• Michael Portillo swaps train journeys for exploring the UK's housing crisis. The special airs at 8:40pm on 11 December on SBS. (SBS)Source: SBS
On the surface, Australia’s housing crisis and the one in the UK look very different. But dig a little deeper, and the same patterns start to emerge.
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11 Dec 2018 - 1:25 PM  UPDATED 11 Dec 2018 - 1:25 PM

What can Australia learn from Michael Portillo: Housing Crisis? According to this one-hour special, since 1980 the number of council-owned homes in the UK has dropped from 6.5 million to 2 million. And while Margaret Thatcher’s introduction of a right-to-buy scheme allowed many then-renters to own their own homes, it’s also meant that many of those coming up after them now face a severe housing shortage.

The irony of having Portillo, a former minister in the Thatcher government, come face to face with the results of that government’s failed policies is not lost in this special. And it’s clear that the shift from public housing to a private market has wreaked havoc on the working class across much of the UK.

Portillo discovers that rising prices have kept many from gaining a foothold in the housing market, while a growing number of investors has meant much of the growth has been in apartments and homes that people on low incomes can’t afford. And with this growing divide in opportunity has come a growing divide in outcome as the poor are left with substandard housing in areas often branded as no-go crime zones by the media.

It’s definitely bad news for the UK. But if the real estate crisis there stems from a situation that’s radically different from the one we face in Australia, why is the end result – a housing crisis forcing low-income families out of the market – the same here?

While the UK housing market is very different to Australia’s, it’s clear that for a long time there were roughly equivalent economic forces in both countries working to keep house prices steady. In Australia, space was readily available, so there was a supply of affordable housing on the fringes of the cities. In the UK, where space wasn’t as available, council housing provided a similar source of cheap housing. But in both markets, having these options available meant that those at the lower end of the economic scale were able to obtain a place to live at a reasonable price.

What the UK’s right-to-buy scheme did was introduce the idea that a house wasn’t just a place to live – it was a money-making investment. And with councils in the UK often actively discouraged from spending money to build new council homes to replace the ones they’d sold, demand for housing rose. Which meant prices also rose.

In Australia many of the same forces came to bear. Long commute times and rising petrol prices, combined with a general lack of services on the city fringe, made cheaper housing less attractive. Changes in negative gearing that made houses a much more attractive investment also kicked in, and suddenly those people who already owned their home (especially in the inner city) found those houses rapidly going up in value, and staying up, which is where the real problems began.

While the initial causes are quite different, now here and in the UK, government policy has created a situation where a large segment of the public sees property as an investment. And any attempt to make housing more affordable is an attack on that investment.

Developers are now building houses and apartments for their investment value, investors are buying multiple properties with the tax break foremost in mind, and now both Australia and the UK are in a situation where any steps by the government to address the housing crisis by creating – or even simply encouraging – lower priced housing will cost a lot of property owners money.

It’s hard to argue this was an accident: both Thatcher and Australia’s John Howard (whose boosts to negative gearing in 1999 helped create the housing investment situation here) were right-leaning leaders who saw private ownership and investment as an unalloyed good and believed the market would take care of any inequalities that came up. And yet, as Portillo eventually points out, unless developers are forced – presumably by the government – to provide more balanced housing, the market has zero interest in solving this problem.

 

Michael Portillo: Housing Crisis airs Tuesday 11 December at 8:40pm on SBS. After broadcast, it will stream at SBS On Demand.