Housing affordability concerns the ability of singles, couples and families to buy or rent dwellings within reasonable distances to employment and study opportunities, and basic amenities. Those dwellings are first and foremost our homes, the foundation of our lives and our families – a basic need. This has become a prominent issue after several years of double digit price growth in some major property markets, with particular pressure in south-east Australian capital cities and certain coastal regional centers. This discussion paper endeavors to identify the underlying causes of affordability issues, and to consider some useful policy responses in the current and historical context.
The key findings of the paper are as follows:
- Australia’s housing affordability problem has developed over several decades and will require a long-term commitment by all levels of government to resolve.
- Destabilising wealth effects and the continuing expansion of household debt are feeding a cycle of property price inflation which looks unsustainable.
- Policy responses that increase the buying power of households (for example, through grants, or reduced taxes) will only increase demand, and therefore prices.
- Ignoring the emerging crisis in assisted housing (affordable, public and community) now risks major future social and productivity costs.
- Simply increasing overall housing stock will not ensure that more assisted housing becomes available. Instead, increasing the supply of assisted housing specifically is required.
- Waitlists for social housing remain intractable and this system no longer serves as a safety net.
- Achieving the necessary growth in assisted supply is beyond the capacity of Australian governments, and private investment is required.
To resolve the issues in assisted housing, Federal, state and local governments need to coordinate their activity without duplication or political interference. The core elements of any strategy will require:
- A central body to provide rigorous housing supply forecasting, which will assist with planning.
- Developing appropriate incentives (for example, tax policy) to encourage institutional investment in a new assisted housing asset class.
- Expanding the capacity and professionalism of the community housing sector to deal with larger scale developments and tenant administration.
Additionally, some general policy suggestions to address broader housing affordability issues are as follows:
- Explicitly linking state and local government planning and housing approvals to estimates of regional housing supply gaps.
- Encouraging more work and student visa holders to reside outside of property market hot-spots.
- Directing all foreign investment in residential property to new buildings.
- Streamlining town planning procedures by mandating the removal of unreasonable height restrictions within urban infill development zones (including ‘inner’ and ‘middle-ring’ suburbs).
- Discouraging land hoarding by identifying underutilised assets for redevelopment (including assisted housing), and providing recycling bonuses to incentivise the release of public and private sites.
- Reorienting some current tax concessions for existing property towards investment in new housing and institutional investment in new assisted housing.
- Reforming land taxes in Australia via the abolition of stamp duties and replacing them with a mix of land and betterment taxes.
- Promoting stability around property – the largest asset class held by ordinary Australians.
SOURCE: Industry Super Australia. “Assisted housing affordability: Discussion paper.” ISA, November 2017.
Produced by the librarians at the Brotherhood of St Laurence in Melbourne, Australia