The Affordable Housing Smoke And Mirrors!

New housing legislation has been introduced to Parliament to deliver the “single biggest investment” in affordable and social housing in a decade.
States and territories tackling their own housing supply crises will have greater help via new federal bills introduced to Parliament on Thursday (9 February).

Under the umbrella of three new bills — the Housing Australia Fund Bill; National Housing Supply and Affordability Council Bill; and Treasury Laws Amendment (Housing Measures No. 1) Bill — the government has delivered “the single biggest investment in affordable and social housing in more than a decade.

But as we discuss the proposals are small and driven by a Neo-liberal mentality. Does not address the fundamentals of housing affordability but plays around the edge for political advantage. We need better!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Land Banking Is Part Of The Housing Problem!

We unpick the “supply-side” problems which are often blamed for high home prices, and in the light of a recent report, find that Land Banking is a significant issue, as large players hold on to land parcels to exploit prices rises. This means you cannot solve affordability by changing planning rules! In addition, there is significant information asymmetry and financial players benefit from the current arrangements – while State and Federal Governments look the other way. Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Land Banking Is Part Of The Housing Problem!
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Australia’s Housing Affordability Long Con…

The final report of the Housing Supply Inquiry is out, and as expected it misses the main points…

https://www.aph.gov.au/Parliamentary_Business/Committees/House/Tax_and_Revenue/Housingaffordability

We discuss the recommendations, and add our own commentary.

For a more thorough approach to housing affordability, wee my post on Steve Keen’s (TNL) policy, which makes so much more sense.

https://tnl.net.au/policies/

Go to the Walk The World Universe at https://walktheworld.com.au/

Housing Affordability Stinks! [Podcast]

We discuss the latest Demographia report on housing affordability. Why are prices relative to incomes so high?

http://www.demographia.com/dhi.pdf

https://theconversation.com/zoning-isnt-to-blame-for-australias-soaring-house-prices-154482

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Housing Affordability Stinks! [Podcast]
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Housing Affordability Stinks!

We discuss the latest Demographia report on housing affordability. Why are prices relative to incomes so high?

http://www.demographia.com/dhi.pdf

https://theconversation.com/zoning-isnt-to-blame-for-australias-soaring-house-prices-154482

Go to the Walk The World Universe at https://walktheworld.com.au/

Housing Affordability Sucks… [Podcast]

We review the latest Demographia survey on affordability.

Housing Affordability Sucks

http://www.demographia.com/dhi.pdf

Live Event: https://youtu.be/Z03jkJEmvOI

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Housing Affordability Sucks... [Podcast]
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Housing affordability has improved slightly, but…

From The Conversation.

The re-election of the Morrison government has delivered an Australian housing policy platform based on home ownership. The recently announced First Home Loan Deposit Scheme and the existing First Home Super Saver Scheme complement first home buyer grants and stamp duty concessions from state and territory governments. What we aren’t going to see is a major increase in the supply of affordable housing through a dedicated subsidised affordable rental program or negative gearing and capital gains tax reform.

Is a policy based on home ownership going to fix the problems of housing affordability in this country? The BCEC Housing Affordability Report published today by the Bankwest Curtin Economics Centre suggests not.

The report is based on a survey that collected responses from just over 3,600 Australians across three states – New South Wales, Queensland and Western Australia – with 75% of responses from metropolitan locations and 25% from regional areas.

Similar surveys were conducted in 2015 and 2017. This allows for comparisons across the three periods.

Housing costs

The survey asked respondents to estimate the proportion of their gross income spent on housing costs. Around 40% of all households reported living rent/mortgage-free (outright owners, young adults living with parents etc). The chart below shows the distribution across six bands for the remaining households.

Just under half reported paying over 30% of their income on rent or mortgage costs. We see little change over the three surveys, although slightly fewer households are now paying more than 50%.

BCEC Housing Affordability Survey 2015, 2017, 2019, Author provided

For 2019, slightly more private renters pay over 30% compared to owners with a mortgage, but renters are more likely to be in the highest burden groups. The main difference is 60% of renters are forced to take on these high housing costs while 72% of owners take them on by choice.

BCEC Housing Affordability Survey 2019 , Author provided

Households are very sensitive to changes in housing costs: 40% of those surveyed said a 10% increase in costs would have a major impact on their financial position. The expected impact was greater for renters than owners with a mortgage (44% compared to 38%). A 3% increase in the mortgage interest rate would have a major impact on the financial position of 63% of owners.

The impact of sustaining such costs can be severe: 46% said high housing costs affected their mental health and 30% their physical health.

The chart below shows the proportions of households struggling to meet their housing costs. Again, we see only slight improvement across the three surveys.

Among all households, 37% reported difficulty regularly meeting housing costs (at least a few months a year). This rose to around half of all renters and low-income households and to 56% of one-parent families.

BCEC Housing Affordability Survey 2019 , Author provided

Perceptions of affordability

Housing affordability is not just about paying the rent or mortgage. It also includes running costs such as utility bills and maintenance. The survey asked respondents to rate the affordability of their housing on a ten-point scale and the results were collated into three ranks.

The chart below shows some improvement across surveys in the proportions of households rating their housing as affordable. These households are largely outside the lower-income groups.

BCEC Housing Affordability Survey 2019, Author provided

Policy settings

The deposit gap is the biggest barrier for potential home buyers, almost double the importance of the next barrier – a lack of stable employment. Other barriers largely revolve around a lack of suitable stock.

BCEC Housing Affordability Survey 2019, Author provided

Help for first home buyers is now embedded. Around three-quarters of potential purchasers regard government help through the various mechanisms shown in the chart below as quite or very important while two-thirds would like access to their superannuation to fund a deposit.

For those without help from the “bank of mum and dad” these policies can mean the difference between home ownership and many more years living with parents or renting. It is difficult to see how such help can be equitably removed from the housing system.

BCEC Housing Affordability Survey 2019, Author provided

The survey included a number of questions for respondents owning an investment property and for those thinking about buying one. The capital gains tax (CGT) discount was more important to investors that negative gearing. However, only 15% regarded the latter as unimportant.

Around a quarter of investors said they wouldn’t have bought their property if negative gearing were not available and CGT was half its current rate. And 28% said they would not buy an investment property in the absence of negative gearing.

BCEC Housing Affordability Survey 2019, Author provided

Such results suggest a modest impact on investment demand which could impact on local housing markets, depending upon the balance between investors and owner-occupiers in those markets.

Policy development

Between the 2017 and 2019 surveys, house prices and rents fell in large areas of the three states. Yet our analysis shows little impact on affordability for low-income households. Intervention is required to deliver housing affordable to such households.

Investment in the National Housing Financial Investment Corporation (NHFIC) and the National Housing and Homelessness Agreement (NHHA) provides some hope outside home ownership policies. The NHFIC has a major role to play in securing funding for the community housing sector. Let’s hope it does not get sidetracked in its new role delivering the first home buyers deposit guarantee scheme.

Large numbers of households are struggling with their housing costs, and not meeting these costs can result in homelessness. This points to the need for more investment in public and community housing.

Ultimately, there is a mismatch between incomes and house prices. Major housing system reform is necessary to redress the balance.

In the meantime, a large and sustained supply of subsidised rental housing and a secure private rental sector that offers a real alternative to ownership are essential components of any future Australian housing system.

Authors: Steven Rowley, Director, Australian Housing and Urban Research Institute, Curtin Research Centre, Curtin University; Alan Duncan, Director, Bankwest Curtin Economics Centre, and Bankwest Research Chair in Economic Policy, Curtin University; Amity James, Senior Lecturer, School of Economics, Finance and Property, Curtin University

Homelessness soars in our biggest cities

From The Conversation.

Homelessness has increased greatly in Australian capital cities since 2001. Almost two-thirds of people experiencing homelessness are in these cities, with much of the growth associated with severely crowded dwellings and rough sleeping.

Homelessness in major cities, especially severe crowding, has risen disproportionately in areas with a shortage of affordable private rental housing and higher median rents. Severe crowding is also strongly associated with weak labour markets and poorer areas with a high proportion of males.

These are some of the key findings of our Australian Housing and Urban Research Institute (AHURI) research released today.

Extending previous AHURI work, we combine 15 years (2001-2016) of homeless estimates from the Australian Census, other customised census and the Australian Institute of Health and Welfare’s Specialist Homelessness Service Collection (SHSC) data.

People counted as homeless on census night live in: improvised dwellings, tents or sleeping out (rough sleeping); supported accommodation; staying temporarily with other households (i.e. couch surfing); boarding houses; temporary lodging; or severely crowded conditions.

How has the geography of homelessness changed?

Nationally, 63% of all homelessness is found in capital cities. That’s up from 48% in 2001.

Shares (%) of homelessness and population by area type

Authors’ panel dataset (ABS Census homelessness estimates)

At the same time, homelessness has been falling in remote and very remote areas. However, it still remains higher in these areas per head of population.

Homelessness is also becoming more dispersed across major cities.

In Sydney, a corridor of high homelessness rates stretches from the inner city westward through suburbs such as Marrickville, Canterbury, Strathfield, Auburn and Fairfield (more than 30km from the CBD).

In Melbourne, high homelessness rates are found in Dandenong (around 25km southeast of the CBD), Maribyrnong and Brimbank to the west, Moreland and Darebin to the north and Whitehorse to the east, about 15km from the CBD.

Homeless rates in Australia 2016

Authors’ panel dataset (ABS Census homelessness estimates and TSP); ABS digital Statistical Geography Boundaries, SA3, 2016

After accounting for population growth, we see a decline in homeless rates in the CBD and inner areas of Perth, Adelaide, Melbourne and to an extent Brisbane over the 15 years. At the same time, homeless rates in outer urban areas have increased. In many regions this increase outpaced population growth.

Change in homeless rate compared with population growth 2001–2016

The highest growth in homeless rates is in those areas where rates increased by 40% or more (the top two deciles) from 2001–2016. Authors’ panel dataset (ABS Census homelessness estimates and TSP); ABS digital Statistical Geography Boundaries, SA3, 2016

The numbers of households living in severely crowded dwellings in capital cities have doubled in 15 years, accounting for much of the growth in homelessness overall. In 2001, this group accounted for 35% of people experiencing homelessness, with 27% living in cities. By 2016, severe crowding rates had soared to 44% of all people experiencing homelessness, with 60% living in capital cities.

Share of severe crowding by area type, 2001–2016

Authors’ panel dataset (ABS Census homelessness estimates)

Rough sleeping has also transformed into an urban phenomenon — nearly half of all rough sleepers in Australia are now found in capital cities.

What is driving these changes?

Homelessness has risen disproportionately in areas with a shortage of affordable private rental housing and higher median rents. That’s especially the case in Sydney, Hobart and Melbourne. In capital city areas with a shortage of affordable private rentals in both 2001 and 2016, severe crowding grew rapidly (by 290.5%) against all homelessness growth (32.6%).

Changes in share of homeless and population by city and region, 2001-16

Authors’ panel dataset (ABS Census homelessness estimates and TSP), Author provided

The effects of rental affordability on homelessness rates still hold after controlling for other area characteristics. We also find that these rates are strongly correlated with higher shares of particular demographic groups in an area, including males, younger age groups, young families, those with an Indigenous or ethnic background, and unmarried persons.

Severe crowding in capital cities is also strongly associated with weak labour markets and poorer areas with a high proportion of males. However, these associations do not hold for severe crowding in remote areas.

What should governments and services do?

The way our cities are becoming more unequal over time is shaping the changes in the geography of homelessness.

Governments must find ways to urgently increase both the supply and size of affordable rental dwellings for people with the lowest incomes. We also require better integration of planning, labour, income support and housing policies targeted to areas of high need.

Rates of severe crowding remain highest in remote areas, and continued efforts to increase housing supply in remote areas, such as the National Partnership on Remote Housing (NPRH), are needed. Targeted responses are required to combat its growth in major cities.

It is critical that specialist homelessness services, as a first response to homelessness, are well located to respond in areas where demand is highest.

The AHURI report can be downloaded here.

Authors: Sharon Parkinson, Senior Research Fellow, Centre for Urban Transitions, Swinburne University of Technology; Deb Batterham, PhD Candidate, Centre for Urban Transitions, Swinburne University of Technology; Margaret Reynolds, Researcher, Centre for Urban Transitions, Swinburne University of Technology

The Home Price Fall Silver Lining – Affordability Improves

The HIA reported today that there was been a 10% improvement in affordability in a year. They attribute this to – wait for it, more building and wage rises – but do not mention the elephant in the room, the home price falls, which are continuing – at more than 10% in Sydney and Melbourne! No surprise, as home prices fall, affordability improves…

Five of the eight capital cities saw improved affordability over the year to March 2019. Sydney continues to be home to the greatest improvements, its index is up by 12.4 per cent. This was followed by Melbourne (+9.6 per cent), Perth (+7.7 per cent), Darwin (+5.9 per cent) and Brisbane (+2.5 per cent). Affordability deteriorated in Hobart (-5.1 per cent), Canberra (-5.1 per cent) and Adelaide (-1.1 per cent).

HIA’s Affordability Index is calculated for each of the eight capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates and wage developments.

“The HIA Affordability Index rose by 2.2 per cent in the March 2019 quarter to post the most significant improvement in affordability since September 2013,” said Tim Reardon, HIA Chief Economist.

“The improvement in housing affordability has been experienced across the country, with the exception only of Tasmania and the ACT, where ongoing house price growth has seen affordability remain static,” added Mr Reardon.

“The boom in home building of the past five years is a key factor behind the improvement in housing affordability. With completions of new homes remaining at elevated levels, affordability is poised to continue to improve.

“Wage growth also contributed to the improvement in affordability.

“The improvement in affordability is most significant in east coast capital cities. Affordability in Sydney deteriorated to an extent that in June 2017 it required two average Sydney incomes to be able to afford repayments on an average Sydney home. In just over a year this has improved to only requiring 1.8 standard incomes to purchase the same home.

“Similarly, in Melbourne the Affordability Index has improved by almost 10 per cent in a year,” concluded Mr Reardon.