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A good house is hard to find: Housing affordability in Australia

Last Updated on Monday, 12 March 2012 14:20

A report from the Australian Senate inquiry into housing affordability was released 16 June 2008. The report, public hearings and transcripts, terms of reference and membership can all be viewed or downloaded  from this Senate webpage. Read the whole report here.

Some points from the Executive Summary follow in extracts below:

The housing affordability problem
The majority of Australians aspire to home ownership. It should be an aspiration that through prudent management of household finances they are able to realise. Currently, there is a significant problem with housing affordability in Australia. In certain regions of the country the problem is particularly acute (see chapter 8).
On some measures, housing affordability is at a record low (see chapter 3).
? the average house price in the capital cities is now equivalent to over seven years of average earnings; up from three in the 1950s to the early 1980s.
? only a third of transacted dwellings would have been accessible to the median young household in 2006-07, compared to a long-run average of almost a half
? around two-thirds of households in the lowest 40 per cent of the income distribution with a mortgage or renting were spending over 30 per cent of their income on housing, the established benchmark for 'housing stress'.

The problem of affordability in Australia has been a function of both strong demand and limited supply. Several factors have contributed to the strong demand for housing (chapter 4). They include:
? higher average real incomes and an increase in the number of double income households;
? a decrease in the size of the average household due to later marriage, fewer children and increased incidence of separation and divorce;
? relatively strong population growth underpinned by higher immigration rates;
? the decline in standard home loan interest rates from the mid 1990s to early 2002 reflecting a low inflation environment

It is estimated that there is currently an annual shortfall in housing supply-relative to underlying (population-based) demand-of 30 000 dwellings. Several factors have been blamed for the shortfall in housing supply: three are of particular concern (see chapter 5).

The right kind of supply
The committee stresses that an adequate supply of housing is not simply a matter of constructing a certain number of dwellings in greenfield sites.
Housing supply must be well located and well serviced with supporting jobs, public transport and social and community infrastructure (see chapter 5). The way to improve housing affordability is not to build cheap houses on the outskirts of cities away from employment, services and public transport links. This simply shifts costs from housing to the cost-in dollars and time-of transport. Rather, the aim must be to build affordable housing in areas where infrastructure can provide for and attract new residents. In considering longer-term changes in the housing stock, thought must also be given to it being environmentally sustainable for it to be truly 'affordable' in a broader sense (chapter 11).
These are major planning challenges. The Victorian and South Australian governments have both devised 'urban growth boundaries' to contain urban development. Future housing development is planned around targeted 'activity centres' near existing transport and shopping precincts. The committee argues that while these boundaries are sound in principle, they need to consider carefully projected population estimates which are vulnerable to government policy decisions on issues such as immigration. It is also essential that state and local governments ensure the support of developers, home buyers and local communities in moving toward a more compact city design.

The second challenge is that the housing supply must reflect what home buyers need (see chapters 5, 6 and 8). The committee has taken evidence from several witnesses that there is often inadequate housing for those looking to downsize and for those with limited means seeking less expensive private rental housing or social housing. Greater diversity in the design, price, location and tenure of housing will help to address the problem of housing affordability and help strengthen local communities.
The committee argues that state governments' planning frameworks must establish a specific target for 'affordable' housing (see chapter 6). In addition, all three tiers of government should invest significantly under the new National Affordable Housing Agreement to meet specific targets for social housing.

Transcripts of hearings are available from this page . Following are some extracts and comments by Ms Sheila Davis, Campaigns Coordinator, Gecko-Gold Coast and Hinterland Environment Council Association Inc.and Simon Baltais.

Sheila said that one of the key drivers of the housing crisis, GECKO believes, is the continued rapid population growth inAustralia, which is a continent of very low carrying capacity, and most of the development is around the edges of the continent because the majority of the continent is desert and does not support human life. So we are developing our housing in the very same area where a lot of the native species of Australia also live. GECKO wanted to address the issue of this population growth because it is a factor that is impacting upon all aspects of our environment. The global population right now is 6.7 billion people, as you may know, and we are adding another 75 million people every year. Australia's population right now is just over 21 million. However, Australia, as one of the 170 countries that attended the Cairo conference in 1994, agreed that we must limit population growth and stabilise the world's population before it reaches eight billion.
Right now we are on target to reach about nine to 12 billion by the middle of the century.

Some of the recommendations that GECKO put in thesubmission include that the federal government should seek to stabilise Australia's population in keeping with the ecological constraints of the land, its biodiversity imperatives, the environmental values of the land and its ability to support human populations.......
Gecko also would recommend that there be no more land released for clearing for development, that all development sites be redeveloped sites and that housing be required to be not only affordable but accessible, sustainable and sensible to the biodiversity of the area in which it exists.
South-east Queensland, where we live, is one of the fastest growing regions in Australia. Simon Baltais has a presentation for you about the specifics of our region. Rose Adams from  GECKO addressed some of the contentions of the development industry.

SIMON BALTAIS transcript as follows:
South-east Queensland, in comparison to Sydney and Melbourne, has only 15.5 per cent of its public open space fully protected, whereas Sydney, for example, has 42 per cent of its green space and Melbourne has 33 per cent of its green space in full protection. South-east Queensland is quite vulnerable to development. We have very little public open land that is protected for green space issues....
Water is a major issue. We are struggling to cope with population growth and yet we add more people. As for human health, the State of the environment report indicated that 13 per cent of the population of Queensland report having long-term mental health and behavioural problems. Noise complaints are increasing. This is all in the context of climate change. We are expected to take on greater population, yet here we have climate change, which means we are going to have fewer water resources and far greater impacts on our coastal environment. The tourism industry in this region is worth something like $10.5 billion. Key to that are our natural assets, and yet we are chopping into them through urbanisation.
I support what the Local Government Association of Queensland has been pointing out. Clearly, the development industry is withholding land. There is a 30 per cent shortfall between what council releases and what the development industry is actually letting go of. Certainly, they are making big profits. I do not see any penniless developers out there but I do see a lot of people who are trying to get into the market struggling to do so.
We are concerned about the Urban Land Development Authority Act. It overrides all environmental legislation. It has the ability to ride roughshod over any local planning schemes that have been developed in consultation with the public. We have had a recent example here where areas have been designated appropriate sites and they have actually added to them. So they have put in for a golf course to be included in one of these development areas. The concern is that these green space areas are now being targeted for housing affordability type developments. How much that actually assists people who are trying to get into the market we are unsure, but what it is clearly doing is removing the green space within the urban environment within south-east Queensland. We are becoming a heavily urbanised area with very little green space to accommodate the local residents who are currently here. That obviously is going to have an impact on our wellbeing.
If you walk away today remembering only one point from our presentation it should be that anything that happens with housing affordability must be underpinned by ESD principles. That is the key message that we would like to get across. Some of our recommendations would be that a national population policy should be debated and created. Opening more land for housing affordability type developments may actually generate more problems in itself. We are seeing urbanisation have major impacts on our waterways, on Moreton Bay, and on quality of life. To fix those problems would probably cost more money than addressing the issue of housing affordability. If stabilising our population is underpinned by one major problem, and that is housing affordability, I would rather see my taxes and rates deal with that issue than with the multitude of problems that we have with dealing with environmental, social and economic problems by allowing growth to continue as it is. Thank you.

The media release accompanying release of the report states that

The Australian Government's comprehensive approach to tackling housing affordability includes the National Rental Affordability Scheme (NRAS), First Home Saver Accounts, National Housing Supply Council, and an audit of surplus Commonwealth land that can be made available for new housing.

In addition, the $512 million Housing Affordability Fund aims to lower the cost of building new homes by tackling the critical supply side issues of the length of time taken to bring new houses to sale and the impact of infrastructure charges. The Fund aims to make housing more affordable by addressing two significant supply-side barriers of holding costs and infrastructure charges. The Fund will be distributed by direct grants, primarily to local governments, local government associations and State or Territory Governments, through a competitive selection process.

Up to $30 million from the HAF is being used to develop IT infrastructure and software to roll out nationally, electronic development assessment systems and online tracking services to reduce red tape and streamline planning approval. The release is available here.

 There's an interesting article on FairfaxDigital by Kenneth Davidson. Greed is at the root of the housing crisis is available here. It concludes

Melbourne's urban planning is run for developers, by developers with the passive acquiescence of the current generation of home owners in established suburbs who can't see beyond their tax-induced capital gains to the impact on the health, happiness and social solidarity of their heirs.



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