July 26, 2012
Affordable Housing: A Necessity Not a Luxury
July 2012
Wyatt’s Housing Portfolio supports initiatives that provide affordable accommodation to people on low incomes. The need for this type of assistance is now more evident than ever after the 2011 Census data released by the Australian Bureau of Statistics indicate that Housing Affordability has worsened between 2006 and 2011. Professor Andrew Beer, a Wyatt External Thought Leader and Director of the Centre for Housing, Urban and Regional Planning (CHURP) at Adelaide University recently wrote this article for Independent Daily.
At the end of June the Australian Bureau of Statistics (ABS) began to release data from the 2011 Census. The first releases from each Census tend to be highly anticipated and notable events for researchers such as myself and the media as they provide fresh insights into the changing face of Australia and either confirm expectations or direct social commentary into new, and unexpected, directions.
On the 21st of June housing affordability took centre stage as the Census revealed that housing affordability had worsened between 2006 and 2011 and that this trend was evident in virtually every capital city. Across Australia median rents rose to $285 per week, up from $191 in 2006 and an increase of 49.2 per cent. At the same time, median mortgage repayment increased from $1,300 in 2006 per month to $1,800 in 2011. A rise of 38.5 per cent over the five years.
Housing costs in South Australia mirrored the national trends. Median rents rising from $150 per week in 2006 to $220 per week in 2011 – a climb of 47 per cent. Median mortgages also rose, jumping from a monthly cost of $1,018 in 2006 to $1,500 in 2011. As with the national picture, the increase in median mortgages did not keep pace with rental costs, but an increase of 38.5 per cent over five years is significant.
The impact of this ongoing increase in housing costs, financially, socially, psychologically and with respect to public policy should not be under-estimated. At the 2006 Census Australia was in the middle of a mining-led boom that had spilt over into the property market and added impetus to a housing market that had been buoyant since the year 2000. But 2009 brought the Global Financial Crisis to Australia’s shores, resulting in a slowing economy, tighter access to housing finance and dark mutterings within the property sector about a declining market. Many, including myself, expected the 2011 Census to reveal an easing of Australia’s housing affordability crisis, not a racheting up of the pain felt by home buyers and tenants.
Where does this housing market pain come from? Tight housing finance conditions since 2008/09 have restricted finance for rental properties, which in turn has pushed up rents. At the same time, many households who would have had access to home purchase finance five years previously now find they are required to save larger deposits or take out mortgage insurance. All of this adds to their housing costs or keeps them in a tight rental market for longer.
In addition, we have to acknowledge that we simply aren’t building enough housing to meet our nation’s needs – a point the National Housing Supply Council has been making since 2009. A shortage of housing and land for development adds to everyone’s costs, and in the long term reduces the standard of living enjoyed by Australians while placing pressure on wages, and by implication, Australia’s competitiveness.
There is an on-going need for governments to make affordable housing a priority. The Rudd Government introduced a number of major initiatives including the National Rental Affordability Scheme and the Housing Affordability Fund, but the long-term future of both programs remains uncertain. South Australia has a long history of innovation in housing, going back to the Playford era and the instrumental role played by the Housing Trust. More recently, the Rann Government – under then Minister Weatherill – introduced a requirement for all new major developments to include a percentage of affordable housing. Perhaps the most promising sign for the future is that four of the seven priorities of the Weatherill Government – creating a vibrant city; maintaining our safe communities and healthy neighbourhoods; an affordable place to live for everyone; and, every chance for every child – are centred on housing and housing issues. Success in housing affordability may well be the most important legacy of the Weatherill government.
The 2011 Census data on housing affordability should serve as a wake-up call for governments and other political parties across Australia at both the State and Federal level. Too many Australians live in housing that is unaffordable and many live in housing that simply isn’t adequate for their needs. On-going policy innovation is needed to roll out programs that will have a real impact. A failure to do so will result in growing levels of deprivation amongst the most vulnerable within our community, a restive electorate and an economy burdened by an inflexible and expensive labour force.
This article was originally published on the Independent Daily website as “Wake-Up Call on Housing Costs” http://www.indaily.com.au
