Housing crisis hits home

Another day, another media story about the housing crisis engulfing Australia.

Even as I write, recent examples include updates on the federal government’s Housing Australia Future Fund Bill, the state of the private rental market and its very human impact, property owners and landlords responding to the possibility of rental reform, the precarious nature of the construction industry, the impact of interest rates on home buyers, and the need for more housing supply overall.

For every article about the housing challenge in this country, there is a wide range of responses. Many of these are based on self-interest, often financial.

They are always passionate, and sometimes they are toxic.

These responses demonstrate that this crisis touches almost everyone, and the stakes are extraordinarily high.

Personally, I am seeing my friends, family, and community impacted by housing insecurity, unaffordability, forced moves and homelessness.

Professionally, my organisation and others like it are trying to assist individuals and households in dire need of housing and other supports when the sector is already stretched. Investors are feeling the pressure of interest rates rises, and industries are on the edge.

From the perspective of National Shelter, which focuses on low-income households, by every available measure this is not just a housing crisis, but a national housing emergency. This does not overstate the magnitude of the issue.

We have seen rents increase by 9.9% in the 12 months to June, with the average weekly rent at $594 for a house and $558 for a unit. Rental listings remain low and the vacancy rate nationally is functionally zero.

Behind these figures are families and individuals who, facing homelessness, find themselves having to live in overcrowded dwellings to save costs or just to have a roof over their heads. Many live in unsafe housing, or must move away from family, friends and support.

While these are very real and pressing issues for households right now, we must not forget that housing instability has long-term implications for health and wellbeing.

This is a housing crisis that could play out over a lifetime.

What we are experiencing now is not only the result of neglect in national housing policy over the past decade, but also the changed paradigm of the role housing plays in our society and economy and the role of government.

For the past nine years there has been no cohesive national housing policy at the Commonwealth level. Instead, the focus has been home ownership and – even during the covid pandemic – home building.

Commonwealth leadership on social and affordable housing languished, with the federal government taking the view that social housing was the remit of the states.

While some states, such as Victoria and Queensland, picked up the baton with significant investment in social and affordable housing, investment in this area has been declining both in absolute terms and as a proportion of the number of private dwellings overall.

Social housing now comprises only 4.4% of total dwellings in Australia.

If we pull the lens back further, the introduction of the capital gains discount in 1999 and the First Home Owners Grant (FHOG) in 2000 in response to the introduction of the goods and services tax have caused considerable impacts that we are grappling with today in terms of wealth inequality.

This has resulted in government spending $20 billion on home ownership in the decade to 2021, and foregone revenue in 2023–24 of approximately $4.8 billion for the capital gains tax discount alone.

These trends have resulted in market distortion with 1% of Australian taxpayers owning nearly a quarter of all property investments.

Home ownership has always been a feature of the Australian property market and the aspiration of many.

A focus on grants to home buyers and favourable tax treatment for investment properties, however, has seen a shift in ,Australians’ perceptions of housing, from “home” to “investment and wealth creation vehicle”.

This has helped propel the estimated value of dwellings in Australia to almost $10 trillion.

As a nation we are spending billions of dollars on housing only to have fewer people in home ownership, lower proportions of social housing, and greater housing need.

As a result, we are now in the unenviable position of having more than 640,000 Australian households whose housing needs are not being met – a figure expected to rise to 940,000 by 2041.

The scale of this challenge is enormous, which is why we need a national plan in response.

Investment in social and affordable housing in Australia has historically relied on capital grants delivered by government, but this funding has been inconsistent, has failed to keep pace with demand and is subject to the politics of the day.

What is needed is a mechanism that provides for a secure ongoing source of funding for subsidised housing, a source that is difficult to unravel when there is a change of government.

This is why National Shelter supports the introduction of the federal government’s Housing Australia Future Fund (HAFF).

We see the HAFF as establishing the structure for a fund that can grow over time and becomes an embedded source of funding for social and affordable housing.

The amendments from the Greens and the crossbench have strengthened the fund. We have also recently seen a proposal by the CFMEU for a super profits tax, and we support, in principle, an approach that can provide a secure funding source for subsidised housing.

The second key mechanism necessary is a national housing and homelessness plan.

Such a blueprint must include all levels of government and connect all pieces of the housing policy landscape, from government policy and taxation to planning reform.

We need every lever at our disposal to confront this crisis.

Underpinning both these crucial responses must be a national conversation about the role of housing in our society and in our economy.

We are at a critical juncture about how we perceive and use housing in Australia.

We cannot afford to make the wrong decision.

Emma Greenhalgh is the CEO of National Shelter.

National Shelter is the non-government peak body representing the housing interest of low-income Australians. Since 1976, National Shelter has worked towards this goal by influencing government policy and action, and by raising public awareness about housing issues.