NEW REPORT OUT NOW
Developing a robust, ambitious and coordinated national strategy to tackle deteriorating housing affordability and availability is not just a necessity; it’s a moral imperative to fulfil our commitment to housing as a fundamental right for all Australians, writes AHURI research fellow Adam Crowe.
Access to adequate and affordable housing is a fundamental human right. Ensuring protection against health, structural and environmental hazards while providing stability and security for households – irrespective of whether one owns or rents their home – are essential aspects of this right. Despite Australia’s commitment to numerous international covenants, we are at a critical juncture where housing affordability and security of tenure have been undermined.
As house prices and rents have decoupled from household incomes, the dream of accessing quality, well-located and affordable housing has become elusive and largely unattainable for many.
Recent analysis showed that more than half a million low-income households nationally are inadequately housed, spending more than 30 per cent of their income on rent, living in overcrowded conditions or experiencing homelessness. This figure is projected to double by 2050, indicating a dire need for social and affordable rental dwellings.
Our report on housing affordability in Western Australia reveals how housing affordability and availability have deteriorated since 2021, alongside a concerning rise in homelessness.
While the National Housing Accord aspires to deliver 1.2 million well-located homes by June 2029, dwindling dwelling completions leave the gap between supply and demand unbridged, exacerbated by a growing population and a preference for larger home sizes following the pandemic. To meet this target, 60,000 new dwellings are required each quarter, surpassing the current rate of 40,000 per quarter.
Greater access to social housing, where rents are typically limited to 25 to 30 per cent of tenants’ incomes, would significantly improve the lives and well-being of many Australians. However, the supply of social housing has stagnated over the past two decades, dropping from six per cent of all dwellings to less than four per cent. In some jurisdictions, social housing has actually decreased as low-quality dwellings are decommissioned faster than replenished. To this end, social housing in Australia remains very limited by comparison with other countries such as the Netherlands, Austria and the UK and falls below the OECD average.
Meanwhile, the private rental sector, comprising 2.5 million households, is grappling with record-low vacancy rates, rising rents and prolonged stays in rental housing (one in three households are considered long-term renters).
Our report demonstrated that, despite offering greater affordability compared with other states, the biggest barrier to home ownership for WA renters is the ability to save a deposit, leaving a growing proportion of aspiring home buyers competing for a limited rental supply.
Government inaction on issues faced by private renters compounds the problem. While some states and territories have made minor improvements to tenancy legislation, the absence of minimum housing standards, open-ended tenancies and rent stabilisation has produced a tenure that lacks security, comfort and affordability.
No-ground evictions, for example, undermine security of tenure, and in a tight market can dissuade tenants from exercising the few rights they do have. Meanwhile, supportive measures remain largely inadequate. Consequently, Australian renters continue to have fewer rights than almost every other OECD country.
This crisis demands immediate and concerted action. While demand-side incentives like grants and subsidies have been a long-standing government response to stimulate housing supply, they often have inflationary consequences, as evident in our research on the COVID-19 housing policy response.
Directly facilitating new supply where it is most needed can be more effective. The Housing Australia Future Fund (HAFF) illustrates a step forward in this direction. Designed as a national match-funding mechanism, it encourages publicly subsidised yet privately financed social and affordable housing development.
Although the HAFF aims to facilitate the delivery of 30,000 new dwellings within the first five years, this target falls short of responding to the unmet housing needs of 500,000 Australian households. Increased construction costs, rising interest rates, material delays and labour shortages pose additional challenges, given the HAFF relies on private investors and developers to deliver the housing.
Policies and programs to address housing affordability and supply must be targeted and balanced across the housing continuum to ensure that the scale, form and price-point of housing options on offer effectively meet the needs of local communities.
For instance, our report points to the need to increase the supply of low-cost rental housing, suggesting a replacement for the National Rental Affordability Scheme (NRAS) as part of the solution.
Stimulating build-to-rent investment is another avenue. The Federal Government’s move to halve withholding tax rates and increase depreciation rates is a step in the right direction. However, further support from state and territory governments such as reduced land tax rates (as recently announced in Queensland) and fast-tracking development approvals, is crucial. This support should be directed to build-to-rent investors partnering with the community housing sector to deliver affordable (below market) housing within developments.
Confronted with deep-seated housing challenges, a multi-faceted housing strategy is critical. The strategy must address declining rates of new supply, but also bolster housing security, elevate housing standards and provide targeted support to those in need. The development of a National Housing and Homelessness Plan holds promise but must be bold, comprehensive in scope and follow a rights-based approach across all government levels.
Developing a robust, ambitious and coordinated national strategy to tackle deteriorating housing affordability and availability is not just a necessity; it’s a moral imperative to fulfil our commitment to housing as a fundamental right for all Australians.
The author acknowledges his report co-authors Steven Rowley, Ryan Brierty, Alex Buckland and Alan Duncan.
It’s been more than a year since the Federal Government’s Housing Accord was announced, and while the housing crisis worsens, we are none the wiser on what a “well-located home”, as set out in the accord, actually is. Clearly and publicly defining “well-located” housing will be a key step to help us achieve the lofty task of building 1.2 million new homes, writes CEDA Economist James Brooks.
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