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At the start of April, the federal government’s chief housing forecaster issued a dire warning.
High interest rates, soaring immigration and community opposition to new homes meant the country faced a shortfall of 106,000 dwellings by 2027.
Even more homes are going to be needed to deal with surging population. It will just add to price pressures on one of the most expensive property markets in the world.Credit: Paul Rovere
This week, the National Housing Finance and Investment Corporation’s updated its outlook.
Due to a larger-than-expected increase net migration this year and next, the corporation now thinks the shortfall of homes could approach 175,000.
In terms of people, that shortage equates to bedrooms and kitchens for about 450,000 – effectively, the combined population of NSW’s Central Coast and the Victorian regional city of Bendigo.
The new numbers were released on the same day that ANZ economists Felicity Emmett and Adelaide Timbrell issued their own warning to people hoping to buy a piece of Australia: home prices are now unlikely to keep falling.
By early next year, Timbrell and Emmett said, capital city prices are likely to start climbing.
And for those who believe bad events come in threes, Anglicare released its annual snapshot of the rental market.
Based on 46,000 rental listings across the country on the weekend of March 17, it found just four affordable for a single person on JobSeeker. All of them were for rooms in share houses.
Not one was affordable for a person on Youth Allowance, 66 were suitable for someone on the disability support pension while 0.4 per cent were within the budget of a person on the age pension.
Housing is often too expensive for people on Jobseeker and Youth Allowance.Credit: Louise Kennerley
“This snapshot has recorded the worst ever result for a person on the minimum wage, with affordability halving over the past year,” the charity noted.
All of these new insights into the Australian property market came as this masthead released a series on whether the Great Australian Dream of home ownership is over, looking at the turning points that have led to the problems of affordability we have today.
The response to the series was unequivocal.
Australians know there is something wrong with the way this country has come to have one of the most expensive property markets in the world, supported by some of the most indebted households in the world and propped up by a banking system dependent on the churn of mortgages.
As one commentator noted, the blame for the current situation cannot be sheeted home to just one policy or decision.
“At some point though, we must bear some of the responsibility ourselves. It’s easy to blame immigrants, banks, governments … But we collectively are to blame as much as all these factors,” they said.
This week’s series highlighted many of the problems facing the nation’s housing system. From local council planning regulations to population growth to a tax system that is supposed to support the construction of rental properties but has continually failed to deliver.
Critics have noted the growth in short-term rentals such as Airbnb, the purchase of new Australian properties by foreign investors and complaints of homes left deliberately vacant by owners were also factors in an issue which is permeating the entire economy.
Land banking by developers on the outskirts of the nation’s major cities also contributes to the problem.
Last year, think tank Prosper Australia released research into 26,000 land sales in nine master-planned communities across the country. Over 9.5 years, less than 24 per cent of the sites released to private developers had been sold to home buyers.
Not that private developers are solely to blame. In Canberra, a recent ballot for 220 blocks in the city’s northern suburbs attracted 4500 registrations of interest, prompting accusations the ACT Labor government was simply not releasing enough land to meet surging demand.
Stockland is the nation’s largest builder of estate-planned homes. It’s managing director and chief executive, Tarun Gupta, this week said there were problems across the entire property market.
Stockland chief executive Tarun Gupta says all aspects of housing policy needs to be revisited.Credit: Renee Nowytarger
“While, undoubtedly, our biggest lever, increasing the supply of private housing on its own will not solve Australia’s affordability crisis,” he said.
“It requires action across the entire housing continuum – from investment in social and affordable housing, built to rent and shared equity, to the sale of private houses – and diversity of product to suit people’s lifestyles and life stages.”
There’s also the economic impact.
Research director at think tank e61, economist Gianni La Cava, said the surge in house prices was creating a huge Catch-22 problem for potential business creators which was weighing on the entire economy.
“You have to own a home to be an entrepreneur. It’s very hard to get a loan for a new business or an idea if you don’t have a mortgage or own a property against which to borrow,” he said.
The federal government used its first budget, in October last year, to elevate the issue of housing. Treasurer Jim Chalmers announced his plan for a “housing accord” to help harness superannuation funds in the construction of 1 million homes by the end of the decade.
Housing Minister Julie Collins is pressing another key part of the government’s agenda. It wants to establish the $10 billion Housing Australia Future Fund, the returns from which would be used to help build 30,000 social and affordable homes within its first five years.
The future fund, however, sits in legislative limbo. The Coalition, concerned about government debt levels, is opposed to it. The Greens are also standing in its way, demanding far more be pumped into housing.
Greens housing spokesman Max Chandler-Mather says Collins needs to invest $5 billion a year in social housing and introduce a two-year rent freeze.
This week Greens Leader Adam Bandt doubled down on those demands and said the party would campaign as the voice for renters at the next election.
“Right now, there’s a shortage of 640,000 public community and affordable homes, and it’s increasing every year. Rents are rising six times faster than wages,” he told the National Press Club.
“The old parties are failing to take renters seriously, but there has been a significant change. We now have seats around the country where the majority of people who live in those seats rent.”
While the Greens demand more housing investment, they also have to deal with issues that highlight the fraught nature of the entire issue.
Chandler-Mather’s official website carries petitions either opposing or calling for scaled-down developments in his Brisbane electorate of Griffith, including the construction of two 26-storey towers that would provide homes for almost 1000 new residents.
The Greens also demanded the federal government impose a nationwide rent freeze. A constitutional referendum in 1948 to give Canberra the power to make that sort of change was easily defeated, denying the current government the ability to implement the Greens’ proposal. It would require every state and territory to sign off on the idea.
Economist Nicki Hutley says Australia cannot afford to continue with the same policy approach to housing.Credit: Eamon Gallagher
While the Greens and Labor argue, the Coalition is effectively silent. Its one policy around housing remains a plan to allow potential first-time buyers to access up to $50,000 in their superannuation for a deposit.
Some analysis of that policy suggests it would drive property prices up by 16 per cent in Sydney and 14 per cent in Perth.
The 2022 federal election delivered a huge crossbench to the federal parliament. They have their own thoughts on the housing crisis.
Independent MP Kylea Tink, who has been searching for a rental in her North Sydney electorate, is holding a housing summit of her own to look at the issues affecting the housing market.
“What’s becoming more and more evident is that, wherever you live, relatively speaking, it’s tougher. And we all have to find a way to start to address some of those challenges to ensure that our communities can stay healthy and vibrant and diverse in the way that we want them to,” she said.
Some countries are dealing with surging prices in extreme ways. This week, the Singapore government overnight doubled the stamp duty on foreign property buyers in the city-state to 60 per cent.
It was an extraordinary intervention and followed a 3.2 per cent rise in property prices through the first three months of the month. Authorities said that without action, “prices could run ahead of economic fundamentals, with the risk of a sustained increase in prices relative to incomes”.
More extreme policy action may be required. Independent economist Nicki Hutley says the current situation simply cannot continue.
“The definition of stupidity is to keep doing the same thing over and over again expecting different results.”
Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.
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