City Futures Blog

News and research in housing and urban policy, from Australia’s leading urban policy research centre.

City Futures Blog random header image

A Housing Strategy for NSW: a good idea, but Housing 2041 falls short

Posted by on May 10th, 2021 · Housing

By Hal Pawson and Vivienne Milligan. First published by The Fifth Estate.

The NSW government’s new 20-year housing strategy gives a broad nod to issues at play while offering few actionable solutions.

With a transition from stamp duty to land tax flagged in Treasurer Dominic Perrottet’s 2020 NSW budget it appeared that the state could be on the brink of major housing system reform. Compounding this impression, was this week’s release of the Government’s Housing 2041 strategy and 2021-22 Action Plan. 

The state’s first ever long-sighted housing strategy (emulating Western Australia and the ACT) is a welcome recognition of housing as both a major continuing challenge and a core policy responsibility of state and territory governments. 

In its scope and aspirations the document refreshingly recognises the range of agencies, powers and policy actions available to state governments to achieve a better functioning and fairer housing system. As well as mooting the stamp duty reform, for example, it contemplates amending planning guidelines to promote housing diversity and sustainability, stronger consumer protection and support for tenants, “maximising the impact of government-owned land to achieve the housing vision”, and “rejuvenating” social housing.

Despite acknowledging the urgency for significant policy change, the strongest underlying message from the Housing 2041 documents is the Government’s desire to buy more time.

Another positive inclusion is new governance and coordination arrangements – including an expert housing advisory panel and a housing strategy implementation unit. These could help to confront the policymaking challenge posed by housing as a many-faceted issue badly served by silo government. 

These strengths apart, though, how convincing are the documents as a genuine strategy? Qualities fundamental to the credibility of any meaningful strategy include: analysis of the problems to be tackled, setting clear and measurable goals, identifying actions to achieve those goals, and a plan for mobilising resources to implement the specified actions.

Regrettably, few of those features appear in the Housing 2041 documents.

First, they include no precise analysis of current housing market conditions, nor any quantification of existing unmet housing needs and housing system performance challenges.

Second, detailed modelling of demographic forecasts, population structure and inter/intra-regional migration is absent. Such projections are essential in planning housing supply targets, and never more so following the disruption caused by the COVID 19 pandemic.

Third, lacking concrete analysis as its foundation, stated strategy goals are extremely high-level in nature. This is revealed by a motherhood vision for NSW to “have housing that supports security, comfort, independence and choice for all people at all stages of their lives”  to be achieved via one-word “pillars”: supply, diversity, affordability and resilience.

Under these headlines, there is little or nothing in the way of definitive targets and progressive milestones that would be needed to calibrate outcomes on any of these fronts.  

While there are numerous stated aspirations for “more” or “improved” levels of activity, these are empty pledges without specifying (a) more than what, (b) how much more, and (c) by when the increased or enhanced activity will be achieved.

Only if defined as such would it be possible to assess future policy impact. For example, what is the current level of affordable and social housing supply across the system against which improvements will be judged?

What proportion of such housing falls short of acceptable standards and how much will this cost to fix? What is the target for reducing social housing waiting lists?  How many first home buyers will government aim to assist? 

Similarly, there are few numbers for current or required government housing expenditure cited in the documents. Admittedly, these could instead be provided in annual state budgets. But as the November 2020 Budget disclosed, relatively little additional direct expenditure in this area is currently envisaged.

At a moment when a long overdue expansion of social and affordable housing could supercharge economic recovery, the best the government could come up with on this front was $400 million for additional new provision (most of the $900 million pledged in this area being for renovation rather than construction).

This sits in stark contrast to the Victorian government’s Big Housing Build – an all-time record investment of $5.4 billion over four years to achieve over 12,000 additional social and affordable housing dwellings – as announced late last year.

Not only is the NSW equivalent action pale by comparison, a systemic financial deficit of nearly $1 billion annually for the efficient and effective upkeep of existing social housing (as quantified in 2017 by the Independent Pricing and Regulatory Tribunal) remains unaddressed in the strategy.  

What is signalled instead is the NSW government’s ongoing enthusiasm to sell off public land and houses to help finance social rental modernisation and replacement. This, unfortunately, is a short-sighted approach, which will result in further loss of public assets and more widespread disruption and displacement for existing tenants in areas attractive to developers.   

Despite acknowledging the urgency for significant policy change, the strongest underlying message from the Housing 2041 documents is the government’s desire to buy more time. Actions specified for the immediate future are predominantly policy reviews, new administrative processes, and evidence-building through data development and research; the kinds of activities often rightly dubbed “busy work“. 

One timely exception is government support, previously announced, for a new build-to rent-product that offers potential to both improve consumer housing choices and the functioning of the housing system – respectively, by offering longer-term rentals and by diversifying developer options (and thereby reducing reliance on a build-to-sell model).

NSW government advocacy on this topic was also in evidence only last week in minister Stokes’s pointed call for complementary tax reforming action from the Commonwealth.

The promise of an effective long-term housing strategy for NSW has not been fulfilled… yet. For now, it appears that citizens will have to wait at least two more years (and until after the next election) to discover whether this state can develop a credible housing strategy. That would be one offering the scale and scope of reform necessary to reverse the renewed trend of worsening housing affordability; and one with meaningful and measurable goals as well as detailed plans and budgets to achieve them. 

New research project: regulation of residential tenancies and impacts on investment

Posted by on May 4th, 2021 · Private rental

Residential tenancies laws across Australia are on a broadly common ‘consumer protection’ model, but with many differences in the details, including coverage of marginal tenures, notice periods, termination grounds and processes. States’ and territories’ reform processes have mostly been unco-ordinated, and significant divergences and gaps have opened up in the law, particularly for interstate landlords.

Reform processes have also had to contend with claims that reforms negatively impact rental investment. The available evidence suggests, on the contrary, that tenancy law reform does not strongly affect investment, but the evidence base needs to be updated to consider changes in the market (e.g. the rise of short-term letting) and expanded to consider how other policy factors (e.g. in financial regulation and taxation) affect the profile and scale of rental investors.

A new research project, led from City Futures Research Centre and commissioned by the Australian Housing and Urban Research Institute, will 1) review the current state of residential tenancies laws across Australia; 2) refresh the evidence base regarding the policy and market factors that shape rental investment; and 3) present options for a new national tenancy reform agenda.

The research approach will employ a mix of methods. We will conduct a topical analysis of each jurisdictions’ residential tenancies laws and recent reforms, using legislation, caselaw and policy documents. The topical analysis will be supplemented by insights from interviews with key stakeholders, including regulators, tenant organisations and real estate institutes, as well as less-heard stakeholders, such as the new Build-to-Rent (BTR) managers and property technology intermediaries.

Quantitative and qualitative methods will be used to investigate factors affecting investment. Using address-level rental bonds data for NSW and Victoria, we will conduct a ‘difference-in-differences’ statistical analysis to test for changes in net sector entries (investment) and exits (disinvestment) around events such as tenancy law reform announcements. We will also conduct an online survey of rental investors to gauge the scale and jurisdictional spread of investors’ portfolios, their intentions regarding holding, developing and selling, and their disposition to regulation. These activities will be supplemented by key stakeholder interviews, including with BTR representatives, financial regulators and property finance experts, to identify other policy factors shaping individual and institutional rental investment.

From all the evidence collected, the research will present options for a national tenancy reform agenda, both in terms of the substantive content of such an agenda, and the various means by which it could be pursued in Australia’s federal system of government.

Research team: Dr Chris Martin (chief investigator), Prof Kath Hulse, Prof Eileen Webb, Dr Laura Crommelin, Dr Sharon Parkinson, Dr Milad Ghasri, Ms Liss Ralston and Ms Zoe Goodall.

Rising house prices putting at risk the economic stability of the nation

Posted by on March 11th, 2021 · Affordability, Economy, Guest appearance

By Duncan Maclennan, Jinqiao Long, Hal Pawson, Bill Randolph, Fatemeh Aminpour and Chris Leishman. Originally published (and headlined) by John Menadue’s Pearls and Irritations. Image credit – Unsplash.

Housing unaffordability is causing real economic damage that governments must treat more seriously. Put simply, rising mortgage debt poses risks for national economic stability, while current housing policies contribute to stagnating economic productivity and growth. Furthermore, when lower income workers have access to affordable housing near innovation hot spots and growth industries, the economy benefits.

For too long, policy makers have treated rising house prices as something to be celebrated as a signifier of political and economic success. Australia’s housing market has been regarded an efficient, smoothly operating system. By a margin of more than two to one the leading Australian economists and housing market experts who took place in our recent survey explicitly rejected this belief.

Productivity arguments now rival welfare arguments

There are obvious implications for a society’s wellbeing and welfare when buying a house is out of reach of most ordinary income earners, and when the less well-off are increasingly confined to insecure and unaffordable rented homes. But increasingly the productivity  concerns around housing are at least rivalling welfare concerns.

New survey evidence indicates that Australia’s top economists and housing policy experts see a major disconnect between government policy on housing and the wider economic impacts of an increasingly underperforming housing system. Some 84% of respondents (and 73% of economists among them) agreed with the proposition that Australian governments pay insufficient heed to the effects of housing outcomes on productivity and economic growth.

These findings come from our survey of leading economists (47) and other housing experts from government, industry and academia (40). They indicate strong backing for the view that housing unaffordability is a policy challenge that governments must take more seriously, not just because of its welfare and wellbeing implications, but because of the economic damage that results. Large majorities of our expert respondents agreed that high rent burdens for low-income tenants impair economic productivity, and that rising mortgage debt poses risks for national economic stability.

Survey participant responses to stated propositions (% of respondents)

Source: Authors’ survey

Housing policy priorities

Current trends suggest that demand for housing at the lower end of the market has escalated dramatically. Public housing waiting lists have grown by 4% in the past year, while priority (high need) applications have spiked by 11% in 2020, and by 54% since 2016 (from 37,897 to 58,511). Since the 1990s, Australia’s social housing supply has effectively halved.

Concerns over the intensifying shortage in social housing were also strongly reflected in our experts survey. An overwhelming majority believed the Federal Government made a mistake in excluding social housing investment from the post-pandemic stimulus efforts. By a margin of eight to one, the experts disagreed with the proposition that omission of such measures from the 2020 budget was well-judged. Moreover, 57% overall (and even 51% of economists) strongly disagreed.

Challenging the Government’s singular focus on its HomeBuilder private housing subsidy scheme, two thirds of experts preferred housing sector stimulus directed at the non-market sector rather than market housing. Since only 17% disagreed, the margin favouring non-market targeting was almost four to one. Experts also generally backed the proposition that any such effort should be channelled through not-for-profit community housing providers rather than state/territory governments.

Survey participant responses to stated propositions (% of respondents)

Source: Authors’ survey

Housing policy, demographic change and economic productivity

The connections between adversity (and opportunity) and economic productivity are well documented. So, too, are the links between high incomes, asset wealth and economic stagnation. Some commentators have estimated that international migration has delivered between half and two thirds of Australia’s economic growth over the past 30 years. Other studies show that it takes 20-30 years for migrants to Australia to converge on Australian-born levels and patterns of consumption and income (the implication is that they work disproportionately hard during that period, to close the gap).

Of course, international migration has largely dried up during the pandemic, and is unlikely to return to previous levels for some years, if ever. The implications on population ageing and declining economic growth are problematic.

Unfortunately, due to current policies, our housing market contributes to stagnating economic productivity and growth, over and above the well-documented impacts on wealth inequality. Central to this is the way ever higher property values compound the gap between owners and others. The negative consequences of rising inequality for productivity and growth have been increasingly highlighted by international institutions such as the IMF and the OECD, by the Reserve Bank in Australia, by Thomas Piketty and, now, by a leading cohort of Australian economists and policy advisors.

In this, and in many other ways we have explored elsewhere, the economic damage that results from the (under)performance of our housing system must prompt Australian governments to re-think their outdated assumptions underlying the low priority they attach to housing challenges. The case for far-reaching policy and governance reforms in this sphere is not just an argument about enhancing community welfare, it is fundamental to enhancing national economic performance.

Consistent with the concerns of leading Australian experts and economists, current stimulus directed exclusively at the home-ownership sector has induced sharply rising house prices that will further exacerbate wealth and residual income inequalities and reward ownership rather than entrepreneurship and effort. Stimulating rental housing provision, especially for the working poor, could promote productivity, stability and fairness. Australia’s modern battlers deserve better designed housing-economic policies.

Survey respondents were drawn from academic, industry and government sectors. Most were trained economists, at least 15 of whom were members of The Conversation’s Economics Panel. Respondents were mainly employed in senior positions such as Professor, Partner or CEO. Further details are in our published report.

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.