Australia is losing the Aussie dream.
House prices are out of reach of many, fear of stamp duty leaves empty nesters rattling around in big houses, and cities have become enclaves for the rich.
On the other side of the coin, rents are a struggle for low-income earners and the supply of social housing continues to be outstripped by demand.
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The Australian Housing and Urban Research Institute’s Ian Winter said it was time to open up the housing market to major investors such as super funds.
“In order to build a robust affordable housing industry across Australia, we need to unlock capital beyond the reach of small to medium non-profits,” Dr Winter said.
“Nor can we rely on tightly constrained federal, state and local government budgets.”
New Social Services Minister Christian Porter agrees.
He told the National Housing Conference, held this week in Perth, that Australia’s rental housing stock was mainly held by mum and dad investors.
“But in Europe and the United States it is large institutional investors that often have a very significant role to play in this regard,” Mr Porter said.
“International investors are significantly absent from our housing market and we need to actively engage with them and look at ways of making this a more attractive investment vehicle which is something the treasurer and I are working on.”
But other Australian governments are trying their hands at investing in the market.
The West Australian government has been working with private property developers to build apartment complexes in the city and along train lines for low- and moderate-income earners.
The multi-million dollar complexes also include market-priced units as well as social housing.
Sheree Beven, who’s on a disability pension after having brain surgery to remove a tumour when she was a child, is one of the social housing tenants at the Abode Apartments in West Perth.
The newly constructed apartment complex is on the train line, a few minutes from the CBD and close to a major hospital.
It’s a far cry from her previous home in Midland on the outskirts of Perth.
“It’s a relief because I will never be able to hold a licence,” she said.
“It would kill someone if I drove.
“I need to be near reliable transport.”
The West Australian government has adopted a policy of social engineering to make sure there is a mix of all income earners in areas that would otherwise be prohibitively expensive.
“We do have a role, we believe, in educating the broader community about the benefits of actually having people living and working together instead of being segregated,” Tania Loosley-Smith from the WA Housing Authority said.
“We know that those concentrations of disadvantage don’t work.”
The WA government also offers low-deposit loans and shared equity schemes to try to help people into their own homes.
Dr Winter said Australian cities needed wind back the clock.
He said the proportion of low-income households within 10 kilometres of the Sydney CBD had fallen by 82 per cent between 1986 and 2011.
“If we don’t realise the benefits that having an efficient and affordable housing has for the economy, then our cities and our housing systems are going to act as a drag on economic productivity growth at a time when we’re desperately trying to find ways of reinforcing and shoring up our productivity,” Dr Winter said.
Another way experts say the housing market could be improved – and prices reduced without hurting capital gains – is by replacing stamp duty with a low, broad-based land tax.
Professor Gavin Woods from RMIT University said stamp duty meant empty nesters were “rattling around” in larger dwellings because they would lose money if they downgraded to a smaller, more practical, home.
“They’re encouraged to do so because of asset tests that apply to pensions which exempt the family home and also because stamp duty deters them from trading down anyway because if they move to a lower value home, they’ll lose quite a bit of the capital gain they realised,” he said.
“So there are certain structural factors there that are the cause of inefficiencies and if removed, would help improve the supply of housing, not just new housing, but also from the existing stock and that would help ease inflationary pressures.”
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