OPINION: AUSTRALIA is in a housing crisis, especially for people on low incomes.
While Australia’s population grew by more than 25 per cent between the 2001 and 2016 Census years, the nation’s stock of occupied social housing shrank by 2.5 per cent. If nothing changes, more than 2 million Australian households on low incomes in private rentals will be in housing stress by 2051. The health, education, productivity and crime costs borne by the community as a result of this unmet housing need is estimated to reach $25 billion per year.
Clearly, we must urgently elevate the conversation around the provision of more public, social and affordable housing across Australia to ensure a brighter future for all Australians.
During my 35 years working in the Australian and international property and financial sectors, I have yet to see virtually any government having a vision to adequately address the long-term investment required in social and affordable housing.
Globally, rising rents and a lack of affordable housing is a growing trend that is impacting the way business and society functions. The release of the new economic report, Give Me Shelter, by Housing All Australians, clearly outlines the significant future costs of the current housing trajectory; it demonstrates the link between the increase in homelessness and its long-term economic impact on all Australians.
A review in 2021 by the federal government’s National Housing Finance and Investment Corporation, estimated the investment required to address the chronic shortage of non-market driven housing is around $290 billion. This is too big for government to solve alone.
It is also encouraging to see the Albanese Government recognising the importance of creating jobs with their upcoming Jobs and Skills Summit in September. As recent commentary has rightly indicated, we have a shortage of key workers and immigration has been identified as an obvious solution.
But a jobs summit without consideration of where these workers will be able to affordably live is missing a vital piece of the strategic narrative. A federal government jobs summit to increase our skilled migration without any consideration regarding the creation of the additional affordable housing supply needed (as this is largely a state responsibility) can only lead to a further deterioration in housing affordability.
We need to get back to supply basics. Historically, the majority of our current public housing started out as affordable housing for key workers.
This “non-market” led housing needs to be re-classified as economic infrastructure – just like our roads, schools and hospitals – which all receive government support as the social and economic benefits created for the Australian public out way the costs.
Give Me Shelter found that the national average benefit-cost ratio (BCR) for Australia in providing adequate social and affordable housing infrastructure is 2:1. In other words, for every $1 invested to drive the delivery of public, social and affordable housing, the Australian community saves $2 in future costs.
This rate of return is comparable to, or better than, those achieved in many other major investments in infrastructure including Melbourne Metro (1.5:1) and the M12 Motorway Sydney. There is a strong underlying business case to mitigate the inevitable long-term taxpayer costs by investing to create more public, social and affordable housing supply.
One solution is to engage with government, at all levels, and private sector capital markets (which includes our superfunds) and encourage their involvement in creating a new residential asset class.
Land supply and approval timelines is where government are needed to fast track rezoning and building approvals for this new residential asset class. This would require an authority in each state which could direct all levels of government to respond, provided key economic, social and environmental outcomes will be met. This would create ultra efficient housing delivery versus the current approval timelines which can be measured in decades, creating massive waste and incremental housing costs.
Importantly, with the savings made in holding and interest costs and development profit, the private housing component would be able to fund much of the affordable housing while still delivering liveable communities with adequate parks, playgrounds, education and community facilities. These communities must be also linked by efficient transport including dedicated walking, riding and autonomous vehicle pathways and should be a hot bed of sustainable innovation. This could not only go a long way to solve our affordability problem at effectively a zero cost to government, but make Australia a world leader in desirable housing and community creation, a new sustainable industry, to create circular economies and a vastly better future.
I encourage all members of government and the business community, especially in the development industry, to register for the national webinar on the 2nd of August on Unpacking the Give Me Shelter report, so that they can learn about the strong underlying business case behind housing all Australians, rich or poor.
Having a jobs summit without the proper consideration and investment in additional affordable housing supply, is another missed opportunity and is not going to create the outcomes Australia needs.
By Mark Steinert, former CEO & Managing Director of Stockland.
This article was first published on the Sydney Morning Herald and The Age.