog of accumulated unmet housing need. The next advocacy challenge would be making the case for the value of an ongoing social housebuilding program as an economic stabiliser and generator of a social good – not just an emergency employment-creating lever to be pulled at a time of national crisis.

But, in the current crisis situation, the Conversation Economist Panel’s stimulus spending priorities are not just an ‘expert perspective’. As revealed by recent polling evidence the public’s economic recovery preferences appear uncannily close to those of the panellists in this respect.

Last week’s Essential Media report showed that ‘building more affordable housing’ was likewise the most popular measure among a range of stimulus options posed by the pollster to a cross-section of Australian voters. Asked to choose their top three Federal Budget priorities, 56% (54% of Coalition backers) opted for ‘build more affordable housing’, while ‘fast track tax cuts for higher income earners’ was supported by just 21%.

Given our Prime Minister’s famously well-honed skill of tapping into the public mood, as well as his claims to an economically hard-headed approach to policymaking, you would surely expect a social housing stimulus to be front and centre of his upcoming financial plan. If it isn’t, the ever-expanding coalition of social housing stimulus backers will need to ratchet up the argument still further.