1. Housing policy and the housing system in Australia
Hal Pawson
City Futures Research Centre, UNSW, Sydney
Draws on: Housing policy and the housing system in Australia: an overview – by Chris Martin, Hal Pawson and Ryan van den Nouwelant

2. Presentation overview
Housing system structure: dwelling stock, demand, supply, tenure profile
House prices, rents and affordability
Housing policy governance, subsidy, tax and finance arrangements
Recently emerging policy developments; key policy challenges

3. 1. Housing system structure: dwelling stock, demand, supply, tenure profile

4. Changing dwelling stock profile
Source: ABS Census of Population and Housing, 2001 and 2011
Historic dominance of detached houses seeing transformation
Trend towards apartment construction redoubled since 2011

5. Recent apartment building boom
Sharp increase in apartment building post-GFC
2015 approvals around 4 times the level of the mid-2000s
But really a story of Sydney/ Melbourne/Brisbane markets
Rental investor-driven demand profile
Off plan sales norm – including in China
Source: Shoory (2016)

6. Demand drivers
Surge in rental investor housing finance approvals especially
NSW up >100%
Victoria up >50%
Foreign investor demand – a component of this
Crucially, foreign buyers limited to newly built properties
Foreign buyer % of new dwelling sales Australia-wide doubled [see graphic]
Foreign buyers’ share of new dwelling sales, Australia
Source: NAB (2016)

7. Housing system structure
Home ownership remains dominant – but drifting down since early 2000s
Owner occupation down from 71% to 67%
Private rental steadily expanding from early 1990s – up from 18% to 25% in 2013/14
Housing tenures, Australia 1994/
Source: ABS, Housing Occupancy and Costs

8. Age-specific home ownership rates
Overall home ownership rate maintained through rising longevity
Age-specific rates falling sharply for younger cohorts
Latest stats show downturn even for 65+ age group
Source: RBA (2015)

9. Changing role of private rental
Long-term private renting doubled since early 1990s
Now around 10% of all households are people living in PRS for >10 years
Family households up to 40% of tenants in 2011
comparison shows disproportionate growth further up income scale
Hypothesis: younger people priced out of homeownership
Private renters by income segment, Australia
Source: Hulse et al (2014)

10. Social housing in relative decline
Social housing construction minimal since 1996 except for stimulus boost
Financially unsustainable system forces most states/territories into routine asset sales
System being run down as major repairs & modernisation shelved
Community housing expanding as % of all social housing – now about 20%
But CH growth mainly via small scale transfers not new build
Social housing dwellings per 1000 persons, Australian States and Territories
Source: Dept of Prime Minister and Cabinet (2014)

11. 2. House prices, rents and affordability

12. House price trends
House prices up substantially in real terms over the past two decades
Post-2012 Sydney & Melbourne prices sharply divergent from rest of Australia
Recent trends for Brisbane, Darwin, Perth reflect mining boom tail-off around 2013
V modest price growth in Adelaide & Hobart associated with more longstanding relative economic weakness
Source: RBA (2016)

13. House price affordability
House prices increases have generally outpaced rising incomes
Low interest rates have lately reduced loan servicing costs
But deposit requirements have continued to parallel house prices
Latest figures show standard deposit equates to 100% of household disposable income – cf <65% in 2000
Therefore owner-occupation access threshold becoming more a matter of wealth rather than income
Source: RBA (2015)

14. Private housing debt impacts on national indebtedness
Australia close to top of international league on household indebtedness
Only one of the countries with higher debt – Norway – likewise remaining on upward trajectory
RBA concerned at resulting risks for broader economic stability
2014 household debt ratios for OECD countries
Source: OECD statistics

15. Private rent trends
Private rents saw period of relative stability in the early 2000s
Constantly increasing in real terms post-2005
Real rents, annual growth, Australia
Source: Hulse et al (2014)

16. Housing affordability by tenure
Housing costs to income ratio: households in bottom two quintiles, by tenure, Australia
For lower income hhlds, incidence of ‘housing stress’ and ‘housing crisis’ highest in PRS
Source: ABS, Housing Costs and Occupancy

17. Private rental affordability trend
Private renters in lowest 40% of income distribution, 2006 and 2011
Clear deterioration in private rental affordability for lower income tenants
One hypothesis – crowding out of lower rent properties by more higher income tenants
Source: Hulse et al (2015)

18. 3. Housing policy governance, subsidy, tax and finance arrangements

19. Housing policy governance: national and sub-national level
Australia currently has no formal national housing minister, dept or policy
Implicit housing policy embedded in official stances on tax, monetary settings, retirement incomes, finance sector regulation
Central outcome of implicit housing policy – high and rising house prices – contrary to conventional housing policy objectives – greater affordability, security and dignity
Labor govts ( , ) have accepted explicit housing policy role
Lib/National govts ( , post-2013) have not
Dominant trend at state level toward integration of formerly distinct housing entities within community services/human services depts

20. Housing subsidies Rent Assistance – private and CH tenants
Grants for social/affordable housing and homelessness
Commonwealth funding to states/territories under NAHA
NRAS funding for affordable housing construction ( )
First Home Owner Grants
Federal Government expenditure on Rent Assistance and social housing,
Source: Department of Prime Minister and Cabinet (2014). Note ‘CRA’ is ‘Commonwealth Rent Assistance’, ‘CSHA’ is ‘Commonwealth-State Housing Agreement’ social housing funding

21. Housing tax expenditures
Scale of housing-related tax spend vastly greater than explicit subsidies
Owner-occupiers
Capital gains and imputed rental income are tax exempt
Principal home exempt from Age Pension assets test
Exempt from State land tax
Private landlords
Negative gearing
Capital gains tax discount
Landlord tax concessions partly underlie huge popularity of rental housing investment
16% of taxpayers declare rental income
Housing subsidies & tax expenditures, by tenure, Australia 2013
Source: Kelly (2013)

22. 4. Recently emerging policy developments; key policy challenges

23. Recently emerging policy developments
Affordable Housing Working Group – set up by Commonwealth Govt, early 2016 to investigate ‘ways to boost the supply of affordable rental housing through innovative financing models’.
But no associated commitment for essential public co-funding
2015 creation of Cities Ministry and 2016 ‘Smart Cities’ discussion paper indicate Commonwealth Govt re-engagement with urban policy
City Deal framework aims to ramp up transport infrastructure investment – possible scope for affordable housing to be similarly construed
State-led initiatives:
NSW – public funding commitments to Social and Affordable Housing Fund (3,000 units phase 1) and Communities Plus (PH estate renewal program) to generate ‘up to 23,000 new and replacement social housing dwellings’ over 10 years
Housing Policy taskforce set up by Victoria State Govt 2016 – linked with recommendations from Family Violence Royal Commission but with wide brief on housing/homelessness reform.

24. Key housing policy challenges
The house price boom – unaffordable and inaccessible home ownership
The house price bust?
The lack of low-cost private rental housing
The spiral of decline in public housing

25. The land tax/value capture agenda
Key emerging trends that will shape and impact on the future housing system
Population growth
Urban consolidation
Disruptive technologies – Airbnb and the use of houses other than as homes
The land tax/value capture agenda

26. Key sources
Australian Bureau of Statistics, Housing Costs and Occupancy, Department of Prime Minister and Cabinet (2014) Reform of the Federation White Paper: Roles and responsibilities in housing and homelessness – issues paper 2 Hulse, K., Reynolds, M. & Yates, J. (2014) Changes in the supply of affordable housing in the private rental sector for lower-income households, 2006–2011, Final Report no 235; Melbourne: AHURI Hulse, K., Reynolds, M., Stone, W. & Yates, J. (2015) Supply shortages and affordability outcomes in the private rental sector: short and longer term trends; Final Report no 241; Melbourne: AHURI Kelly, J. F. (2013) Renovating Housing Policy, Melbourne: Grattan Institute National Australia Bank (2016) Quarterly Residential Property Survey: Q Shoory, M (2016) The growth of Apartment Construction in Australia, Reserve Bank of Australia bulletin, accessed 17 June 2016