‘A perfect storm’ – The complexity of housing affordability
|Employment growth must target permanent employment as the key focus so that more workers and their families can access the ‘great Aussie dream’.|
By John Kelly, Catholic Outlook, July 2015
Considerable discussion has taken place recently regarding housing affordability. The Federal Treasurer, Joe Hockey, has a particular view of how people can afford a ‘good home’, while the Council of Social Service of New South Wales (NCOSS) sees the phasing out of negative gearing tax benefits as a critical lever in increasing housing affordability.
The reasons for the affordability crisis in Sydney and Melbourne are complex and the result of a number of factors creating a ‘perfect storm’.
At CatholicCare, our staff are at the frontline assisting community members who are homeless or struggling financially to hold on to their accommodation.
Our financial counselling service provides advice around managing money and negotiating debt with creditors. A primary concern for many people is losing the roof over their heads, the most basic human need.
The shortage of community and social housing options means there is often little alternative for someone experiencing the stress of becoming homeless.
Almost half of Australia’s population lives in two urban centres; Sydney and Melbourne. As a result, these cities experience particular pressures around the demand and supply of housing stock that are not as critical in regional areas.
In simple economic terms, if the demand for housing exceeds the supply, the price of housing increases. With increasing foreign investment in housing, we have not only local demand but international demand placing pressure on prices.
All levels of government have a major part to play in improving housing affordability. Some key issues that government can address are:
· Better coordination and planning around development of dwelling types, zoning and location;
· Improving processing systems to ensure timely and consistent decisions;
· Reducing over-regulation and red tape;
· Prioritising and planning key infrastructure to reduce pressure on urban areas by providing employment, services and infrastructure to regional and rural centres;
· Reviewing the taxation system around tax incentives for new dwellings;
· Reviewing the impact of foreign investment in the housing market;
· Providing incentives for the construction of and/or changes to existing housing stock to affordable housing overseen by specialist housing providers in the not-for-profit space; and
· Developing policies that will increase the levels of full-time employment as opposed to casual employment, which precludes many from gaining home loans.
At the local level, there is a need to make better use of space in existing suburbs without dramatically impacting on established land use patterns.
This includes higher density development around transport nodes and along shopping strips. This benefits local business, especially smaller business such as food and retailing.
It requires the reduction in lot sizes to enable development such as dual occupancies, which are lower impact than units but add to housing stock.
It is vital that higher density and newer suburbs are serviced by first class public transport, roadways, drainage, footpaths, schools, hospitals, government services, and parks and recreation.
Where these issues have been ignored, it has led to the creation of social issues and dislocation for residents isolated from vital services and opportunities.
These are overlooked or underfunded because they are big ticket items that carry significant capital cost; but this is a short-sighted view that leads to greater social cost in the future. All levels of government need to take responsibility in this area.
Sydney’s land area is enormous, which exacerbates issues around transport, access to employment, jobs and services. A greater focus on regional development to take housing stress from the urban areas will stabilise housing prices and alleviate social issues.
Negative gearing was established to encourage investment in new development and add to housing stock. If it is to maintain relevance and serve a purpose, government needs to re-establish a focus on tax incentives for new stock.
At the moment, it is draining our national tax base and doing little to address affordability and supply.
An essential ingredient in the affordability mix is the provision of affordable housing, especially for key service workers in the community; teachers and emergency service staff.
Community housing providers play an essential role across the country for lower income families. Government has made it difficult for providers to access stock from the public system as well as funding to develop and maintain stock.
Realistic funding from government to the provider for upgrading and maintaining existing stock is required. This funding should be viewed as a key investment in the future, not a penny-pinching budgetary exercise, off-loading cost to the NFP sector.
Providers are willing to make large investment choices to provide innovative solutions to housing affordability and support services but struggle to access stock (even with government owned land and buildings).
Lastly, while Mr Hockey tells people to “get a good job” to afford a house, increasingly there is a class of worker that remains disadvantaged due to their employment status; the casual employee.
It is extremely difficult, if not impossible, for this worker to access a home loan. Casual employment has become more prevalent in modern times as employers seek a ‘flexible’ workforce, and the lack of absolute job security for this worker precludes the banks from lending to them.
Employment growth must target permanent employment as the key focus so that more workers and their families can access the “great Aussie dream”.
John Kelly is the Executive Director of CatholicCare Social Services, Diocese of Parramatta.
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