On 15 March Prof Hal Pawson appeared at the Senate Economics Committee Inquiry on the Albanese Government’s package of housing legislation, entered into Parliament in February 2023. Reproduced below is his opening statement to the hearing. This draws on the Centre’s submission to the Australian Government on the draft bills as published in December 2022.The testimony itself can be viewed here.
After a decade of minimal additions to Australia’s social and affordable housing portfolio, the new government’s commitment to initiate a national investment program is greatly to be welcomed.
Rental housing market pressures have been recently compounded by the pandemic. But the need for stepped-up social and affordable housing construction long pre-dates COVID-19. The private rental market’s efficacy in generating housing suitable for low income Australians has been in steady decline over more than 25 years. Census-based research shows that since 1996 the shortfall in the number of private rental dwellings affordable to this group has increased from 48,000 to 212,000.
Beyond the inadequate levels of government investment seen in the recent past, the declining performance of Australia’s housing system also results from a policymaking failure due to a long-term erosion and fragmentation of governmental capacity.
Both at federal and state levels, the past 25 years have seen the progressive disappearance and/or downgrading of ministerial housing portfolios and associated departments. Aspects of housing policy been increasingly split across departments and there has been little effort to foster system-wide analysis or coordinated policy development. These aspects are crucial for a policy area of such complexity and breadth.
Although the hollowing out of governmental capacity has affected many policy areas, it has been especially damaging for housing. It has diminished official housing policy domain knowledge and policymaking capacity. The process has also proceeded in parallel with an increasing tendency to view housing policy as a narrowly defined subset of welfare policy.
Re-establishing a housing minister post within cabinet was an immediate and welcome step taken by the Albanese government that began the task of addressing these problems. The institutional reform proposals in the current legislative package seek to build on this. Again, all this is positive.
However, it is essential to overcome the administrative fragmentation that is a distinct source of recent housing policymaking failure. We also need to ensure that the renewed impetus for national action on housing has an enduring impact. Evidence from other countries provides inspiration on the potentially crucial contribution of a strong national housing agency in these respects.
We therefore argue that the current legislative proposals need to be strengthened in several ways:
Housing Australia should be accorded a wider analytical and research role to inform policymaking and to support the NHSAC
Formulation of the NHHP should be re-assigned from DSS to Housing Australia, as should the co-ordination of NHHP implementation and review
Housing Australia should be charged with developing as well as implementing the National Housing Accord, and with informing re-negotiation of the National Housing and Homelessness Agreement
NHSAC functions should include an oversight/advisory role on the NHHP
The NHHP should be ambitiously scoped as well as legislated.
First published in The Conversation – read the original story here
The Albanese government’s housing package moved a step closer to delivery with the recent release of draft legislation and bills tabled in parliament. After a decade of general federal disengagement from housing policy (first home ownership being the main exception), this is more than welcome.
At the same time, the proposed laws don’t give enough priority to the need for a coherent approach to a complex housing system. Multi-faceted problems such as homelessness, unaffordable rents, mortgage stress and a lack of social housing demand joined-up solutions. Housing knowledge and policy-making capacity within government have been badly eroded and must be restored.
The draft legislative package comprised three bills (and a helpful explanatory memorandum):
National Housing Supply and Affordability Council Bill
Housing Australia Future Fund Bill
Treasury Laws Amendment (Housing Measures) Bill.
Beyond this, the National Housing and Homelessness Plan now being developed by the government should provide the vital strategic framework that has been so glaringly absent. This means it could be even more important than the measures in the draft bills. Arguably, the plan should also be enshrined in law.
What’s good about the package?
In our submission on the draft package, we commend the progress towards reasserting Commonwealth leadership on housing. State and territory commitments and actions are vital, too, in confronting Australia’s mounting and complex housing challenges. But federal engagement and ambition are essential to make any significant and lasting progress.
Similarly, after more than ten years of negligible investment in new social and affordable housing, the $10 billion Housing Australia Future Fund is certainly a laudable commitment. However, the aim of building 30,000 new social and affordable housing units over five years is relatively modest. We estimate current unmet need for social housing equates to 437,000 households.
The recent National Housing Accord on expanded construction output could also play a meaningful role. Full details are yet to be released.
Chart: The Conversation. Data: Author provided from Productivity Commission Reports on Government Services, Australian Bureau of Statistics
And what will it take to fix the housing system?
As argued in our book, the declining performance of Australia’s housing system is not just a matter of historically miserly government funding. It’s also a result of policymaking failure.
That failure reflects the long-term deterioration and fragmentation of governmental capacity in this realm. At both federal and state levels, the past 25 years have seen the progressive disappearance or downgrading of ministerial housing portfolios and associated departments. At the same time, housing policy has been increasingly viewed as a narrowly defined subset of welfare policy.
Potentially more of a game-changer than the measures in the draft bills is the promised National Housing and Homelessness Plan. Since housing is a complex and interactive system, micro-measures targeting selected aspects of that system are liable to have minimal or even counter-productive impacts. Housing therefore demands strategic policymaking (rather than an incremental or reactive approach).
This is why Australia should emulate the Canadian government by enshrining the National Housing and Homelessness Plan in law. Doing so would reduce the risk of a future administration emasculating or abandoning the structure.
As for the three draft bills, a crucial enhancement would be to strengthen the status, capacity and responsibilities of Housing Australia.
Here we again take inspiration from across the north Pacific. The Canada Mortgage and Housing Corporation (CMHC) has played a crucial strategic role as a national housing agency over decades. The UK’s Scottish Homes (1989-2001) and Housing Corporation (1964-2008) were similarly influential in informing, co-ordinating and delivering housing policy. Importantly, they also championed housing within government.
With these examples in mind, there is a strong case for Housing Australia to be:
given a wider analytical and research role to inform policymaking and support the National Housing Supply and Affordability Council
tasked with formulating the National Housing and Homelessness Plan and co-ordinating its implementation and review
In short, to boost the chances that the current housing policy impetus can be sustained, the proposed institutional reforms must be both strengthened and embedded.
By Assoc Prof Ben Clifford, University College London. This post comes out of Assoc Prof Clifford’s September 2022 presentation in the City Futures Seminar Series.
In England, as in Australia, the housing crisis, and its links to planning reform debates, has remained high on the political agenda for many years. Recent months have seen tensions within the Conservative Party about housing targets in local development plans and an associated Parliamentary backbench rebellion. Much of this debate comes back to an over-simplified representation of housing unaffordability being due to planning systems unreasonably restricting new housing supply. Linked increasingly to so-called ‘YIMBY’ arguments, the solution to the housing crisis here appears deceptively simple: remove or reduce planning regulation and let the market do the rest.
Whilst there is a seductive appeal to this argument, and certainly planning regulation does play a role in restricting supply, it is overly reductive. As UCL colleagues have argued, the housing crisis is much more complex, involving issues not just of housing availability but also affordability, type, location and quality, and with an important factor of demand as well as supply: housing has increasingly become an investment vehicle and a variety of initiatives such as buy-to-let mortgages have fuelled this trend. At the same time, ever since the Thatcher administration in the UK, local government has hardly built any housing, when prior to that it was often responsible for around a third of new supply each year, as affordable council housing. This complexity is overlooked, particularly by politicians of the right but seemingly also increasingly by politicians of the left, in favour of a mantra of reducing planning control as the ‘solution’ to the housing crisis.
In the UK, such deregulatory approaches have been particularly pushed by right wing think tanks as influential players in planning reform debates over the last decade. One instructive example has concerned the deregulation of the change of use of commercial buildings to residential use.
In short, ever since 1948, the change of use of existing buildings in the UK has generally required planning permission from the local state. In England, in 2013, the government deregulated so that changing an office building to residential use was considered ‘permitted development’ not requiring full planning permission. In 2015 this was extended to cover retail and light industrial buildings being converted to residential use, and in 2021, further expanded to cover a yet wider range of building uses including restaurants, gyms, clinics and day centres.
With colleagues, I studied the implications of this deregulation through key reports in 2018 and 2020. Comparing conversions allowed under the deregulated permitted development route with those allowed under a traditional full planning permission revealed a number of problems. Firstly, there was the absence of any requirement for the commercial buildings to be actually be empty first, leading to examples of tenants being kicked out to allow for conversion to residential use, and in some cases then struggling to find suitable alternative premises, impacting the mixed use and viability of urban economies. Secondly, since schemes required no planning permission, the traditional routes to secure planning gain such as affordable housing and infrastructure contributions, could not be levied, harming local communities.
The most concerning outcomes were, however, around housing quality. Much of the ability to require decent design for housing has been secured through planning regulation. Without it, we were finding tiny units, e.g. 15 square metres for a studio flat compared to a government recommended minimum of 37square metres.I In 2020, we found just 22% of the housing units created under permitted development would meet recommended national space standards. There was a predominance of studio and one bed flats (77% of the units we considered in 2018), as developers tried to maximise the number of units per scheme for profit even when mixed communities might better be established by including some family sized units in a scheme and when this may be a key part of unmet local housing demand.
There were examples of flats with no windows at all (rare but some existed) or, more commonly, flats with little natural light or no windows you could easily see out of. Flats were far less likely to have dual aspect windows (29.5% of the units we examined allowed under permitted development had these, compared to 72% allowed under full planning permission), to have access to outdoor space (just 3.5% of the units we examined under our 2020 study had such private amenity space) and were sometimes in unsuitable locations such as the middle of industrial estates or business parks cut off from suitable amenities and without provision of things like play space for children. In some cases, the issues were so bad that we suspected they were having a negative impact on the health and wellbeing of occupiers.
The government did introduce some additional safeguards in 2020 and 2021, such as a requirement for adequate natural light to all habitable rooms and a requirement to comply with government space standards. Other issues, such as access to outdoor space and possible locational issues and issues related to thermal comfort as well as affordable housing provision remain, however. The whole experience has served to show that planning regulations are not just an unnecessary burden restricting new supply of housing but can have a vital role to play in actually ensuring housing is fit for habitation.
There is also an interesting question about whether this deregulation was even necessary in the first place. It has certainly boosted the number of housing units developed through conversion of commercial buildings (now more than 100,000 across England since 2013), but it was not unknown before. A comparison with the Netherlands showed an equal uplift in conversions achieved not through deregulation but rather a proactive role for local government, identifying possible buildings for conversion, acting to help developers navigate planning regulations, and with central government producing best practice guidance to promote the possibility of such conversions to landowners and developers.
People deserve decent housing, and if the only way to increase market supply is to reduce requirements that uphold a decent minimum standard, then perhaps that points to the fact that market supply alone is not sufficient to resolve England’s housing crises. Indeed, local authorities in England have increasingly come to realise this. At the same time as central government has been further reducing the ability to exert influence through the planning system, the local state has been reengaging with direct delivery of housing itself. With my colleague Janice Morphet, I have studied this with reports charting our findings published in 2017, 2019 and 2021. From a base of almost complete disengagement through the 1980s to 2010s, we are now at a point where 80% of English local authorities report they are directly engaged in delivering housing again.
This activity responds to a number of different motivations and is being conducted through a range of different mechanisms. Some local authorities have considered housing development as a possible solution to the challenges of austerity, with the ability given them to have what are in effect private companies in which they are the sole shareholder. Some 55% of local authorities now report having such a ‘local housing company’ which may, for example, be using council owned land to develop market housing.
Those local authorities which retained some of their own housing stock, primarily built before 1980, are able to use this as an asset against which they can borrow to fund the development of new affordable housing, and this is becoming increasingly popular again. There are concerns with demonstrating the possibility for higher quality design through the council’s own activity than the market volume housebuilders are delivering in some instances, and a real drive for the council’s own activity to try to boost affordable housing supply (which is now specified as a corporate priority by 80% of local authorities in England).
This activity is often starting from a low base, with challenges around funding, land availability and the fact that local authorities have been unable to retain development skills in-house. There have been some challenges, particularly where development has most been focussed on profit motivations such as the Brick-by-Brick company in Croydon which effectively went bankrupt. Nevertheless, other local authorities such as Birmingham, Bournemouth, Brent and many others are more quietly getting on with things and making them work. The mantra seems increasingly that ‘planning is not enough’ in so far as central government has weakened planning through successive reforms, but also relying on the ability through planning gain to try and secure affordable housing purely as a residual of market housing delivery seems an impossible ask.
Reducing planning control is perhaps favoured by governments where it may align to ideological predispositions sceptical about the role of the state and might seem a zero-cost solution to increasing housing supply and so apparently resolving the ‘housing crisis’. In some cases, opposition to new housing development has been so extreme that it seems common sense that planning deregulation might be the solution. Densifying suburbs and converting surplus commercial space to residential use when there’s a need for additional housing, and considering the embodied carbon in buildings, all seems sensible. However, there’s an important question as to whether such positive goals are best achieved by planning deregulation. There are potentially positive reforms that can be made to the planning system but as the example of permitted development in England shows, a straight leap to deregulation may have a range of disbenefits (and doesn’t’ seem to have delivered more affordable housing).
Such apparently easy solutions to the very real challenges of housing affordability are something to be extremely wary of. The planning movement grew out of particular concern in the nineteenth century with the impact on health and wellbeing from the output of unregulated urban development. Such concern should still exist today, alongside the need to increasingly consider sustainability and the implications of the climate crisis. Those who think removal of planning control will enable everyone to be able to afford to live exactly how and where they want to live are promoting a fantasy which, when unrealised, will likely just drive calls for further deregulation, with the potential to cause further harms. Liveable future cities require a proactive role for local government, which might positively influence development both through regulatory levers such as planning control, but also through direct action such as developing housing directly.
By Dr Rupa Ganguli, City Futures Research Centre. Originally published by The Fifth Estate.
In NSW, the Opal and Mascot Towers defects scandals have galvanised a wide ranging response on the issue of quality in apartment building. Together with the tragic fire in London’s Grenfell Tower, the shine has most certainly come off the so-called swing to urban living typified by high rise apartment buildings.
The overwhelming focus in this reaction has been on exposing the failure of the apartment developers and builders, together with allied professions – engineers, architects, certifiers – to ensure build quality. But critical though these professions are, surprisingly little attention has been paid to the role of another major actor in the apartment market: the sales agents.
This is all the more surprising given the central role sales agents – called project marketers in the jargon – play in the whole high rise apartment development process. These are the people who convince buyers to take the plunge to commit to buying into the developer’s vision of a new home, in most cases off-the-plan before anything has actually been built.
But rather than being passive players in this transaction, new research – based on interviews in mid-2020 with over 30 professionals involved in the apartment development and sales sectors – has exposed the highly active role these sales agents play in mediating the process. In many ways, understanding their role also helps explain why it is possible to sell a lemon to so many consumers.
While their fundamental purpose is to maximise sales rates and prices on behalf of the developer and the project’s financier, project marketers play multiple roles beyond just the sales process, acting as market matchers, information providers, and price influencers, constantly adapting to market volatility. This makes them a key institution in the apartment delivery process, influencing the prices paid and who gets to live in the apartment sector.
So, what are the key roles of the project marketer?
Firstly, the market matcher role involves convincing buyers to purchase off-the-plan using face-to-face or on-line communication and creating hype and FOMO (or a fear of missing out), when the apartment exists only as a display suite or computer generated image.
Well-established views on buyer typologies and pre-sales success underpins their approach to buyers. For example, investor purchasers are believed to be more common in a market boom and viewed as an easier target buyer group. They are seen as quick decision makers, often relatively well-placed to obtain a purchase deposit from financiers, making them less risky for a developer. Advertising and marketing costs were considered to be minimal in a market dominated by investor buyers, a positive for maximising sales revenue from the perspective of project marketers and their fee-paying developer clients.
In contrast, the downsizers or empty nesters among the owner-occupier buyer groups who became more dominant in the bust are perceived to be a more challenging target group, in need of more hand holding in the sales journey.
This means more expensive advertising and marketing campaigns, including high-quality computer generated imagery, drone photography, and display suites. This could be offset by this buyer group’s ability to pay high prices compared with the first home buyers or investors.
In this way, marketers become a gatekeeper by enabling or constraining purchase opportunities to certain buyer groups and in doing so controlling access to apartment ownership.
Information providers
Project marketers are also information providers to developers, architects, and consultants, which can affect what is eventually built and sold.
The information includes advice on the target buyer market at the land purchase and project feasibility stage, as well as asking prices and sale rates, design features, and competing projects.
But they also provide information to buyers. When advising off-the-plan buyers, research participants spoke about different types of information shared between investors and owner-occupiers. For example, investors were seen to be more interested in characteristics which positively affected capital appreciation and rental yield prospects.
There was no connection made to the issue of poor construction quality and this sales mindset. During the boom of 2012 to 2018, few buyers asked about the profile and track record of the developer or builder. But these questions have become more frequently asked following the defect scandals with marketers adopting a quality assurance role to reassure buyers of product quality.
In contrast, there was little mention of information being requested or shared with buyers on the environmental sustainability of projects. This issue had clearly not filtered through to developers or their project marketers.
Price influencers
Thirdly, the price influencer role involves advising developers on expected off-the-plan sales prices.
Importantly, these may be incorporated into project feasibility, informing the price payable for the land and eventual sales goals, and asking prices. This role is performed within the context of limited information transparency for buyers, with marketers employing different off-the-plan sales strategies for investors versus owner-occupiers.
In one reported instance, pre-sale prices were kept five per cent below the market level for the first third of the stock released for sale, with prices ratcheted up as sales continued until a target pre-sale rate was reached. Thereafter, prices were kept to five per cent above market for the last third of sales stock. The objective here was to attract investor purchasers in the initial stages and owner-occupying downsizers in later stages as the latter were keener to see a project’s physical progress. Of course, buyers remain completely unaware of such price manipulation.
Implications for cities
These research findings have global implications for all urban centres experiencing rising housing density.
Far from responding to a hidden hand, the high rise apartment market is actively shaped by project marketers whose job it is to maximise returns and sales rates.
In a hyper-commodified market context, the project marketer acts as a central conduit through which information on new apartments reaches potential buyers. In this process, they actively manage to whom pre-sales are targeted and at what price.
In such a one-sided transaction, the possibility of on-selling a product of inferior quality becomes not only possible, but compelling.
By Hal Pawson (CFRC) and Cameron Parsell (University of Queensland). This article is republished from The Conversation under a Creative Commons license. Read the original article.
Homeless numbers have risen sharply across Australia, with soaring housing costs emerging as the biggest driver of the increase. The Australian Homelessness Monitor 2022, released today, reports that the average monthly number of people using homelessness services increased by 8% in the four years to 2021-22. That’s double the population growth rate over that period.
In the first major homelessness analysis spanning the COVID crisis years, we also show numbers have been rising in some parts of the country at rates far above the national trend. The problem has been growing especially rapidly in non-metropolitan areas. This trend is consistent with the boom in regional housing prices and, more especially, rents sparked by the pandemic.
Figure 1. Changes in homelessness service caseloads over 4 years
Percentage changes in specialist homelessness service case numbers in capital cities and regional Australia from 2017-18 to 2021-22
Figures based on monthly average figures for the two cited financial years
The homelessness that has long been a sad feature of our biggest cities has clearly spread to regional and rural Australia.
Many other patterns in the changing scale and nature of homelessness in Australia are ongoing trends that pre-date the 2020-21 public health emergency. This period appears to have had relatively little effect on these trajectories, which include a growing proportion of older adults, as well as First Nations peoples and those affected by mental ill-health.
As the chart below shows, unaffordable housing is playing an increasing role in people becoming homeless.
Figure 2. Reasons people seek homelessness services help
Breakdown of homelessness services caseloads (persons) by “reason(s) for seeking assistance” from 2017-18 to 2021-22.
Note: Baseline value from 2017-18 is 100. Service users may select more than one ‘trigger factor’. Figures based on average monthly service user numbers for each financial year.
Social housing programs are welcome but overdue
The pandemic triggered significant and welcome commitments to social housing programs by the new federal government and some state governments. The recent federal budget confirmed funding for 20,000 new social housing dwellings over five years.
Social housing offers secure tenancies at below-market rents. It’s a crucial resource for both preventing and resolving homelessness.
Together, these new programs will – at least temporarily – halt the long-term decline in social housing capacity. The sector’s share of the nation’s housing stock has been shrinking for most of the past 25 years.
By our reckoning, the government programs should deliver a net increase of about 9,000 social rental dwellings in 2024. This will be the first year for decades in which enough dwellings will be built to maintain the sector’s share of Australia’s occupied housing stock.
But sustaining this achievement will require more funding beyond the current commitments. Otherwise, the decline will resume.
Affordability is the big issue, but some need other help
As a recent Productivity Commission report acknowledged, homelessness is primarily a housing problem. In its words, “fundamentally, homelessness is a result of not being able to afford housing”.
Figure 3. Increases in advertised rents and inflation, 2018 to 2022
Year-on-year percentage change for each quarter based on national averages
While other reasons do contribute to some people becoming homeless, most people experiencing homelessness have no long-term need for personal support. And many who do have high support needs can access and keep tenancies when suitable affordable housing is available.
At the same time, the most disadvantaged rough sleepers may require a great deal of help to overcome their problems. The widely acclaimed “housing first” model successfully does this. As other recent research emphasises, for many chronic rough sleepers helped into secure housing, withdrawing such support – even after three years – markedly increases their risk of becoming homeless again.
Australian governments need to better recognise the case for expanding the supply of permanent supportive housing. This involves integrating long-term affordable housing with ongoing support services where required.
Only a few such projects operate in Australia. There is no general framework to fund them, especially the support services.
Lengthy rough sleeping is typically a symptom of societal failure. All too often, for those affected, this failure starts from infancy.
Housing the chronically homeless pays for itself
The Productivity Commission report advocated a “high-needs-based [social] housing subsidy to ensure housing is affordable and tenancies can be sustained”. Logically, since this is essentially a social work (not social security) responsibility, it is the states and territories, and not the Commonwealth, that should bear the cost.
This may sound like a big ask for underfunded governments. But state and territory budgets stand to benefit from avoiding the costs that recurrent and chronic homelessness imposes on departments such as health and justice. As our previous research shows, we spend enormous amounts of public money responding to the consequences of leaving people in a state of chronic homelessness.
A model for funding permanent supportive housing needs to be developed. Ideally, this process should involve all Australian governments, perhaps as part of discussions to advance the National Housing and Homelessness Plan. Federal Labor pledged this project will take shape in 2023.
More broadly, these deliberations must be underpinned by recognition that our current ways of developing, operating and commodifying housing produce homelessness. A plan to end homelessness requires a plan to overhaul our housing system so it produces enough suitable and affordable housing for all Australians.
By Chris Martin, UNSW Sydney; Milad Ghasri, UNSW Sydney; Sharon Parkinson, Swinburne University of Technology, and Zoe Goodall, Swinburne University of Technology. This article is republished from The Conversation under a Creative Commons license. Read the original article.
More Australians are renting their housing longer than in the past. But they have relatively little legal security against rent increases and evictions compared to tenants in other countries. When state governments suggest stronger protections for tenants, landlords and real estate agents claim it will cause disinvestment from the sector, increasing pressure on already tight rental markets.
In research for the Australian Housing and Urban Research Institute (AHURI), published today, we put the “disinvestment” claim to the test. We looked at the impacts of tenancy reforms in New South Wales and Victoria on rental property records over 20 years, as well as surveying hundreds of property investors. We found no evidence to support this claim.
We did find a high rate of turnover as properties enter and leave the sector. This happened regardless of tenancy law reforms. It’s a major cause of the unsettled nature of private rental housing for tenants.
We suggest that if substantial tenancy reforms did cause less committed landlords to exit the sector, that might not be a bad thing.
How did we test the disinvestment claim?
We analysed records of all rental bond lodgements and refunds in Sydney and Melbourne from 2000 to 2020. From these records we can see properties entering the rental sector for the first time (investment) and exiting the sector (disinvestment).
We looked for changes in trends in property entries and exits around two law reform episodes: when the 2010 NSW Residential Tenancies Act took effect, and the start of a tenancy law reform review in Victoria in 2015.
We found no evidence the NSW reforms affected property entries (investment). And property exits (disinvestment) were slightly reduced – that is, fewer properties exited than expected.
In Victoria, we found property entries reduced slightly when the law reform review started – perhaps a sign of investors pausing for “due diligence”. We saw no effect on property exits.
So in neither state did we find evidence of a disinvestment effect.
We also surveyed 970 current and previous property investors, and got a similar picture. When deciding to invest, investors said prospective rental income and capital gains were the most important considerations, but tenancy laws were important too.
On the other hand, tenancy laws were the least-cited reason for disposing of properties. Many more investors said they did it because they judged it a good time to sell and realise gains, or they wanted money for other purposes, or because the investment was not paying as they had hoped.
A state of constant churn
Our research also gives new insights into the private rental sector, which has been growing relative to owner-occupied and social housing.
Small-holding “mum and dad” landlords dominate the sector. Some 70% of landlords own a single property. Multiple-property owners own more properties in total, but still relatively small numbers (rarely more than ten) compared to corporate landlords in other countries who have tens of thousands of properties, or even more. Australia now has some large corporate landlords, but their properties are a tiny fraction of the total rental stock.
Beneath its gradual growth and persistent small-holding pattern, the private rental sector is dynamic. Properties enter and exit the sector very frequently. In both Sydney and Melbourne, our analysis shows, most properties exit within five years of entering.
Numbers of private rental properties in Sydney and Melbourne at five-year intervals from 2000 to 2020. Properties are categorised by year of first observation in rental bonds data. The authors
More than 30% of tenancies begin in a property that’s new to the rental sector. And more than 25% of tenancy terminations happen when the property exits the sector.
Our investor survey also shows the sector’s dynamism. Many investors made repeated investments, owning multiple properties and some interstate. They indicated strong interest in short-term letting, such as Airbnb, and significant minorities had used their properties for purposes other than rental housing.
Australia’s rental housing interacts closely with other sectors, particularly owner-occupied housing, as houses and strata-titled apartments trade between the sectors. The tax-subsidised property prices paid by owner-occupiers heavily influence investors’ gains and decision-making. Rental is also increasingly integrated with tourism, through governments’ permissive approach to short-term letting.
In short, the Australian rental sector is built for investing and disinvesting. As properties churn in and out of rental, renters are churned in and out of housing.
This presents problems for tenants.
A new agenda for tenancy law reform
Australian residential tenancies law has accommodated the long-term growth of the rental sector and its dynamic character. With no licensing or training requirements, it’s easy for landlords to enter the sector. It’s also easy to exit by terminating tenancies, on grounds they want to use a property for other purposes, or even without grounds in many cases.
Over the years tenancy law reform has fixed some problem areas, but with virtually no national co-ordination. Laws are increasingly inconsistent on important topics, such as tenants’ security (for example, some states have restricted, but not eliminated, no-grounds terminations), minimum standards and domestic violence. Reforms have overlooked significant problem areas, such as steep rent increases and landlords’ liability for defective premises.
It is time to pursue a national agenda that goes further than previous limited reforms. The focus should be on the rights of tenants to affordable housing, in decent condition, that supports autonomy and secure occupancy.
Where landlords say it is too difficult and they will disinvest, this should not be taken as a threat. Indeed, it would be a good thing if the speculative, incapable and unwilling investors exited the sector. This would make properties available for new owner-occupiers and open up prospects for other, more committed landlords, especially non-profit providers of rental housing.
Similarly, if we had higher standards and expectations to discourage private landlords from entering the sector, that would open up scope for new owner-occupiers and investors who are less inclined to churn properties and households.
While past tenancy law reforms have not caused disinvestment, maybe the next reforms should.
The authors acknowledge the contributions of their research co-authors, Professor Kath Hulse, Professor Eileen O’Brien Webb, Dr Laura Crommelin and Liss Ralston.
By Edgar Liu, UNSW Sydney; Bruce Judd, UNSW Sydney, and Mariana T Atkins, The University of Western Australia. This article is republished from The Conversation under a Creative Commons license. Read the original article.
In response to the horror stories of abuse and neglect from the Royal Commission into Aged Care, the new federal Labor government has made legislative changes. Prior to this, Australia’s most recent aged-care reforms were enacted a decade ago. The focus, however, is still largely on residential care homes, so what about older Australians in the broader community?
More older Australians are still living in their own homes. How do our policies and cities support them? We have published an analysis comparing 85 policy documents across all three levels of Australian governments against World Health Organization (WHO) guidelines on age-friendly cities.
We found these policies reflect outdated views of old age. They neglect many important aspects that contribute to happy and fulfilling lives in older age.
The policy focus is overwhelmingly on care and support services. There are decreasing levels of attention to housing, transport, walkability and, least of all, cultural diversity.
WHO guidance on making age-friendly cities
The WHO first published its Global Age-Friendly Cities: A Guide in 2007 to support the active ageing policy framework it proposed back in 2002. Described as “the centrepiece of WHO’s age-friendly cities approach”, the guide became a major point-of-reference for age-friendly policymaking around the world.
In 2010, the WHO launched the Global Network of Age-Friendly Cities and Communities. The network aims to help governments and other organisations build age-friendly cities through evidence-based guidance and knowledge exchanges. Australia’s members include two states, 34 local councils and one regional organisation.
Our research, however, found little to no difference between Australian members and non-members in making direct policy references to these guides. For example, more of South Australia’s (a non-member) policy documents referred to the guidelines than Western Australia’s (a member), as the table below shows.
There were also discrepancies between the tiers of government. State and territory governments were more likely to take on such guidance than federal and local governments. Yet local governments are the intended audience of the framework and the guide.
Previous research in Canada blamed this on “the minimal state powers of municipal governments”. In Australia, too, our federated system has left local councils with limited authority and resources.
An outdated view of old age
In analysing the 85 policy documents, we adopted a “traffic light” system to highlight whether they acknowledged ageing-related challenges and proposed corresponding actions.
Our analysis focused on five policy areas:
care and support services
cultural diversity
housing
transport
walkability.
These areas broadly align with the WHO’s age-friendly domains.
The skewed policy focus is on care and support services. This reflects decades of aged-care reforms in Australia and their take-up at all levels of government. It also potentially reveals a stereotypical view of old age as being a time of frailty, decline and disengagement.
Our analysis also reveals a failure to recognise how diverse circumstances impact the ageing processes. The result is a neglect of the broader spectrum of older Australians’ support needs.
In Australia’s three-tiered government system, each level has its own authority and resourcing ability. Previous Australian research shows local governments have limited ability to raise the resources they need to design and implement policies and programs for their ageing residents as the WHO guidance intended.
Our analysis shows a reliance on national programs instead. These may not be as nuanced in responding to local needs and conditions.
In related work, our fine-level spatial analysis also highlights a mismatch between the growth of ageing populations across Australia and where aged care services are being offered. This is due largely to inequitable eligibility criteria. These effectively favour home owners living in standalone suburban houses over others such as renters.
The latest proposal to revamp a residential aged-care sector that is no longer fit-for-purpose must be applauded. Policy should aim to provide these residents with all the attention and dignity they deserve. But as the population ages, there’s an ever greater need to provide support across all the domains that enable older people to live healthy, fulfilling lives.
Local authorities would know local residents and their needs most intimately. But our analyses show they are hamstrung in supporting the needs of older people in the community.
Continued reform must aim to ensure local councils have the powers and resources required to serve these needs. This will go some way towards responding better to Australians’ changing needs. Importantly, it will also help to reframe the dialogue of ageing away from frailty and debilitation.
By Hal Pawson, UNSW Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.
Housing took centre stage in Treasurer Jim Chalmers’s first budget this week. Relatively modest but positive steps were made towards tackling Australia’s worsening shortage of affordable social housing, as well as the broader challenge of housing affordability. But parts of the package cast some doubt on the new government’s analysis of the problem and its ambitions to tackle it.
The most substantive aspect of budget housing plans was the confirmation of promised funding for 30,000 new social and affordable rental homes over five years via the new Housing Australia Future Fund. This will involve a A$10 billion, debt-funded, equity investment. Resulting annual returns will be ploughed into building subsidised housing available at below-market rates.
The 2022 ALP election platform had outlined this initiative. The budget added a bonus in the form of federal funding for another 10,000 affordable rental homes under a newly minted National Housing Accord with state and territory governments.
As part of that deal, the states have pledged to enable construction of “up to” 10,000 affordable homes on top of Commonwealth commitments. One way they would do this is by making well-located state land available for the purpose.
How achievable is the 1 million homes pledge?
To help make housing more affordable for Australians in general, the accord also commits Australian governments to enabling at least 1 million new homes over five years from 2024.
A million homes has a good ring to it, but how ambitious is it really?
Critics have pointed out that 985,000 homes were built over the past five years. However, in Australia’s notoriously volatile housing system, that was a period of peak activity unlikely to be repeated soon. In the five years to 2014, for example, the total was only 860,000 homes. And official and industry forecasts suggest only about 180,000 housing completions per year on average over the next three years.
By these measures, the million homes target could be quite challenging. So how can it be achieved?
Firstly, if governments directly fund 50,000 social and affordable rental homes, that will be a good start.
Secondly, according to the budget statement, it’s hoped measures such as stepped-up rezoning of non-housing land for housing and higher-density redevelopment near transport hubs will boost market housing output. These moves could lead to better-sited house building.
This approach also follows from the analysis that unreasonably high prices and rents are largely a result of “constrained housing supply”, in turn largely due to excessive planning restrictions.
Planning simplification can never be a bad aspiration. However, it’s questionable whether market players would ever boost construction rates enough to significantly lower new house prices – and therefore existing property values too.
A one-sided view of the housing system
The real problem here is that the budget and Labor’s election platform focused solely on the supply side of the market. They turned a blind eye to the policy settings that affect housing demand such as migration, tax, social security and financial regulation.
It would be hoped the more holistic analysis of Australia’s housing problems and solutions that’s essential to address these issues will underlie the government’s forthcoming National Housing and Homelessness Plan.
Positively, the budget allocated funds for the plan’s development. But that task has been assigned to the Department of Social Services. This seems to raise the risk of an unduly narrowly defined conception of what’s needed. The concern is it might focus exclusively on homelessness and affordability at the lower end of the market.
Certainly, these are crucial aspects of the wider housing policy challenge. But to examine them in isolation risks misdiagnosis and the prescription of palliative solutions.
Budget downplays need for institutional reform
The budget papers also imply a substantial downgrading of another ALP election pledge – to emulate countries such as Canada by setting up a national housing agency. Just $500,000 a year is allocated to this task. In my book, Housing Australia should be leading on the national plan, as well as accommodating the re-established National Housing Supply and Affordability Council.
With the right mandate, Housing Australia could create a much-needed permanent body of housing expertise within government, co-ordinating policy development and implementation across departments and levels of government. It could help to insulate housing policymaking from the short-term political dynamics that have plagued it for decades. This is an area where long-term thinking comes at a premium.
Negotiating the multi-party Housing Accord within months of taking power is an impressive government achievement. More broadly, though, these developments seem to speak to a disappointingly lukewarm commitment to essential institutional reforms.
The governance structure for housing policy in Australia is outdated, fragmented and underpowered. It’s badly in need of an overhaul.
After nearly a decade of Commonwealth neglect, the Albanese government has moved fast to flesh out its main housing commitments. Yet an administration with serious long-term ambition to restore the health of our housing system would also be embracing the challenge of wider policy governance reform. It’s a fairly low-cost undertaking, but a precondition for progress beyond this term of office.
By Fatemeh Aminpour, UNSW Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.
As people age, they often become less confident about walking. Fear of falling can limit the activity of older people, leading them to become isolated.
So what, exactly, makes for a great footpath to walk on?
My colleagues and I explored this question in a recent paper. We used an evidence-based tool to measure the walkability of urban roads – assessing not just the footpath itself, but the features around it.
The results can help urban designers make our cities more walkable, especially for older people.
What makes a footpath ‘walkable’?
Only about 42% of people in Sydney and Melbourne live in neighbourhoods with above-average walkability. This compares poorly with people in Lisbon (99.2%), São Paulo (97%) and Hong Kong (96%).
Generally, features that determine whether a footpath is walkable fall into one of two categories.
Neighbourhood-level features refer to a neighbourhood’s general environment, such as:
how well connected streets are to each other. Do they offer a variety of available routes for daily trips?
how densely dwellings are built and how amenities are distributed. Are there parks, train stations, cafes or shops within walking distance?
Footpath-level features refer to the safety, comfort and attractiveness of a footpath, such as:
obstacles such as tree roots and short poles
the width of the path
convenience of crossing facilities
green belts (such as grass and shrubs) and fences that separate pedestrians from traffic lanes
areas of shade
street furniture
bicycles travelling along the path
vehicles parked on the path
noise from cars and other sources
diversity of streetscapes such as building facades, trees and grasslands.
Previous studies on walkability have mixed these two levels of features. But our research separated them, to help urban designers identify which features are most important and which should be improved.
We focused on neighbourhood walkability for senior citizens. By 2050, one in six people in the world will be aged over age 65 – almost double the number in 2015. Australian census data paints a similar picture.
Research shows older adults who perceive their neighbourhood as walkable are happier and more satisfied with life, and less lonely.
Walkable cities help senior citizens – especially those with physical restrictions – be more physically active, and promotes stronger and more regular social connections.
So it’s particularly important to identify how to make our streets more appealing for this age group.
What we found
Our research focused on the city of Shenzhen in China. Over the past 40 years, Shenzhen has grown into a megacity, and urban planners have historically prioritised the needs of motorised traffic over pedestrians and cyclists.
Among the methods involved in our study, we asked 256 senior citizens to rate footpath features to help us understand how much each one affects their walking.
Respondents told us bikes on footpaths and vehicles parked on footpaths were the biggest factors in reducing walkability. They reported that cars parked on footpaths made the space too crowded and increased the risk of being injured by bikes travelling on the footpath.
Convenient crossing facilities were rated as the second most important feature of footpath walkability. This includes formal crossings – such as zebra crossings and underpasses – as well as informal crossings such as quiet streets.
We employed two auditors to quantify how well each feature appears in 11 sample footpaths. The results showed that the way researchers quantify the quality of a footpath can differ to the views of senior citizens.
For example, we measured the quality of a green belt based on the ratio of the length of the belt to the length of the footpath. But for the pedestrians we spoke to, no matter how wide a green belt is, it’s effective as long as it separates them from traffic lanes.
We need walkable neighbourhoods, too
Our research shows what makes a good footpath, but neighbourhood walkability is also important. If people don’t have destinations to walk to, or streets are not well connected, then they will be deterred from walking even if the footpath is good quality.
And we must remember, people experience footpaths differently. An able younger adult may consider a footpath walkable when a senior citizen or a younger child struggles to navigate it.
Every citizen has an equal right to use and enjoy public space – and footpath design should reflect this.
By Hal Pawson, UNSW Sydney; Bill Randolph, UNSW Sydney; Chris Leishman, University of South Australia; Nicole Gurran, University of Sydney; Peter Mares, Monash University; Peter Phibbs, University of Sydney, and Vivienne Milligan, UNSW Sydney. This article is republished from The Conversation under a Creative Commons license. Read the original article.
The federal Labor government has promised to craft a national housing and homelessness plan and to fund new social housing, returning Canberra to a field it all but abandoned for a decade. A new Productivity Commission report is scathing about current arrangements and calls for far-reaching change.
Yet some of the report’s key recommendations rest on faulty assumptions and outdated economic thinking. It relies on a misplaced belief that the market will respond to low-income households’ need for affordable housing. Its faith in deregulation as a cure-all is misguided.
The experience of recent decades and a wealth of research evidence instead point to the need to increase government investment in public and community housing.
Failed policies must change
The National Housing and Homelessness Agreement provides $1.6 billion a year in federal funding to the states and territories. It’s meant to improve Australians’ access to affordable and secure housing.
However, in its review of the agreement, the commission judges it ineffective and in need of a major shake-up.
With rents rising and vacancies falling, low-income private renters “are spending more on housing than they used to”. Some “have little income left after paying their rent”. Almost one in four have less than $36 a day for other essentials.
More people are seeking emergency housing support from homelessness services. And, as the report acknowledges, more are being turned away.
The commission declares “homelessness is a result of not being able to afford housing” and governments must “address the structural factors that lead to housing unaffordability”. As experts in housing policy, economics and urban planning, we agree. Far-reaching reform is long overdue.
The report concludes, for example, that first home-buyer grants and stamp duty concessions are counterproductive and push up prices. It advocates spending these billions on preventing homelessness instead.
The report endorses a “housing first” approach to tackling homelessness – this means housing people unconditionally as the first priority before dealing with their other needs. The report also calls for early intervention programs for “at risk” cohorts, such as people leaving hospitals, prisons or out-of-home care.
So what’s wrong with the report?
The review’s terms of reference, set by the previous government in 2021, meant the commission did not consider how easy credit, negative gearing and the capital gains tax discount drive real estate speculation, inflate prices and lead to inefficient use of housing and land. Coupled with the commission’s embedded faith in market forces, these omissions skew its recommendations, especially on social housing.
Instead of more public investment to provide more social housing, the commission urges Canberra to convert its $1.4 billion-a-year support for social housing running costs through the national agreement into Commonwealth Rent Assistance. It wants to up-end the current system by replacing income-based rents with market rents across social housing.
But most of these renters would be much worse off unless there is a large rent assistance increase across the board. Recognising this, the commission advocates a top-up payment “to ensure housing is affordable and tenancies can be sustained”. Without estimating the cost, it optimistically suggests the states should pick up the tab.
The commission argues this approach would be more equitable for social and private renters. The implicit subsidy from capping social housing tenants’ rents at 25% of income typically exceeds the rent assistance paid to private tenants. Yet reducing social housing tenants to the same level of precarity as private renters seems an odd way to eliminate unfairness.
Enabling low-income Australians to secure decent private rental homes would require a dramatic rise in rent assistance payments, perhaps even to a level equating to the implicit subsidy social housing tenants receive.
Broader benefits of social housing overlooked
The commission has neglected the broader benefits of social housing investment that delivers good-quality, well-managed homes that low-income earners can afford.
Decades of mounting rent assistance expenditure have failed to fill the gap created by the lack of a sustained national program of social housing construction since the 1990s. Research shows the shortfall in private dwellings affordable to low-income renters ballooned from 48,000 in 1996 to 212,00 in 2016.
Simple comparisons between the costs of rent assistance and building affordable homes also ignore the wider community benefits of social housing. SGS Economics recently found the return on social housing investment is “comparable to, or better than” major infrastructure projects. And economics professor Andi Nygaard estimates the “large, but avoidable, annual social and economic costs” of the affordable housing shortage will top $1 billion a year by 2036.
Why planning reform is no panacea
Underlying much of the commission’s thinking is the idea that the main cause of unaffordable housing is outdated land-use planning rules that restrict new housing supply.
This contention ignores two decades of state planning reforms, including higher-density housing near transport and town centres, simplified rules and accelerated decision-making.
The commission estimates a 1% increase in overall housing supply (implicitly achievable through planning deregulation) could deflate rents by 2.5%. But what makes this scenario implausible is the development industry’s time-honoured – but entirely rational – practice of drip-feeding new housing supply to keep prices buoyant. Even if planning relaxation could enable ramped-up construction, it’s hard to imagine that being sustained in the face of any resulting market cooling.
However, the commission argues all private real estate development, regardless of cost, will eventually trickle through to those in need. As properties are traded over time, pricier homes will “filter down” through the market at progressively lower rents.
This view defies evidence that many factors other than planning have profound impacts on housing costs and supply. New Australian research strongly suggests “filtering” alone will not make homes affordable for lower-income earners.
None of this is to deny that the planning system could be improved. But if solving housing unaffordability were simply a case of “unleashing planning reforms”, other countries would have managed it long ago.
Australians struggling to pay the rent, or even find a home, deserve a much better response from Australia’s premier economic policy agency, and one that actually reflects the dynamics of the housing system.
