News & Media
THE HOUSING CRISIS IN AUSTRALIA - SOME COMMENTS & THOUGHTS.
Even since the coming of full employment and general prosperity to Australia, there has been ongoing press comment about the housing crisis. For the sake of this discussion, let’s look at this commencing in the 1980s.
The housing crisis in simple terms means not enough homes/dwellings available for the people who are looking for a home in which to live, be it by way of rental or purchase. This is actually slightly different to there being enough homes in existence. We also need to acknowledge that demand has increased considerably as result of more people living alone than ever previously in the history of the nation for all sorts of reasons.
SUPPLY. Why the shortage? Land, building materials, planning constraints, building systems, regulations, labour or all of the above?
DEMAND. The buyer/ tenancy pool is largely determined by population growth, whether this be through birthrate or immigration. The population has grown from 14.69 million in 1980 to 26.71 million in 2024, which has created an extraordinary need for additional housing.
Demand is also largely influenced by the availability of finance. In the 1970s, when the banks and building societies were the main sources of funding, they kept a lid on price growth by restricting the availability of funds. They would only lend amount to people who were in what was judged to be secure employment, where the repayments did not exceed 30% of the gross household income.
FOREIGN COMPETITION. The pool of buyers has certainly been affected by the ability of non-residents / non- nationals to buy residential property here in competition with Australians. Surely, we must look after our own & exclude non-nationals from competing in our residential property market. I see no reason why foreigners should not be allowed to buy commercial or industrial properties in Australia, but definitely not residential or farming assets.
Foreign buyers sometimes have different reasons for buying residential property in Australia which often has nothing to do with housing. For example, moving money off shore to a safe haven. They create further competition in the local market which not only drives up prices, but often does not add to the supply of rental stock, as many prefer to leave the properties vacant. There are apartment buildings around Sydney which are substantially vacant since completion, as they have never been offered for lease.
SHORT STAY ABUSE. Another big issue is the improper use of the existing residential housing stock for short stay or holiday accommodation. AirBNB would be the biggest promoter of this misuse of housing stock. Housing stock constructed in areas zoned for low, medium or high-density permanent housing is meant for long stay or permanent occupation. Short stay accommodation which was previously the province of hotels and motels is located in areas which are appropriately zoned for this use. Most people who live in medium or high-density housing don’t want a new neighbour moving in every week at all hours, dragging bags through the public areas. We have seen public displays of anger in European cities against this misuse of housing.
PLANNING & REGULATION. We have one of the most regulated building industries in the world, but there are still major issues with unsafe and highly defective modern buildings. Obviously, something is not working properly.
The who you know or busy body planning system is time consuming and adds to the cost of new stock. Regularly we see buildings approved that are much larger than the local development control plan permits, and the opposite also occurs where an approval is sought for a building which complies with the development control plan, and approval is delayed or denied because of some difficult neighbours. If the local planning regulations adequately express the aspirations of the people living in the area, then surely a compliant application should automatically be approved. These matters often end up being argued in the Land & Environment Court which costs both sides enormous amounts of time and money.
POPULATION. We have supposedly had a housing shortage for 40 years, yet we continue to bring more people, and often, people without money or means into the country. So why bring them here. The main argument is we need them to ensure economic growth. Other reasons are family re-union, skills shortages and complying with international refugee treaty obligations. However, they all need housing, medical services, education, roads, public transport, child minding, law & order, etc. These actions are just perpetuating the problem and just create more demand for services which we are continuously told are in short supply or under pressure.
In more recent times, there is more and more questioning of whether bigger is necessarily better. Smaller societies can often be more harmonious and better suited to human aspirations. They are easier to manage and can create a better feeling of security and belonging for the members. So Maybe Australia needs to take a long hard look at where we are heading instead of blindly following the old mantra of growth is good!
INFLATION. Whilst we are on the subject, let’s talk about indexation. Our major obsession after housing is controlling inflation. So, whoever came up with the idea of CPI indexation, which has embedded inflation in our system should be hung! What a ridiculous idea. Index everything that you can think of to inflation, and you will have not inflation. Surely this inculcates inflation into our system. There must be a better way of managing the setting of fees and charges. Oh no, just index it & blame inflation for inflation. The governments are the worst offenders in indexing everything they can to inflation.
CONCLUSION. Are we any closer to solving the housing problem? Maybe not. However, hopefully food for thought!
Gregory May Director, May Estates, Sydney, Australia.