The NSW government and Labor opposition have been urged to make grander election commitments on housing as three of the state’s most marginal seats descend into housing stress.
On Monday, the UNSW City Futures Research Centre released data revealing that some 18,600 households in south-western Sydney — just under 13% — are experiencing some sort of housing stress, including soaring rents, overcrowding and homelessness.
Among the electorates suffering the toughest housing conditions are three of the most marginal seats in NSW.
Housing stress is when a household is spending more than 30% of its income on housing, whether rent or mortgages, and extends to overcrowding and homelessness.
In Kogarah, where Labor Leader Chris Minns holds his seat by a paper-thin margin of 0.1%, or as few as 60 votes, 9.5% of all households reported to have unmet housing needs, accounting for about 3400 families and individuals.
Leppington, another seat held by Labor on a slim margin of 1.5%, has more than 2200 households with unmet housing needs.
In the Labor seat of Strathfield, held on a margin of 5.2%, more than 10% of households are in stress, and this only worsens in the party’s strongholds. In the safe Labor seats of Fairfield and Bankstown as many as 5400 and 4800 households are suffering housing stress respectively.
Mark Degotardi, chief executive of the Community Housing Industry Association NSW, said the data should be wake-up calls to both of the major parties. He said they have offered “nothing substantial or significant” to curb the crisis.
“We’ve had some useful proposed changes to rental laws, and some first-home buyer [incentives], but frankly this is all stuff around the margins when you’re facing a crisis of this scale,” Degotardi told Crikey.
In June, the NSW social housing waitlist swelled to 51,031 approved and waiting for a property to become available for as long as 10 years, advocates say, up from 49,928 the year before.
Voters in Coalition-held seats haven’t been safe from the crisis, either. In the electorate of Penrith, which Liberal Stuart Ayres holds on a margin of 0.6%, as many as 2700 households are experiencing housing stress, and residents in the nearby Coalition seat of Parramatta, held by a margin of 6.5%, is home to 4800 residents in housing stress.
But the issue has been relegated to the periphery by Premier Dominic Perrottet and Treasurer Matt Kean.
In the last state budget, the Coalition committed $37 million to delivering 120 new social housing properties, $300 million on maintenance and upgrades to existing stock, and $149.8 million for 200 new and 260 upgraded homes for First Nations peoples.
Another $500 million was earmarked for housing infrastructure, planning and rezoning efforts aimed at delivering new homes, but without promises they would do anything to improve affordability for renters.
Beyond its budget commitments, though, the Coalition government has remained tight-lipped on what, if any, housing policies it will take to the election.
NSW Labor, meanwhile, has issued a “portable bonds” pitch to renters who could be able to bypass stumping up thousands of dollars for a bond when moving home, and instead transfer their existing bond.
The party has also pledged to review lease-ending laws in consultation with “stakeholder and advocacy groups” to develop a list of reasonable grounds for an owner to end a tenancy agreement, “including minimum notice” requirements.
So far, only the NSW Greens have a housing plan that targets social and affordable housing, although details related to budgetary commitments and scope have yet to be released.
As is the case across Australia, advocates say the incoming NSW government needs a bolder long-term strategy to bolster housing supply, as low vacancy rates and the conclusion of the national rental affordability scheme (NRAS) turn the screw on an “already acute” shortage of social and affordable housing.
More than 600 households will come off the scheme this year, before it is completely wound up in 2026.
Shelter NSW chief executive John Engler told Crikey the shortage of supply and shovel-ready projects should lead major parties to consider buying ill-fated private developments, “like Mascot Towers”, and repurpose them for social housing, in combination with longer-term ambitions.
He said the government’s refusal to do so was symbolic of the absence of “cleverness” in its short- or long-term approach to the housing crisis.
Degotardi said the federal government’s Housing Australia Future Fund, which is set to spend $10 billion on 30,000 new social and affordable homes in the its first five years, offers NSW an opportunity to ramp up a coordinated effort.
“But we’ve just not heard anything from either party about how they’re going to make the most of that federal government investment,” he said.
“Community housing providers are ready to go; $3 billion over the next four years isn’t going to make [all these crisis indicators] go to zero, it’s not going to solve or remove the housing waitlist by any means, but it is a reasonable start.”
In the long term, Degotardi said, the community housing sector would welcome more investment. He said the government would do well to consider its track record on playing a role in large-scale affordable housing schemes like the NRAS and maximising government investment.
I’ve been thinking for years we would get to this point, where younger people were so priced out of the market that anger would start to bubble through noticeably to voting intention. I didn’t realise there’d be a high rent crisis at the same time though. Someone needs to bite the bullet and axe negative gearing etc, by making that argument solidly to the public.
They won’t, sadly. Owners are about the biggest voting bloc that this country has, and no mainstream politician wants to test them. Look at what happened to Shorten in 2019.
Except that some large proportion of owners are just home owners and not property investors, and are probably open to persuasion to turn against those who created the necessity for such a large mortgage…
People are easily convinced to take a small hit (or even a big one) when that’s the only way to land a blow on the folks who screwed them over. And it would be mostly just on paper for those not flipping joints.
That would include the advocates for – and enablers of – importing tens of thousands of immigrants to add demand to (aka “prop up”) the housing market.
Tens of thousands per month.
That’s hopeful. Home owners, in my experience, won’t turn against those responsible for this mess. They are too busy working and attending to family matters – if they are good. The trouble is that most home owners tend to turn against the most vulnerable, like housos, because they can measure their standing in the social order by vilifying the more unfortunate. I hear it all the time. Homeowners are about as revolutionary as 457s and working holiday makers and tourists working here illegally.
We have a Murdoch News Corp media that is the propaganda arm of the Coalition and continues to barrage us with negative publicity about any change to negative gearing policies
On census night, one million homes were empty! An empty tax on some of these might start to remove the problem
Proportionally this was no different to the preceding twenty (at least) years.
It’s not the cause of current problems.
A lot of these are for holiday (ie short term) rentals.
The federal gov’t could (if it wants to ?) change the tax treatment of holiday rental properties to be the same as other businesses. They are, after all, nothing but a small business, so why should they get special treatment?
That would mean they can only right off losses against earnings from that business, or else carry the losses forward.
That is, the ‘negative gearing’ aspect of investment properties would be removed.
If they are really brave they could also reduce the capital gains discount introduced by the Costello.
I know, such bravery disappeared with the 2019 election.
Ah well….?♀️
Neither Labor nor Liberals have the slightest interest in actually fixing the problem, which can only be done by (dramatically) reducing property values in real terms through increasing supply (building more houses, especially public housing), reducing demand (eg: lower immigration, lending restrictions), or some combination thereof.
Looks like they’ll be losing more voters to the Greens then. At some point that should be enough to make them act.
The Greens waive through population growth at every opportunity.
Every bit as hypocritical and useless as the big two.
Bromides about housing shortages are meaningless unless you’re prepared to address demand…and no one is.
well said
The Greens when they were still an environmental party back in the early nineties had a Zero Population Growth policy. Go onto their website today and that policy has been watered down to nothing.
Greens are probably the least worst of the mainstream parties, but only by a hair because they want more public housing.
But they refuse to consider the demand side, and are only interested in increasing real supply through increasing density.
Yes and this is their disappointment. Great they want more public and/or social housing but they want most of us to live i medium to high density properties. They support increased immigration. They reject the older more environmental, Left wing concerns about overpopulation and take the modern day Marxist exegesis that it is no one’s fault where peoppe are at and they should live anywhere they damn well please. That can only mean Third World immigration to First World countries if this is possible.
Density is not good. It actually leads to more GHG emissions through overuse of air conditioners and clothes dryers. There are no trees to provide cooling and lower temperatures for houses and everyone is forced to use dryers as you can’t hang your washing out in a unit. It just isn’t common as is the absence of solar panels on units. And congestion like cars increases.
The restart of mass immigration not only adds 300-400K people to the demand queue year on year, it also weakens wage growth thus depriving working people of the ability to reduce the debt-income ratio for housing (which would make it more affordable), while pushing the prices up. It’s a double edged shafting for working people.
Yes
A hollow gesture here, a drop in the bucket there. A few vague promises, and a well-publicized amount of money spread so thinly over time that the resulting housing is useful only for overseas workers. But who cares? Homeowners outnumber renters. Can’t wait for the point where we return to an electoral system where only property owners get to vote.
Instead of actual obvious disenfranchisement, we just broke the media ownership laws so that billionaires could tell all the renters what to think.
More importantly, certain parts of the media tell the owners that they are in the right, that God smiles upon them, and that their investment properties are the gift that capitalism bestows upon the righteous. No need to feel a little bit guilty about renters, they’re just animals.
It’s not really evil landlords it’s really the system especially negative gearing which means almost all rental properties are actually running at a loss. ‘Most landlords are average people who can’t really afford it and are lured by the prospect capital gains. Fundamentally the idea that you negative gear a rental property and make a loss is not good for either renters or investors. The margins are not just tight but negative. And it means that half of the costs of all repairs and improvements are being fronted by the tax payer. Once only rich people who could afford to at least neutrally gear a property after expenses would own rental properties, and house values and rents were far more realistic. The current situation is a failed distortion of the market. It’s also about to finally implode.
Negative gearing only makes the underlying problems worse, it is not a root cause.
Without a property bubble, negative gearing makes no sense.
Not quite true. Negative gearing is a reference to costs exceeding revenue and defraying these costs in your tax return. It is a tax minimisation strategy. And it is claimed against total income, not the income generated solely by the property. Unlike many other countries. This makes it almost unique.
The property bubble you refer to creates capital gains, a separate matter again. The owner holds the asset, takes the losses due to his overcommitment in borrowing and other expenses incurred through the property, reduces his total taxable income and then sells the investment property and makes a capital gain for which he is taxed, at 50% of the capital gain – the difference between the purchase price and sale price minus expenses.
The point of negative gearing is to turn relatively heavily taxed income into relatively lightly taxed capital gains.
Whether your money is going to the tax man or loan interest, it’s still going out. The latter becomes preferable when it is exchanged for massive capital growth.
But if your property isn’t increasing in value by a stupid amount, then it makes little sense to keep losing money year after year “buying” it.
This is reflected in the percent of landlords negatively geared increasing sharply at the turn of the century when Costello halved the CGT rate.
(I suspect we are mostly in furious agreement – but my TL;DR is that negative gearing is an easy target, but ultimately not a major influence in house prices.)
Hi. Yes we are in agreement basically in principle but I think that you are conflating negative gearing and capital gains without differentiating them. They are or can be 2 different things. One doesn’t necessarily follow the other. One may even preclude the other depending on the housing market or asset cycle bubble if one is in a bubble or not.
A family home can have a capital gain but it is not delegated, defined or treated as capital gains because it (capital gains and any tax liability) doesn’t apply to the family home. But most people become wealthy in this country, (unless they were lucky enough to have someone else buy the property or inherit it), by buying a property and have it’s value accumulate over time. That is, you pay 20,000 pounds for a house with land in Killara or West Pymble in 1950 or 1960 and sell it in 1996 to move up the coast for $575,000. That is really a capital gain but because it applies to the primary residence, is not considered a capital gain by the ATO. There is no taxable liability. And there is no intention of the seller to accumulate more property and are most likely to relocate homes with some left over depending on location, size of home and other factors. This why property is often ultimately a zero sum game.
Negative gearing is the opposite of positive gearing which is where revenue from an investment, usually a property, exceeds all costs liable for tax deduction. As most of us who are under 50 – not me – are in debt, this does not often apply. Most investors borrow to fund their investment pursuit. This pursuit in mostly property, is able to have allowable costs deducted from ALL income of the investor as the property is an income generating asset. Income generating doesn’t have to equal profit or capital gain. Not all costs are allowed for tax deduction, but most are, including the interest component on borrowed money. If allowable costs exceed revenue from rent, the amount in deficit of revenue is tax deductible. The property or asset is negatively geared. Your using the asset to generate income whether it makes a profit or not. Your not stashing away jewellery, gold bars, antiques, watches, stocks and shares, debentures or promissory notes in a safe and watching their value grow over time because that is not generating income. Their appreciation in value is considered a capital gain if they are later sold.
Of course, most investors are willing to wait over time and make a capital gain but then they are up for CGT which, since 1999, is taxed on 50% of the profits or capital gain. You sell a place and make a clear capital gain of $100,000, the CGT is assessed on 50% of that – $50,000. Provided the asset is held for 1 year or more AND the asset, being the rented property, is geared towards generating an income – i.e., rented out. Doesn’t apply to holiday homes or weekenders not rented out for income purposes. Now an investor might be very happy living off 1 of these investments or more, in which case, if they make an income exceeding profits, this income is tax assessable. If 1 or more properties generate losses then, yes, they are negatively geared but it is up to the owners or investors to meet the expenses.
It’s like a business really. Not an ideal one I know but just so you know that there is a difference between the 2 – negative gearing, which is a process; and capital gains which is realised only through sale of investment property or assessable assets.
I know what negative gearing and capital gains are.
My point is that most people negative gearing – who aren’t just doing it because they went to a seminar and it told them they’d pay less tax – are doing so because they are expecting extraordinary capital growth, and are happy to lose money for decades to take advantage of that.
Absent that extraordinary capital growth, negative gearing (ie: losing money on an asset that’s not appreciating dramatically) doesn’t really make a lot of sense.
My other point is that negative gearing is not a root cause of the property bubble or rental crisis, so eliminating it wouldn’t make a huge difference. On the flipside, leveraging it with policy – eg: so that only new-build properties (with an exclusion for knockdown/rebuilds) could be negatively geared – would genuinely incentivise investors to increase supply.
This is true and capital growth from an investment property increases over time. You’d be a mug to do it otherwise and most people are ignorant of the share market and if they do, invest in an indexed share fund – a bundle of random shares basically. This may require a broker as well as an accountant. Good luck with that! It is easy if all a dufus has is money and they can sit on a place for years. True but outgoings have to be met all the time. There are many people who can’t do that but they are in the minority.
I would focus on those who own multiple properties, 5 or more, and can sustain costs, negatively gear and make a killing when they sell. This is the problem. Owners of multiple properties. Money for nothing. Just rely on good ole immigration and general population increase. Unless you have bought on top of a toxic waste facility you can’t lose. This is unproductive and it is often these people which drive government policy and even municipal planning. Absent war and capital gain is a surety. Nothing profound there. I think curbing negative gearing is a good idea but it is the how that is the problem. Direct restriction on number or other monetary and fiscal levers – like borrowing restrictions, variable interest rates or taxation. Damned difficult. I think negative gearing is the problem as it allows people with lots of money to dominate the housing market. I just don’t have a ready-made plan as to how to implement a policy to counter it. I don’t agree as you say, that increasing supply helps solve the problem. I think increasing supply just creates newer and more problems. Building newer homes won’t necessarily incentivise investors to build new homes either and people take them up. Newer homes in new, greenfield areas or newer areas, are the realm of homeowners. Renters tend to prefer homes in older, more established areas, close to education and social amenities and public transport. Newer areas are for the homeowner, commuter belt. Not many rented homes there. Such a policy distorts social features that are in the best interests of most people. It makes no sense for students to live in rented accommodation in far out, fringe places on the edge of our large urban environments. If I had money, which I don’t, I wouldn’t do it.
I would say that it is madness to have our population increase by a further 1 million in 3 years. That is asking for trouble.
It’s always the way. The wealthy come up with the tax minimisation idea, the hoi polloi try to get in on the bandwagon and find they’re too late or don’t have the resources or smart advice to play the game well. However, when anyone tries to close the loophole, a mug punter is produced on a tabloid television show to portray the government as an enemy of “mums and dads” or poor pensioners.
Hundreds of billions on useless submarines. Sure. Hundreds of billions on tax cuts. No problem. It’s easy where our govts priorities lie. And as long as both major parties, both federal and state, do nothing about housing, there’s absolutely nothing we can do about it. Yes Labor, 30,000 homes over 4 years is the equivalent of doing nothing! Voting independent might change things over time, but I wouldn’t bet on it.