Another day, another report on our growing housing supply crisis.
Today the COAG Reform Council, headed by Paul McClintock, released its third annual report on performance against COAG’s 2009 National Affordable Housing Agreement, covering 2010-11.
The report’s conclusions are disheartening. It finds that rental affordability got worse between 2007 and 2010: more than 40% of low-income households are now in “rental stress” (defined as rent higher than 30% of gross household income), up from 37% in 2007. Sixty per cent of people in the lowest 10% of incomes face rental stress, up from just under 50%. And the problem is worst in NSW, which has been identified in other reports by the National Housing Supply Council and from the census as the worst state for housing supply.
The Reform Council’s report also concluded that housing had become less affordable through the period, though primarily as a consequence of interest rate rises. The problem was particularly acute in capital cities, and Queensland was the worst state for affordable housing for low-income earners. But the overall level of mortgage stress for low income households remained the same over the period.
The report also concluded that the gap between the level of housing supply and demand had more than doubled to nearly 187,000 since 2008. The numbers are a little more conservative than the most recent National Housing Supply Council update, which revised its estimates of the dwelling gap to 200,000 in 2010. Both reports agree, however, the NSW was the worst state, with a dwelling gap of about 73,000-74,000, but Queensland was getting worse.
The COAG report is separate from the process initiated in April 2010 — Kevin Rudd’s last COAG meeting — where COAG agreed “a housing supply and affordability reform agenda” with a tight timeframe for a comprehensive series of reports and reviews examining housing supply and government policies that acted as impediments to the delivery of more housing stock. All of the activity associated with the agenda was scheduled to be completed by the end of 2010, except for one project that was given until mid-2011.
Since then the agenda has disappeared without trace, as if it was all a figment of Rudd’s imagination. According to the National Housing Supply Council, from the time COAG announced the agenda to the end of 2011, the dwelling gap blew out by another 28,000 to 228,000.
The COAG report noted that it was having difficulty reporting on the relevant partnerships between state and Commonwealth governments that contribute to the housing agreement, because it “cannot link the activity reported to the outcomes and objectives in the National Agreement. Reports on national partnerships generally provide information on activity without evidence of the effect the activity has on outcomes … We cannot clearly mark progress against commitments or analyse them comparatively.”
That is, the states are good at saying what they’re doing but not so good at saying whether they’re meeting outcomes or making progress in a way that enables the council to compare across states.
We’re thus left with only a limited number of indicators, and chiefly that ever-growing dwelling gap, to illustrate government failure.
As the history of the COAG housing agenda shows, this was briefly a priority for federal Labor, but the Gillard government appears to have lost interest in it. Low-income earners across Australia will continue to suffer the consequences.
So what was that you were saying last week Bernard? We’ve never had it so good.
You’re so full of it.
The state governments (and the territories) can make housing affordable again if they dump that insidious duty called stamp duty. Buying a new house is not easy. After dealing with financial institutions, conveyancers, real estate agents and then to be slugged with stamp duty, as well as scary removalist costs, it is no surprise that many people, single or part of a family unit add up the costs and opt to rent instead.
Don’t get me started about the ACT Government’s Land rent program – there is a system that is both confusing and an empty promise. You buy a house on a land rent block, and keep on paying for the land. on top of a mortgage. how is that better? If, when I bought my 3 bed bungalow in north cooma, (tuggeranong) I had not had to pay for the stamp duty, I would not be living on the smell of an oily rag. I would at least have had a buffer for the times when I needed to pay a bit extra, or fix the place up a bit.
The Governments, both local and federal are very good at telling us we will be better off under tax cuts, but as the median price increases on house purchases, we still end up back at square one – no house, no equity and if you are single, no help.
Yet, last week Earthsharing Australia released a report demonstrating (through water use data) that “[t]here are 90,700 vacant houses in Melbourne” AND prices are softening in all markets.
Nope. I’m with the Steve Keensians on this one…
The following is unscientific and has not been peer-reviewed or seen by the Productivity Commission. It is completely based on gut feeling, instinct and perhaps a little common sense.
Friends just returned from a 4 week holiday in Spain. I have just returned from a 3 week holiday, with 6 friends, in France. All of us from both holidays are in our mid-late 50s. Most of us travelled or backpacked in our early 20s before the marriage kids thing. Back then, we found it tough going because Australia was so cheap and Europe so expensive. I lived as a vegetarian in the UK in 1979 because I couldn’t afford meat, even though I was working full-time.
Reviewing and comparing our experiences earlier this week, we all agreed never has it been so good for Australians to travel – with the strength of the dollar, things in Europe are so much cheaper than in Australia, particularly food, wine/beer, shopping and public transport. Australia has become a very expensive country. Why is this so?
Without any economics qualifications, I can only surmise that cheaper prices reflect cheaper overheads which leads me to suspect, again without having searched for any evidence, that wages must be lower in Europe. I hear regular calls from business bleating about the level of wages in Australia but it seems to me that one of the determinants of wages is the need for housing. People have to live somewhere so wages have to be high enough for people to be able to cover their rent or mortgage. Has anyone considered the primary driver of higher wages and a higher cost of living in Australia might be higher land prices? Has anyone considered the effect of the housing bubble created by easy credit, mortgage competition, First Home Owners Schemes etc on the overall cost of doing business in Australia? Rather than higher wages per se being the problem, has anyone considered that these merely reflect the cost of accommodation, which has been pushed up by government policies over the last 15 years? I am drawn to this idea from perusing real estate agents’ windows in France – not so much Paris inside the peripherique, but the mid-size towns. For $500,000 you can get a 4 bedroom country home on blocks as large as 2000 m2, some with pool, etc etc.
It occurred to me that reasonably priced land and accommodation was the key to lower wages. People have to live somewhere and that need has to be factored into their wages. Because of the land/housing policies in Australia, wages reflect higher housing prices and rent.
I’d be interested if someone who knows what he/she is talking about would be prepared to disabuse me of my theory.