By Joe Montero
There is still far too much silence on the deepening housing crisis facing Australia. Just about everyone is feeling the pinch. Add to this growing food insecurity. According to Food Bank Australia, more than a million people are coming in for assistance every month. This is in a population of just over 27 million. Officially 123, 000 people are sleeping under the stars. This doesn’t count the thousands living in cars and other makeshift places. The Australian Institute of Health and Welfare suggests 5.400. The real number is much higher because many don’t access welfare services and are therefore not counted.
Housing unaffordability is in part the result of lack of decent jobs and extremely low Centrelink payments. The lagging value of wages contributes another dimension to the problem.
It’s also the result of a housing market gone out of control. Much of Australia can no longer afford to buy or rent a home. It’s not only the homeless who are suffering. A huge swathe of Australia is in housing stress, with record numbers of mortgagees facing the prospect of default on payments and loss of their home. Renters are finding they can no longer cope with rent rises.
The housing question has reached a point where it has become a hot political potato and shaping up be a key political issue of governments and would be governments. It may even explode into a much bigger crisis at any time.
Our political elite had ignored the issue for years. Now, because they can no longer hide, they offer promises without substance at best. At worst, they go about reducing the stock of public housing. It’s virtually gutted in NSW. Victoria is heading down the same road, covering the reduction in the stock of public housing with talk about boosting social housing. The illusion has been created to over the fact that the stock of public housing is being reduced. The fine print reveals that most of the benefit handed out will go to developers and private owners, and very little of it to those in need.
Most of the blame for the high cost is put on rising interest rates in recent times. The truth is that interest rates have been and continue to be at a historically low level. The problem is that the price of properties is too high, and this is flowing onto rents. Zero interest would still leave housing unaffordable.
Government policy, at both the federal and state levels, echoes that of corporate interests benefitting from the way things are. This is that there is a shortage of supply, and that throwing money at the market is the solution. If the big investors are happy, they will invest in building more homes, is how their story goes.
It’s exactly this in practice that has marked the decades of fast rising prices. The market has failed to provide an answer. A home that now costs more than $1 million you could buy for under $40,000 in the 1980’s. This is a 2,500 percent increase from a starting point of $40,000. Talk about inflation. A shift on this scale spells out a monumental market failure other than a mere supply problem.
The fat that many have said that the base problems are the uncontrolled use of credit, and government handouts to in the forms of negative gearing and capital gains write offs, doesn’t make it any less true. These incentives provide opportunities for the greedy to make a quick buck, and line the road to a speculative property bubble. This bubble must be pricked, and the only way to do it is to get rid of its pillars and get on with the job of providing enough investment in non-private housing to make a real difference.
Restoration and expansion of public jousting must be a big part of the answer. But realistically, this will not be enough on its own. The affordable housing crisis is too big. Separate investment in cooperative housing is also necessary. This form of housing, with the addition of being set at 25 percent of income, provides tenants with greater control over the conditions in which they live. Since cooperative housing suits some but not everyone, it can’t be the answer on its own either. Then there are those stuck in the private rental market. They need help too. The only way to provide this is by the imposition of rent control at a liveable level.
They tell us this won’t work because it will scare away investors and hurt the market. So what. This is a non-market solution. If there is enough of a cheaper alternative, it will push down market prices, and this is a good thing.
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