Australia: Affordable housing: the great Australian dream

THE GREAT AUSTRALIAN DREAM OUT OF REACH

Housing affordability has been the topic of much debate and discussion recently as the realisation that the once great Australian dream – home ownership – is simply out of reach for many Australians and may never be achieved by a whole generation.

In early March the Turnbull Government announced the establishment of an Affordable Housing Implementation Taskforce, tasked with developing an affordable housing bond aggregator model for consideration by the Commonwealth, States and Territories.

With most homeowners mortgaged into record debt, thirty percent of Australians living in rental properties, an increasing demand for social housing and growing homelessness in capital cities, it is clear something must be done.

Bipartisan support for the planned bond aggregator model, that would match institutional funders with the growing community housing industry and provide access to cheaper and longer term debt, is a good start. However, potential funders and the housing industry alike want to see increased government investment to reduce the cost of both buying and renting and fund the shortfall between the bonds that can be repaid with affordable rents and the initial cost of providing the new dwellings.

"TELL 'EM THEY'RE DREAMING"

If we learnt nothing else from the iconic Australian movie, The Castle, it is that owning our own home, however humble, represents more than a roof over our heads. Surely it is the reason we work, sleep, repeat.

But with the median house price in major capital cities projected to exceed $1 million within the next decade – who can dream that big?

Not the current generation of 4.4 million millennials aged 23-40, who, according to a series of articles in The Australian (starting April 26, 2017), are postponing or cancelling plans to buy a home. The situation doesn't look much brighter for young people leaving school now and following on the millennials heels. And, as Chris Kohler and Fred Pawle from the Australian point out: "The social and economic consequences of this for all Australians are serious and long term".

The National Housing Affordable Housing Consortium (NAHC) has found that average Australian house prices are approximately 4-5 times the average annual household earnings. A massive shortfall of housing supply, affordable and available to the lowest income households is resulting in increased homelessness.

In a discussion paper released by the Australian Council of Social Services in 2015 entitled: An Affordable Housing Reform Agenda, the extent of the problem is detailed and makes recommendations including tax reform, investment in new affordable housing stock, innovations in finance models, changes to urban planning, land and building regulation and increased Commonwealth Rent Assistance.

McCullough Robertson Partner and Director of NAHC and a number of other community service organisations, Heather Watson says stable housing is essential to raise children, participate in paid work, develop community connections and maintain health and wellbeing. These are building blocks of a cohesive society, one which every level of government, especially the coal-face of local government, should be concerned of achieving.

SOCIAL COHESION? WHAT DOES IT MEAN?

In its simplest form, Heather says, social cohesion implies social togetherness – in a community sense, a place where everyone generally gets along, shares values and a standard of living, and feels accepted and worthy.

The Scanlon Report says there is no agreed definition of social cohesion, although various versions can be found which all carry the themes of inclusion, trust and shared belief system.

"If we consider a definition of social cohesion that includes the ideal of upward mobility being possible for all those within a society or community, we can understand why and how housing affordability is so important," Heather says.

"High levels of poverty or unemployment and underemployment, debt-stressed families, homelessness; these are all factors that undermine social cohesion and are common when affordable housing is lacking.

"And of course, the more divided a community is in terms of the haves and have nots, the less cohesive that society is.

"So, it is in everyone's interest to strive for social cohesion and it is incumbent on all levels of government to respond to issues of poverty, disadvantage and inequity in some way.

"Local governments are at the coal face and the 'societies' under their care are well-defined and identifiable. They deliver services such as water, waste and waste-water treatments, service roads and build new communities, some of the most basic requirements of life.

High levels of poverty or unemployment and under-employment, debt-stressed families, homelessness; these are all factors that undermine social cohesion and are common when affordable housing is lacking.

"Councils have the power to deliver and shape economic, environmental and social outcomes into the future through local and regional plans, laws and decisions."

In addition, local governments often have access to underutilised land that can make a valuable contribution to emerging collaborative models that both contribute to increasing affordable housing supply as well as other forms of community infrastructure.

Beyond contributions to physical infrastructure, local governments also contribute strongly to social infrastructure and help is available to support their activities in this endeavour.

One such resource is available from the Australian Human Rights Commission. The Building Social Cohesion in our Communities interactive online resource is designed to support local government to build strong, socially cohesive communities. It aims to help local government to:

  • understand their communities and measure social cohesion
  • engage their communities and build partnerships between key stakeholders
  • prevent and respond to incidents of racism or conflict between groups
  • strategically plan for the needs of their communities now and into the future
  • monitor, evaluate and share outcomes.

The online resource is structured around five elements for social cohesion. It features case studies from local governments around Australia, tips for implementing good practice at the local level and links to further resources.

The online resource is available at www.acelg.org.au/socialcohesion.

High levels of poverty or unemployment and under-employment, debt-stressed families, homelessness; these are all factors that undermine social cohesion and are common when affordable housing is lacking.

SHARED EQUITY OPPORTUNITIES

In Victoria, where Melbourne house prices are second only to Sydney's housing bubble, the Government has announced two new initiatives to help first home buyers. In a shared equity scheme, the State Government will co-purchase with 400 home buyers who meet the criteria for a bank loan but lack a big enough deposit. The pilot scheme will be introduced from 1 January 2018 with an initial allocation of $50 million over two years.

The scheme, HomesVic, will apply to both existing and new homes, and will be administered through State Trustees, which has the necessary financial licences. HomesVic will take an equity share of up to 25% and eligibility will target applicants with incomes of up to $75,000 for singles, or up to $95,000 for couples or families. Buyers will need to have a 5% deposit.

When the properties are sold, HomesVic will recover its share of the equity and reinvest it in other homes. In a further and separate initiative, the State Government will contribute $5 million to bring a national community sector shared equity scheme, Buy Assist, to Victoria.

Run by the National Affordable Housing Consortium, it will assist low to medium income, waged employee households to get a foothold in the property market. It has similar eligibility criteria and a requirement for bank loan eligibility and is expected to deliver up to 100 shared equity homes in Victoria.

Buy Assist is similar in principle to the HomesVic scheme, but is based on a private sector model built around partnerships with developers and accessing first mortgage lending from mainstream banking institutions.

COMMONWEALTH BUDGET ANNOUNCEMENTS 2017

Consistent with a number of recent advance announcements by the Commonwealth government, the Budget contained a number of new initiatives which reflect a significant investment by the Commonwealth, and make a direct contribution to the role that local government can play in addressing the issue of affordable housing supply.

The Commonwealth government will establish the National Housing Finance and Investment Corporation whose role will be to operate an affordable housing aggregator to encourage greater private and institutional investment with the intention that this will provider cheaper and longer term finance for the community housing sector, as has been the experience in the United Kingdom.

It will also have a role in assessing applications for financial assistance from local governments to access a newly established National Housing Infrastructure Facility (NHIF) in order to finance critical infrastructure required to speed up the supply of new housing. Funding of $1 billion over five years is to be made available to the NHIF specifically to finance local governments through concessional loans, equity investments and grants. This finance will be applied to such infrastructure as transport links, power and water infrastructure and site remediation works.

A further commitment through the Budget announcement reflects the Commonwealth's intent to ensure that its surplus land holdings are identified and applied to the development of affordable housing where that land is no longer required. Of interest to local communities, from 1 December 2017 the Commonwealth will publish a registry of Commonwealth land holdings online, including mapping their locations. This will enable communities including local government to be proactive in identifying opportunities to develop affordable housing on currently held Commonwealth land holdings.

A number of other policy and funding initiatives in the budget announcement are also targeted at removing barriers for both renters and home owners to access the increased housing supply.

THE SOLUTION?

As with many complex societal problems, solutions to our affordable housing challenges lie not in a single solution, organisation or part of government. Rather, solutions are found when we can find ways for the respective contributors to work together with a common goal and intent.

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