tag:theconversation.com,2011:/us/topics/home-ownership-7030/articlesHome ownership – The Conversation2024-03-06T03:09:41Ztag:theconversation.com,2011:article/2031442024-03-06T03:09:41Z2024-03-06T03:09:41ZHuge housing costs make us slaves to our jobs and unsustainable growth. But there’s another way<p>Every three months, Australian economists, analysts and commentators anxiously await the new gross domestic product (GDP) figures, a key measure of economic performance and growth. The latest figures, released today, show <a href="https://www.theguardian.com/business/2024/mar/06/australia-gdp-december-quarter-2023-reserve-bank-interest-rates">GDP growth of 0.2%</a> in the December quarter.</p>
<p>But our dependence on such growth is <a href="https://www.nature.com/articles/s41893-023-01157-x">destroying our planet</a>. Humans are consuming resources faster than they can be replenished, and disrupting <a href="https://www.science.org/doi/10.1126/science.1259855">vital Earth systems</a> through pollution, deforestation and other damage. </p>
<p>Why are we so reliant on an ever-expanding economy? The answer can be found in our economy’s first building block: the <a href="https://www.thelandmagazine.org.uk/articles/short-history-enclosure-britain">privatisation of land</a>. The high and rising cost of land for housing has monumental, often lifelong implications. It influences the work we do, our available time, our need for a car, and so on. We’re made reliant on growth, while care for the planet often falls by the wayside.</p>
<p>There are alternatives. Innovative examples of public housing offer hope – and a chance to move away from endless growth towards a more sustainable future.</p>
<h2>The foundation of the problem</h2>
<p>Before land was broadly <a href="https://academic.oup.com/ahr/article/117/2/365/30072">privatised</a>, people in many parts of the world survived through subsistence farming, hunting and gathering on land commons.</p>
<p>Much changed during the 16th century, starting in Europe and spreading through colonisation. The turning point was the shift to <a href="https://www.jstor.org/stable/41475544">larger-scale agriculture</a>, which made it increasingly profitable for the nobility and merchant classes to enclose land.</p>
<p>Once land was privatised, many people had <a href="https://uncomradelybehaviour.files.wordpress.com/2012/04/thompson-ep-the-making-of-the-english-working-class.pdf">no real option</a> but to enter the market to sell their labour. They now had to rent or buy land for shelter and food. </p>
<p>Broadly speaking, the privatisation of land serves as the cornerstone for an economy <a href="https://www.ppesydney.net/content/uploads/2021/06/19_Baumann-Alexander-and-Burdon1.pdf">tethered to economic growth</a>.</p>
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Read more:
<a href="https://theconversation.com/friday-essay-searching-for-sanity-in-a-world-hell-bent-on-destruction-160447">Friday essay: searching for sanity in a world hell-bent on destruction</a>
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<figcaption><span class="caption">Alex Baumann and Western Sydney University students describe how land commons would make economic contraction, or degrowth, possible.</span></figcaption>
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<h2>Green growth has limits</h2>
<p>Some proponents of economic growth argue a that rapid transition to <a href="https://theconversation.com/renewable-projects-are-getting-built-faster-but-theres-even-more-need-for-speed-221874">renewable energy</a> will make this growth environmentally sustainable.</p>
<p>But there’s increasing <a href="https://www.thelancet.com/journals/lanplh/article/PIIS2542-5196(23)00174-2/fulltext">evidence</a> that key industries – such as retail, construction and tourism – are just too environmentally intensive. Even with <a href="https://theconversation.com/five-reasons-green-growth-wont-save-the-planet-116037">optimistic uptake of renewables</a>, continued growth will surpass <a href="https://theconversation.com/what-are-planetary-boundaries-and-why-should-we-care-213762">planetary boundaries</a>, such as the extent of global warming and biodiversity loss Earth’s systems can withstand. </p>
<p>We <a href="https://eeb.org/library/decoupling-debunked/">cannot separate</a> increases in GDP from dire environmental consequences.</p>
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Read more:
<a href="https://theconversation.com/coronavirus-shows-housing-costs-leave-many-insecure-tackling-that-can-help-solve-an-even-bigger-crisis-137772">Coronavirus shows housing costs leave many insecure. Tackling that can help solve an even bigger crisis</a>
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<h2>The survival paradox</h2>
<p>Altering our dependence on economic growth is not easy. We all rely on the opportunities it provides. </p>
<p>Take me, for example. I’m a sustainability academic and my employment relies on the government to subsidise education. But a large proportion of these funds come from taxing unsustainable commodities such as iron ore, coal and gas. </p>
<p>Universities also depend on international students who fly in from overseas, contributing to aviation emissions. And the university’s business model ultimately relies on student employment in a perpetually growing economy.</p>
<p>This dependence does not sit well with me. But bills have to be paid. The biggest and most unavoidable bill is the cost of keeping a <a href="https://theconversation.com/higher-prices-have-hit-most-people-but-homeowners-have-felt-it-harder-than-renters-211200">roof over my head</a>. </p>
<p>I’m not alone. For most people, the <a href="https://everybodyshome.com.au/report-reveals-brutal-reality-of-housing-crisis/">pressures of paying for housing</a> far outweigh other survival concerns, such as those related to the environment. And those pressures are increasing. </p>
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<p>Given this, it’s not surprising that environmental concerns also take a back seat in government priorities. To remain electable, governments must foster jobs through economic growth. </p>
<p>For instance, the Labor government has rejected the <a href="https://reneweconomy.com.au/un-says-australia-must-quit-coal-by-2030-reach-net-zero-by-2040/#:%7E:text=The%20Secretary%20General%20of%20the,any%20new%20oil%20or%20gas">United Nations’ call</a> for a moratorium on fossil fuel projects, <a href="https://www.smh.com.au/politics/federal/devastating-impact-pm-rejects-greens-call-to-halt-fossil-fuel-exports-20220726-p5b4v3.html">citing</a> mass job and revenue losses as primary reasons.</p>
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Read more:
<a href="https://theconversation.com/we-are-the-1-the-wealth-of-many-australians-puts-them-in-an-elite-club-wrecking-the-planet-151208">We are the 1%: the wealth of many Australians puts them in an elite club wrecking the planet</a>
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<h2>A practical way forward</h2>
<p>How do we escape this vicious cycle? A modern urban commons land arrangement, developed through a revitalised public housing sector, offers a way forward.</p>
<p>A noteworthy precedent can be found in <a href="https://www.news.com.au/finance/real-estate/renting/renters-utopia-greens-say-vienna-proves-public-housing-can-be-highquality-and-affordable-for-all/news-story/6df55cc046bc18a2a2ac1c4355e4aeb6">Vienna</a>, where public housing and rent controls mean 80% of residents spend only 20-25% of their income on housing.</p>
<p>This policy redefines land and housing as social or common goods, rather than just as market commodities. After all, land, like air and water, is <a href="https://www.ohchr.org/en/land">not a market good</a> but part of our collective natural heritage. Such policies can significantly free people from economic growth reliance. As Peter Pilz, a Viennese social housing tenant, <a href="https://www.nytimes.com/2023/05/23/magazine/vienna-social-housing.html">told The New York Times</a>: </p>
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<p>If people don’t have to struggle all day long to survive — if your life is made safe, at least in social conditions — you can use your energy for much more important things.</p>
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<p>These “more important things” could be activities that promote <a href="https://theecologist.org/2020/mar/04/towards-walden-wage">collaborative, sustainable ways of living</a> such as <a href="https://www.communityledhomes.org.uk/what-self-help-housing#:%7E:text=This%20could%20be%20an%20option,on%20a%20longer%2Dterm%20project.">self-help housing</a>, “share and repair” programs and local food production.</p>
<p>Such housing models are not confined to Europe. In <a href="https://theconversation.com/a-century-of-public-housing-lessons-from-singapore-where-housing-is-a-social-not-financial-asset-121141">Singapore</a>, as many as 80% of residents are publicly housed.</p>
<p>And what about Australia? The seeds are sewn in this nation’s long heritage of public housing and <a href="https://www.facs.nsw.gov.au/housing/living/rights-responsibilities/get-involved">tenant participation</a>. This includes activities such as producing food, hosting community events and managing tenancy issues. </p>
<p>The <a href="https://www.tenantsrights.org.au/blog/co-operative-housing-interview-co-op-renter-amalina-wallace">Emoh Ruo housing cooperative</a> in Sydney is a public tenant housing cooperative, where tenants are active in roles such as managing their tenancies. </p>
<p>Centrelink’s <a href="https://guides.dss.gov.au/social-security-guide/3/11/3/30">voluntary work option</a> for unemployed people – intended to partially fulfil their obligations for income support – also provides an Australian policy precedent.</p>
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<a href="https://images.theconversation.com/files/579829/original/file-20240305-20-z6gt17.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Protestors hold up a sign saying 'Housing for people not profit'" src="https://images.theconversation.com/files/579829/original/file-20240305-20-z6gt17.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/579829/original/file-20240305-20-z6gt17.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=358&fit=crop&dpr=1 600w, https://images.theconversation.com/files/579829/original/file-20240305-20-z6gt17.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=358&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/579829/original/file-20240305-20-z6gt17.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=358&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/579829/original/file-20240305-20-z6gt17.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=449&fit=crop&dpr=1 754w, https://images.theconversation.com/files/579829/original/file-20240305-20-z6gt17.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=449&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/579829/original/file-20240305-20-z6gt17.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=449&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Civil unrest is building over the housing crisis.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/dublin-september-15-2021-protestors-gather-2111985701">Damien Storan, Shutterstock</a></span>
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<h2>A catalyst for change</h2>
<p>Of course, many barriers to such urban commons arrangements exist. </p>
<p>The main barrier is <a href="https://www.theguardian.com/australia-news/2023/sep/20/nsw-state-budget-labor-daniel-mookhey-social-housing">inadequate funding</a> of public housing. But as the housing crisis deepens, public housing is <a href="https://theconversation.com/labors-proposed-10-billion-social-housing-fund-isnt-big-as-it-seems-but-it-could-work-174406">attracting more funding</a> which could be applied to innovative housing models. </p>
<p>The right model of public housing could eventually be expanded toward the high levels seen in places such as Vienna and Singapore.</p>
<p>Not everyone wants to live in public housing, and there will likely always be a mix of housing tenure types. But widespread global adoption of public forms of housing could help balance the downsides of our current absolute reliance on economic growth.</p>
<p><em>Information in this article is drawn from a <a href="https://www.degruyter.com/document/doi/10.1515/9783110778359-018/html">chapter</a> written by the author and others in the <a href="https://www.degruyter.com/document/doi/10.1515/9783110778359/html">Handbook of Degrowth</a>.</em></p><img src="https://counter.theconversation.com/content/203144/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alex Baumann is affiliated with the NTW project (<a href="http://www.ntwonline.weebly.com">www.ntwonline.weebly.com</a>). This project is working on a reframing of public housing policy settings – to provide an example of local collaborative development on public land. This association is voluntary and involves no financial interests. </span></em></p>This obsession with economic growth is destroying our planet. We must rethink private ownership of land – that’s where it all went wrong.Alex Baumann, Sessional Lecturer, School of Social Sciences & Psychology, Western Sydney UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2193892023-12-18T00:32:19Z2023-12-18T00:32:19ZHousing and the Albanese government: a mid-term report card<p>The Albanese government can justly claim to have reasserted Commonwealth leadership on housing since its election in 2022. Media attention has focused mainly on the <a href="https://www.theguardian.com/australia-news/2023/sep/11/greens-support-labor-housing-australia-future-fund-albanese-government">legislative stoush</a> with the Greens over the Housing Australia Future Fund. But that’s only one element of a <a href="https://www.ppesydney.net/content/uploads/2023/12/4-Pawson.pdf">raft of initiatives</a> from Canberra over this time.</p>
<p>Many Australians have recently felt the impact of <a href="https://www.news.com.au/finance/economy/australian-economy/rents-continue-to-surge-in-major-capital-cities-adding-to-cost-of-living-pressures/news-story/1e66ad7c7d165d309fdbe39df30a8157">sharply rising rent</a> and <a href="https://www.theguardian.com/australia-news/2023/nov/07/interest-rate-rise-would-see-almost-half-of-australian-mortgage-holders-under-financial-stress#:%7E:text=Those%20on%20a%20typical%20mortgage,the%20cycle%20of%20hikes%20began.">mortgage payments</a> as <a href="https://www.ahuri.edu.au/research/brief/why-does-australia-have-rental-crisis-and-what-can-be-done-about-it">household numbers</a> and <a href="https://www.theguardian.com/australia-news/2023/nov/07/rba-interest-rates-rise-hike-november-official-cash-rate-announcement-reserve-bank-australia#:%7E:text=The%20RBA%20board%20on%20Tuesday,rate%20rise%20since%20May%202022.">interest rates</a> surged in the post-COVID period. However, several fundamental and enduring <a href="https://link.springer.com/book/10.1007/978-981-15-0780-9">housing problems</a> have been escalating for decades. These include:</p>
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<li><p>home ownership <a href="https://www.aihw.gov.au/reports/australias-welfare/housing-affordability">becoming less affordable</a></p></li>
<li><p>private rental housing receding <a href="https://www.anglicare.asn.au/publications/2023-rental-affordability-snapshot/">beyond the reach</a> of low-income households</p></li>
<li><p><a href="https://cityfutures.ada.unsw.edu.au/documents/689/Waithood_final.pdf">increasingly scarce</a> and <a href="https://www.aph.gov.au/DocumentStore.ashx?id=e856263b-8b5a-4627-8594-329f3aac1aae&subId=746019">deteriorating</a> social housing. </p></li>
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<p>To seriously confront these challenges, the government will need to expand its initiatives and tackle reforms of taxes and regulations, which it has avoided to date.</p>
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Read more:
<a href="https://theconversation.com/what-are-young-australians-most-worried-about-finding-affordable-housing-they-told-us-218426">What are young Australians most worried about? Finding affordable housing, they told us</a>
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<h2>Tackling housing on 4 fronts</h2>
<p>The government’s commitments so far can be largely broken down into four policy themes.</p>
<p><strong>1. Direct assistance for low-income groups</strong></p>
<p>The Housing Australia Future Fund is the largest initiative in this area. The goal is to fund <a href="https://blogs.unsw.edu.au/cityfutures/blog/2023/09/how-does-the-haff-add-up-unpacking-labors-10-billion-housing-australia-future-fund/">30,000 new social and affordable homes</a> over five years.</p>
<p>Under the <a href="https://ministers.treasury.gov.au/sites/ministers.treasury.gov.au/files/2022-10/national-housing-accord-2022.pdf">National Housing Accord</a>, another 10,000 affordable rental homes are funded over this period. </p>
<p>However, the unmet need for social and affordable housing <a href="https://cityfutures.ada.unsw.edu.au/social-and-affordable-housing-needs-costs-and-subsidy-gaps-by-region/">exceeds 600,000 units</a>, so these targets remain modest.</p>
<p>Also in the direct assistance category is the May budget’s one-off 15% boost to Commonwealth Rent Assistance. While accurately <a href="https://ministers.dss.gov.au/media-releases/12936">claimed</a> as “the largest increase in more than 30 years”, maximum payments remain far below market rents. As economist Bruce Bradbury <a href="https://theconversation.com/the-rent-crisis-is-set-to-spread-heres-the-case-for-doubling-rent-assistance-196810">argued</a>, the increase should have been 100%.</p>
<p>These initiatives are significant contributions to relieving rental stress when compared to the previous decade of federal inaction. However, that is a low bar.</p>
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<p><strong>2. Direct assistance to first-home buyers</strong></p>
<p>This batch of measures includes expansion of the Coalition-established low-deposit mortgage scheme, now branded the <a href="https://www.housingaustralia.gov.au/support-buy-home/first-home-guarantee">First Home Guarantee</a>. Qualifying first-home buyers can secure a home loan with a down-payment of only 5% of property value – rather than the standard 20% deposit.</p>
<p>There’s also the government’s <a href="https://www.theguardian.com/australia-news/2023/aug/20/labor-shared-equity-scheme-what-is-it-how-does-it-work-who-is-eligible">Help to Buy</a> proposal. Under this shared-equity model, government takes a 30-40% interest in a dwelling acquired by a qualifying home buyer. The buyer’s home loan and equity contribution are much smaller as a result.</p>
<p>But the government may battle to secure Senate approval for this scheme. The Coalition <a href="https://www.abc.net.au/news/2022-05-01/government-takes-aim-labor-election-housing-pitch/101028814">opposes it</a>, saying first-home buyers will dislike the idea of “[having Anthony] Albanese at the kitchen table with you, owning part of your home”. The Greens have <a href="https://login.wwwproxy1.library.unsw.edu.au/login?url=https://www.proquest.com/newspapers/grens-may-block-labor-scheme-first-home-buyers/docview/2792484570/se-2?accountid=12763">queried</a> the workability of proposed scheme rules. </p>
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<p><strong>3. Boosting housing supply</strong></p>
<p>The main push here has been the <a href="https://ministers.treasury.gov.au/sites/ministers.treasury.gov.au/files/2022-10/national-housing-accord-2022.pdf">National Housing Accord</a> agreed with state governments and others in late 2022. Signatories must do their best to enable construction of <a href="https://www.pm.gov.au/media/meeting-national-cabinet-working-together-deliver-better-housing-outcomes">at least 1 million homes</a> – and up to 1.2 million – from 2024 to 2029. This would increase current construction rates by about a third, so it’s a challenging target.</p>
<p>The modest federal investment in social and affordable homes supports the accord aspirations. </p>
<p>More importantly, A$3 billion in new federal funding for the <a href="https://www.pm.gov.au/media/meeting-national-cabinet-working-together-deliver-better-housing-outcomes">New Home Bonus</a> aims to “incentivise states and territories to undertake the reforms necessary to boost housing supply and increase housing affordability”. This approach appears to emulate recent efforts in <a href="https://researchbriefings.files.parliament.uk/documents/SN05724/SN05724.pdf">the UK</a> and <a href="https://liberal.ca/our-platform/1-4-million-new-homes/">Canada</a>.</p>
<p>It remains to be seen if this will work in Australia. There is reason to be sceptical about any strategy to make housing more affordable based on the belief that “inadequate” supply is largely due to planning restrictions. The main consideration for private developers and their financial backers is <a href="https://link.springer.com/book/10.1057/978-1-137-46403-3">expected market conditions</a> when newly built homes are to be sold.</p>
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Read more:
<a href="https://theconversation.com/councils-are-opening-the-door-to-tiny-houses-as-a-quick-affordable-and-green-solution-217267">Councils are opening the door to tiny houses as a quick, affordable and green solution</a>
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<p>If the prime minister is serious about achieving his government’s targets, he may need to consider more direct government involvement in housing production. Much greater social housing investment would be needed in any case to genuinely address the scale of unmet need. He might even contemplate a <a href="https://www.smh.com.au/politics/federal/labor-set-for-conference-housing-stoush-as-big-union-demands-super-profits-tax-20230724-p5dquf.html">union-sponsored proposal</a> to use a corporate super-profits tax to fund massively stepped-up social housing construction.</p>
<p>Equally, state and territory governments could look to revive the <a href="https://link.springer.com/book/10.1007/978-981-15-0780-9">state-commissioned build-for-sale programs</a> of the 1950s and 1960s. That is, homes built for sale at cost price on land owned by government or acquired for the purpose under compulsory powers.</p>
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Read more:
<a href="https://theconversation.com/to-deliver-enough-affordable-housing-and-end-homelessness-what-must-a-national-strategy-do-207120">To deliver enough affordable housing and end homelessness, what must a national strategy do?</a>
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<p><strong>4. Institutional reform</strong></p>
<p>Fragmented and inadequate policymaking capacity bears much of the blame for Australia’s weak record on housing in recent decades.</p>
<p>In response, the Albanese government has to its credit set up an expert panel, the <a href="https://nhsac.gov.au/">National Housing Supply and Affordability Council</a>, and a national housing agency, <a href="https://www.housingaustralia.gov.au/">Housing Australia</a>. However, Housing Australia has been designated as purely a delivery agency with no policymaking remit. This seems highly questionable – especially as the housing minister lacks her own department of government.</p>
<p>Even more concerning are <a href="https://insidestory.org.au/flawed-foundations/">indications</a> that the proposed National Housing and Homelessness Plan may <a href="https://johnmenadue.com/labor-offers-new-help-for-renters-and-first-homebuyers-pm-must-aim-higher/">fall far short</a> of providing a fit-for-purpose rationale for the government’s post-2022 initiatives and, more importantly, a meaningful framework for the much more ambitious reforms Australia badly needs.</p>
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Read more:
<a href="https://theconversation.com/homeless-numbers-have-jumped-since-covid-housing-efforts-ended-and-the-problem-is-spreading-beyond-the-big-cities-194624">Homeless numbers have jumped since COVID housing efforts ended – and the problem is spreading beyond the big cities</a>
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<h2>A promising start, but can do better</h2>
<p>In the first half of its term, the Albanese government made progress on almost all its election pledges on housing. It also brought forward other notable initiatives. This activity corresponds quite well with key dimensions of <a href="https://link.springer.com/book/10.1007/978-981-15-0780-9">Australia’s multi-faceted housing challenge</a>.</p>
<p>At the same time, announced measures are somewhat disparate and many are extremely modest alongside the scale of these problems. To make a real difference, they will need to be expanded and extended over a longer time. They must be complemented by tax and regulatory reforms as yet eschewed.</p>
<p>If the measures to date prove to be a down payment on ambitious and purposeful future action, they may come to be seen as significant. If not, policy analysts of the 2030s will deem them of little importance.</p>
<hr>
<p><em>This article draws on a fuller <a href="https://www.ppesydney.net/content/uploads/2023/12/4-Pawson.pdf">housing policy paper</a> published in a <a href="https://www.ppesydney.net/labor-in-government-a-new-special-issue-of-jape/">special issue</a> of the Journal of Australian Political Economy along with mid-term assessments of the Albanese government’s performance across a range of other policy areas.</em></p><img src="https://counter.theconversation.com/content/219389/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hal Pawson receives research funding from the Australian Research Council, from the Australian Housing and Urban Research Institute, from Queensland Council of Social Service, from the Lord Mayor's Charitable Fund, City of Melbourne, and from Crisis UK. He is also a non-Exec Director at Community Housing Canberra and a part-time unpaid advisor to ACT Senator David Pocock.</span></em></p>The government has made housing a federal policy priority after a decade of neglect. But the scale of the housing crisis means its actions to date are just a start – much more must be done.Hal Pawson, Professor of Housing Research and Policy, and Associate Director, City Futures Research Centre, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2190012023-12-10T19:07:54Z2023-12-10T19:07:54ZAustralia’s ‘deeply unfair’ housing system is in crisis – and our politicians are failing us<p>“The fact that one of the least populated countries on Earth contains the world’s second most expensive housing is a national calamity, and a stunning failure of public policy,” writes Alan Kohler, in <a href="https://www.quarterlyessay.com.au/essay/2023/11/the-great-divide">the latest Quarterly Essay</a>.</p>
<p>He doesn’t mince words. We are in a housing crisis – and it is a public policy failure of the biggest kind. This crisis is about more than housing: it is a social and economic crisis, creating a society defined by inherited wealth. </p>
<hr>
<p><em>Review: Quarterly Essay 92: The Great Divide – Australia’s Housing Mess and How to Fix It by Alan Kohler (Black Inc.)</em></p>
<hr>
<p>This has not happened overnight. Kohler maps out 70 years of housing public policy in Australia, starting with changes to the Commonwealth and State Housing Agreement in 1954, when the program was redirected to support home ownership by forcing the states to sell much of what was being built.</p>
<p>By 1971, approximately 40% of the houses built by the Commonwealth State Housing Agreement – which had included 96,000 in its first decade, from 1945 to 1955 – had been sold.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=424&fit=crop&dpr=1 600w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=424&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=424&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=533&fit=crop&dpr=1 754w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=533&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/564403/original/file-20231207-21-xo2nvq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=533&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">After 1954, Australia sold much of its public housing. This public housing in Brisbane was built around 1950.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Queensland_Housing_Commission#/media/File:BrisbaneSuburbanOuthouses1950.jpg">John Oxley Library, State Library of Queensland</a></span>
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</figure>
<p>These changes have led to a generational fracture in housing pathways and a breakdown in one of the key pillars that defined Australia’s welfare state in the 20th century. </p>
<p>Somewhat refreshingly, Kohler captures a sentiment many of us with newly minted mortgages or stuck in private rental know, deep down: Australia’s housing system is in crisis, it is deeply unfair and our politicians are failing us. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/friday-essay-how-policies-favouring-rich-older-people-make-young-australians-generation-f-d-199403">Friday essay: how policies favouring rich, older people make young Australians Generation F-d</a>
</strong>
</em>
</p>
<hr>
<h2>‘Housing is a human right’</h2>
<p>Kohler argues the seeds of the problems we now face were established not long after the second world war, when, as he points out, the Australian government was directly funding the delivery of over 50,000 dwellings annually. Over half a century, the decline in government support for the development of new housing – and in particular for new public housing – underlies the current crisis.</p>
<p>In 1947, just 53.4% of Australians owned a home. By 1966, this had risen to 71.4%. Robert Menzies, prime minister from 1949 to 1966, claimed the credit. Now, in 2023, it’s dropped to around 66%.</p>
<p>But, Kohler says, the credit Menzies claimed for expanding access to housing is “unjustified” – instead, he and his Minister for Social Services, Bill Spooner, “destroyed” public housing and “set the scene for decades of mistakes by their successors in the Coalition”.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/564166/original/file-20231207-17-kvs0p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In 1966, 71.4% of Australians owned a home. Now, it’s around 66%.</span>
<span class="attribution"><span class="source">Tom Rumble/Unsplash</span></span>
</figcaption>
</figure>
<p>The subversion of the public housing program from the mid-50s onwards, reflecting the conservative and nationalist agenda of the Menzies government that instigated it, shifted the policy position on public housing from being a key plank in the building of a modern nation, to one of residual welfare. Kohler makes the case that “housing is not welfare, it’s an economic right”. </p>
<p>Housing is more than that: it is a human right. The wider point though, is that housing and housing policy is integral to the economic welfare of all Australians – and only considering it in terms of social welfare, a policy space that has suffered from malign neglect over half a century, has consigned housing policy to the wilderness. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/insecure-renting-ages-you-faster-than-owning-a-home-unemployment-or-obesity-better-housing-policy-can-change-this-216364">Insecure renting ages you faster than owning a home, unemployment or obesity. Better housing policy can change this</a>
</strong>
</em>
</p>
<hr>
<h2>Tax reduction and capital gains</h2>
<p>While the conditions may have been set long ago, the key changes that culminated in this affordability crisis began around 2000. Discounts on capital gains, <a href="https://www.theage.com.au/opinion/revenge-bloodymindedness-and-gullibility-the-untaxing-of-capital-gains-20150810-giv8zg.html">introduced by the Howard government</a> in 1999, lit the fuse on this housing bonfire. </p>
<p>The tax and wealth advantages of property investing were so beneficial, it unleashed a tidal wave of demand in housing. High-income-earners in particular could reduce tax on their income, then get a kicker on capital gains later. Kohler notes that these changes have meant:</p>
<blockquote>
<p>whereas in the rest of the world investing in real estate is all about getting rental income from tenants, in Australia it’s about getting an income tax deduction and then capital gain.</p>
</blockquote>
<p>The charts presented in the essay can almost pinpoint the exact moment these changes passed through parliament (see below). Dwelling prices detached themselves from income growth. </p>
<p>Since 2000, there has been a 6% component growth in dwelling values, compared with only 3% for incomes. Prices are so detached from incomes, it is no longer possible for the average earning household to afford the average house. </p>
<h2>Housing now defines class</h2>
<p>As the essay’s title suggests, Kohler makes the case that over the past 30 years, public policy has created a society increasingly defined and divided by inherited wealth. Wealth is now determined, he argues, by two things: where you live, and the house you inherit from your parents. </p>
<p>There are two important dimensions to this. The first is that wealth (and wealth creation) has been deeply embedded in housing ownership. Lisa Adkins, Melinda Cooper and Martijn Konings at the University of Sydney have termed this the <a href="https://www.wiley.com/en-us/The+Asset+Economy-p-9781509543458">“asset economy”</a> and argue new class positions are being defined through housing assets. </p>
<p>Traditionally, class was often defined through the type of job you did. Now, it is increasingly defined by how much property you own. Renters of course, don’t even get a look-in. This change really got underway from the mid-1980s, led by the then-Labor government through financial deregulation, broad privatisation of urban services and residualisation of welfare. </p>
<p>Secondly, opportunity is now no longer tied to education and hard work: it’s now inherited. The simple arithmetic on the historical trends Kohler presents exposes how the scale of the problem has shifted since the 1990s. The median price of housing has grown from around three times the median income in 1990 to around eight times in 2023. </p>
<p>For housing to be affordable, house prices would need to halve, or incomes would need to grow at 4% per year for 20 years, while house prices stayed the same. Neither is likely. As <a href="https://dx.doi.org/10.18408/ahuri7327301">our recent research</a> has shown, the problem is so extreme that in places like Sydney, the only pathway to ownership is through inherited wealth and the bank of Mum and Dad.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/564160/original/file-20231207-15-tzvzwq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">In places like Sydney, the only path to home ownership is inherited wealth.</span>
<span class="attribution"><span class="source">Ketut Subiyanto/Pexels</span></span>
</figcaption>
</figure>
<h2>Housing: ‘a cartel of the majority’</h2>
<p>Many of the broad threads of this essay were on point. They lay out how policy has not only failed to address housing problems, but actively created them. There were, however, some contradictory moments. </p>
<p>The first was around housing supply. After noting the key historical threads, Kohler points the finger at recalcitrant planners for blocking development. But planners, as he points out, “do not build housing, developers do”. Moreover, he acknowledges the whole “property development business model favours selling apartments to individual investors who can pay more”. </p>
<p>Blaming planners is not new, but it ultimately misses the point. <a href="https://osf.io/r925z/download">A recent analysis</a> suggested there were over 100,000 approved but unbuilt dwelling units in Australia between 2012 and 2000. The supply system itself is now thoroughly geared to capital flowing from investors. If developers cannot sell to them, or simply cannot make enough profit, the banks won’t lend and developers won’t build. </p>
<p>As Kohler notes, the politics of this is simple:</p>
<blockquote>
<p>housing is a cartel of the majority, with banks and developers helping them maintain high house prices with the political class actively supporting them.</p>
</blockquote>
<p>Even if financing constraints could be overcome and developers could build what they liked, <a href="https://www.rba.gov.au/publications/rdp/2019/2019-01.html">the Reserve Bank Australia itself</a> noted this would only drop prices by about 2.5%. When prices rose by 25% in 2021, this hardly seems revolutionary. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/564174/original/file-20231207-19-ktq6on.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/564174/original/file-20231207-19-ktq6on.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/564174/original/file-20231207-19-ktq6on.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=843&fit=crop&dpr=1 600w, https://images.theconversation.com/files/564174/original/file-20231207-19-ktq6on.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=843&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/564174/original/file-20231207-19-ktq6on.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=843&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/564174/original/file-20231207-19-ktq6on.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1059&fit=crop&dpr=1 754w, https://images.theconversation.com/files/564174/original/file-20231207-19-ktq6on.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1059&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/564174/original/file-20231207-19-ktq6on.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1059&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption"></span>
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<p>The real issue of supply is exposed in the essay, but unfortunately not returned to in the resolution. <a href="https://cityfutures.ada.unsw.edu.au/social-and-affordable-housing-needs-costs-and-subsidy-gaps-by-region/">Our recent analysis</a> showed Australia would need to deliver around 45,000 social housing dwellings per year for 20 years to meet the current backlog in demand. </p>
<p>When Commonwealth and state governments managed to create over 50,000 dwellings in 1950, when the population was one third what it is today, meeting today’s need should not be a problem. But the current government ambition is just 30,000 over five years – which is woeful. Even if those numbers are delivered, the share of social housing will still be going backwards. </p>
<p>There is much to like in this essay, which clearly demonstrates that the current housing crisis is about so much more than the shelter it represents. </p>
<p>Housing is deeply implicated in the very idea of what it means to be Australian and the egalitarian values many Australians hold dear. Unfortunately, the inequalities that are emerging are cementing new class inequalities – now, your chances in life will be completely dependent on the family you were born into. </p>
<p>The sooner we realise this, the sooner there can be a collective reflection. We need to ask: is that what we really want?</p><img src="https://counter.theconversation.com/content/219001/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laurence Troy receives funding from the the Australian Research Council (ARC), and the Australian Housing and Urban Research Institute (AHURI). </span></em></p>Alan Kohler’s Quarterly Essay lays out how the policies of successive governments have not only failed to address housing problems, but actively created them.Laurence Troy, Senior Lecturer in Urbanism, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2185202023-12-03T19:17:00Z2023-12-03T19:17:00ZWe all know about JobKeeper, which helped Australians keep their jobs in a global crisis. So how about HomeKeeper?<figure><img src="https://images.theconversation.com/files/562302/original/file-20231129-17-znejzh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Bipartisan support for temporary extra government spending to preserve businesses and jobs through JobKeeper was one of the few positive outcomes from the COVID-19 pandemic.</p>
<p>Recognition that the long-term damage caused by short-term economic crises far exceeds the cost of temporary government spending to avoid it underpinned that consensus.</p>
<p>It’s worth considering now whether the same logic could be applied to create a “HomeKeeper” program, especially given Reserve Bank Governor <a href="https://www.theguardian.com/australia-news/2023/nov/22/rba-governor-michele-bullock-inflation-interest-rates-speech">Michele Bullock’s recent message</a> that interest rates could stay higher for longer than expected. </p>
<p>JobKeeper kept businesses open and preserved jobs during the short pandemic economic chasm. </p>
<p>Equally, HomeKeeper could help financially stressed mortgagors avoid losing their homes during the current interest rate crunch, and stop them joining already too-long rental queues – or worse, becoming homeless.</p>
<p>Government could apply vital lessons from JobKeeper’s design flaws too, making HomeKeeper a winner not just for vulnerable mortgagors but for the government’s balance sheet too. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/562838/original/file-20231130-21-agbx3d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/562838/original/file-20231130-21-agbx3d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/562838/original/file-20231130-21-agbx3d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/562838/original/file-20231130-21-agbx3d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/562838/original/file-20231130-21-agbx3d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/562838/original/file-20231130-21-agbx3d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/562838/original/file-20231130-21-agbx3d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A recent survey found that over 30% over mortgage holders were experiencing stress with their repayments.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<h2>How a ‘HomeKeeper’ scheme could work</h2>
<p>Rather than loans or handouts, the government could take a small equity stake in the property, equal to the value of the mortgage aid as a proportion of the property’s market value at that time. </p>
<p>The idea is to give those experiencing mortgage stress a little breathing space to recapitalise and get them through until interest rates ease without having to lose their homes. Up to $25,000 in assistance per family would be a reasonable ceiling.</p>
<p>It would work like this. Say, for example, someone has a $500,000 mortgage and their monthly repayment is $5,000. They could apply for HomeKeeper assistance for five months (reaching the $25,000 cap). In return, the government would get a 5% equity stake in their house. This could also be taken out as partial assistance, depending on the home owner’s needs.</p>
<p>Then, when the owner is able to pay back the government’s stake, or when the house is sold – whichever is sooner – the government is paid back the market value of the equity stake at that time.</p>
<p>These equity stakes could be held in a government “housing trust” until repaid on market terms. This would reflect growth in the property’s capital value and make it a sound investment for taxpayers. </p>
<p>By keeping the maximum size of the stake low, the help would matter most to families on low incomes in modest homes. Relative to the size of their mortgage, it would be significant assistance, and might mean the difference between keeping the family home or having to sell.</p>
<p>Mortgage payments could be dispatched directly from the government to the relevant bank with the mortgagor’s permission, to ensure the funds are applied on time and for the agreed purpose.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-happens-if-i-cant-pay-my-mortgage-and-what-are-my-options-188891">What happens if I can't pay my mortgage and what are my options?</a>
</strong>
</em>
</p>
<hr>
<h2>Why is a HomeKeeper program necessary?</h2>
<p>Australia has a crude system for identifying mortgage stress. </p>
<p>In research after the Global Financial Crisis (GFC), Western Sydney University’s <a href="https://www.westernsydney.edu.au/__data/assets/pdf_file/0019/140536/mortgage_distress_report-webversion_hires.pdf">Urban Research Centre found a range of partial</a>, sometimes indirect measures using “inconsistent categories”. </p>
<p>There is “often a failure to disaggregate between wealthy and poorer households”, it said. In other words, government tends to cite the overall picture instead of the specific situation of different types of mortgagors.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/562307/original/file-20231129-25-boohnv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/562307/original/file-20231129-25-boohnv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/562307/original/file-20231129-25-boohnv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/562307/original/file-20231129-25-boohnv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/562307/original/file-20231129-25-boohnv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/562307/original/file-20231129-25-boohnv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/562307/original/file-20231129-25-boohnv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A HomeKeeper scheme could mean the difference for some people between keeping their home or having to sell.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>There is also often the casual assumption that because Australia has full employment, people won’t have trouble meeting their mortgage payments.</p>
<p>“Most households, because employment is so strong and unemployment is so low, they seem to be coping,” ANU economist <a href="https://www.afr.com/policy/economy/sydney-and-melbourne-lead-the-nation-in-mortgage-stress-rba-20231002-p5e923">Ben Phillips told the Australian Financial Review</a> last month.</p>
<p>Phillips conceded, though, that Australia doesn’t have meaningful, up-to-date financial stress indicators. “Various measures such as arrears, insolvency, savings and so on are partial measures or measures that are perhaps too late in the game,” he said. </p>
<p>So the picture is opaque, and lags. The early 1990s recession showed how <a href="https://www.abc.net.au/news/2020-07-08/1990s-recession-shows-there-is-no-quick-road-to-recovery/12431398">immense damage can already happen</a> by the time governments realise its dimensions.</p>
<p>This eventually had devastating consequences for the Labor government that oversaw it.</p>
<p>The then prime minister, Paul Keating, won the 1993 election immediately after the recession, up against the crusading neoliberal opposition leader, John Hewson, who had proposed a big new goods and services tax.</p>
<p>But Labor lost the following election in a landslide as voters, in Queensland premier Wayne Goss’s words, sat “on their verandahs with baseball bats” waiting to vote the Keating government out.</p>
<p>Banks classify loans as “delinquent” when mortgage payments are in arrears. NAB chief executive <a href="https://www.smh.com.au/business/banking-and-finance/nab-anz-see-few-signs-of-mortgage-stress-despite-rate-rises-20230712-p5dnm8.html">Ross McEwan told federal parliament</a>’s House Standing Committee on Economics in July that NAB was seeing “some stress in the system” and an “uptick in 30, 60 and 90-day delinquencies”, but said they remained below the ten-year average. </p>
<p>However, not all mortgagors are equal. </p>
<p>AMP senior economist <a href="https://www.amp.com.au/insights-hub/blog/investing/econosights-mortgage-stress-in-australia#">Diana Mousina said in March</a> that “the downside risks to the household sector are greater than the RBA, and most commentators, are estimating”. </p>
<p>Mousina drew attention to Australia’s record household debt as a proportion of household disposable income, upping the scope for financial stress considerably, and also to the particular vulnerability of one kind of borrower.</p>
<blockquote>
<p>In our view, the risk of mortgage stress lies with recent borrowers who have taken out loans between 2020 and mid-2022, which is around 62% of outstanding housing loans.</p>
<p>These households have not had time to build prepayment buffers […] have had a very fast repricing of mortgage rates, are more likely to have taken out larger loans and were probably not stress-tested for the current increase in interest rates.</p>
</blockquote>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/homeowners-often-feel-better-about-life-than-renters-but-not-always-whether-you-are-mortgaged-matters-215147">Homeowners often feel better about life than renters, but not always – whether you are mortgaged matters</a>
</strong>
</em>
</p>
<hr>
<h2>Helping those who don’t have access to the ‘Bank of Mum and Dad’</h2>
<p>Anecdotal evidence and logic suggest there’s another vulnerable group in addition to the one identified by Mousina: working-class mortgagors.</p>
<p>The “Bank of Mum and Dad” in middle- and upper-income families <a href="https://www.afr.com/companies/financial-services/the-bank-of-mum-and-dad-is-good-for-70-000-new-analysis-concludes-20231129-p5enpp">has for some time helped offspring buy their first home</a>.</p>
<p>A recent further development is the Bank of Mum and Dad providing assistance to help their offspring avoid mortgage delinquency in another intergenerational transfer of wealth among the well-off. </p>
<p>But there’s often no Bank of Mum and Dad for working-class mortgagors, who lack families with accumulated wealth to turn to for help.</p>
<p>HomeKeeper could be the government equivalent to the Bank of Mum and Dad for working-class families trying to hold onto their homes until interest rates ease.</p>
<h2>What are the likely objections?</h2>
<p>Three main objections are likely.</p>
<p>The first is that there’s no evidence there’s a problem whose solution requires something like HomeKeeper. However, current indicators are partial, inconsistent and lag, so over-reliance on them is risky – and there are signs there really is a problem.</p>
<p>The latest <a href="https://www.roymorgan.com/findings/mortgage-stress-risk-october-2023-2">Roy Morgan survey of stress</a> among owner-occupied mortagees showed near-record numbers of people “at stress”, numbering 1,514,000, or over 30% of mortgage holders. Nearly a million of them (967,000) are considered “extremely at risk”.</p>
<p>RedBridge pollster Kos Samaras has been regularly drawing attention to the extent of mortgage stress in social media posts all year.</p>
<p>By mid-2023, Samaras says, “over 1.1 million borrowers in just NSW and Victoria were experiencing negative cash flow” – that is, “income not enough to meet repayments and other expenses”.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1728875825003712944"}"></div></p>
<p>The second objection is that there have been assistance schemes in the past and they haven’t worked very well.</p>
<p>It’s true there have been some small fragmentary schemes, but never one on a JobKeeper-type scale, or with a JobKeeper-level public profile, or with the sound finance characteristics of using equity stakes rather than loans or handouts to fund it. </p>
<p>HomeKeeper would be different in kind, scale, profile and fiscal responsibility from any previous mortgagor-assistance program.</p>
<p>The third potential objection is that it would undermine the impact higher interest rates are designed to have – namely, to restrain household spending – and that interest rates would have to remain higher for longer to make up for that.</p>
<p>This misses an important point.</p>
<p>Radiation treatment for cancer used to involve obscenely large amounts of radiation over diffuse areas to achieve the desired goal, doing massive collateral damage in the process. </p>
<p>Over time, medical scientists refined their techniques and learned how to achieve the desired result using much less radiation confined to much more targeted areas. These days it’s a very precise science.</p>
<p>There’s no reason monetary policy shouldn’t undergo a similar evolution, becoming less blunt, more targeted and causing less collateral damage in the way it achieves the necessary goal of low inflation.</p>
<p>Working-class mortgagors are not the ones whose spending need to be restrained in the current inflationary environment. They shouldn’t be collateral damage in the RBA’s crusade to tame inflation.</p>
<p>A program like HomeKeeper could make the difference between them keeping or losing their homes, in a way that’s good for them and their families, and at the same time a sound investment for taxpayers.</p>
<hr>
<p><em>Correction: the definitions of mortgagee and mortgagor were inverted in an earlier version of this article.</em></p><img src="https://counter.theconversation.com/content/218520/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Chris Wallace has received funding from the Australian Research Council. </span></em></p>Applying the logic of JobKeeper to create a HomeKeeper program could save a lot of working-class mortgagors from losing their homes.Chris Wallace, Professor, School of Politics Economics & Society, Faculty of Business Government & Law, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2130022023-10-31T16:47:08Z2023-10-31T16:47:08ZWhy it’s so hard to be young in Britain right now<figure><img src="https://images.theconversation.com/files/556109/original/file-20231026-28-s9l4ee.jpg?ixlib=rb-1.1.0&rect=82%2C49%2C5420%2C3555&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/young-female-her-unemployed-husband-many-587565332">Cast of Thousands/Shutterstock</a></span></figcaption></figure><p>If you’re taking the first steps in your career right now, you’re doing so in the face of a high cost of living and an increasingly inaccessible housing market. You may well be facing the reality that you will be <a href="https://www.ucl.ac.uk/ioe/news/2018/nov/younger-people-could-be-worse-their-parents-generation-their-whole-lives">worse off</a> than your parents’ generation.</p>
<p>The UK’s youth (15-24) unemployment rate fell from almost 15% in September 2020 to 9% in August 2022, but is <a href="https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/timeseries/mgwy/lms">now rising again</a> reaching 12.7% in July this year. This is higher than the average for developed economies and much higher than the likes of <a href="https://data.oecd.org/unemp/youth-unemployment-rate.htm">Germany and Japan</a>.</p>
<p>There is also a serious gender disparity – one of the <a href="https://data.oecd.org/unemp/youth-unemployment-rate.htm">highest</a> among developed countries. The <a href="https://www.statista.com/statistics/280329/youth-unemployment-rate-by-gender-uk/#:%7E:text=Youth%20unemployment%20rate%20in%20the%20UK%201992%2D2023%2C%20by%20gender&text=As%20of%20the%20second%20quarter,and%209.8%20percent%20for%20women.">unemployment rate</a> among young males (14.6%) is significantly higher than females (9.8%). </p>
<p>This is even more pronounced in some regions. For example, in the West Midlands, young men are more than two and half times more likely to be unemployed than women. Young men, in particular, have a <a href="https://archive.discoversociety.org/2020/04/01/its-not-like-that-anymore-young-men-searching-for-work-in-the-service-economy/">harder</a> time finding work during tough economic times.</p>
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<figure class="align-right ">
<img alt="Quarter life, a series by The Conversation" src="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em><strong><a href="https://theconversation.com/uk/topics/quarter-life-117947?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">This article is part of Quarter Life</a></strong>, a series about issues affecting those of us in our twenties and thirties. From the challenges of beginning a career and taking care of our mental health, to the excitement of starting a family, adopting a pet or just making friends as an adult. The articles in this series explore the questions and bring answers as we navigate this turbulent period of life.</em></p>
<p><em>You may be interested in:</em></p>
<p><em><a href="https://theconversation.com/make-new-friends-and-become-a-role-model-why-you-should-consider-volunteering-if-youre-in-your-20s-or-30s-209939?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">Make new friends and become a role model: why you should consider volunteering if you’re in your 20s or 30s</a></em></p>
<p><em><a href="https://theconversation.com/girl-math-may-not-be-smart-financial-advice-but-it-could-help-women-feel-more-empowered-with-money-211780?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">‘Girl math’ may not be smart financial advice, but it could help women feel more empowered with money</a></em></p>
<p><em><a href="https://theconversation.com/why-young-workers-are-leaving-fossil-fuel-jobs-and-what-to-do-if-you-feel-like-climate-quitting-214759?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">Why young workers are leaving fossil fuel jobs – and what to do if you feel like ‘climate quitting’</a></em></p>
<hr>
<p>The number of young people not in education, employment or training is <a href="https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment/bulletins/youngpeoplenotineducationemploymentortrainingneet/august2023">estimated</a> to be 11.6%. The pandemic has led to fewer opportunities for young people to get into work, such as <a href="https://researchbriefings.files.parliament.uk/documents/SN06113/SN06113.pdf">apprenticeships</a>, and <a href="https://www.oxfordcollege.ac/news/skills-gap-statistics-uk/">skills gaps</a> are making it hard to break into a number of industries. </p>
<p>And new figures show that the number of young people unable to work due to long-term sickness has <a href="https://www.telegraph.co.uk/news/2023/10/17/britain-long-term-sickness-under-35s-over-50s/">drastically increased</a> since the pandemic.</p>
<h2>The problems with youth unemployment</h2>
<p>This is not just a concern for people currently trying to find work, but has repercussions for the economy overall. Higher rates of unemployment and inactivity among youth adversely affect long-term wages and productivity. It can also lead to wider socioeconomic consequences, including a high <a href="https://www.london.gov.uk/press-releases/mayoral/driving-factors-behind-violence-affecting-young-pe">crime rate</a>. </p>
<p>A recent study by PwC, an accounting firm, suggests that reducing the UK youth unemployment rate by just 5% (bringing it in line with the German level) would boost the economy by <a href="https://www.pwc.co.uk/press-room/press-releases/pwc-youth-employment-index-2022.html">£38 billion</a>. The government has committed to investing in <a href="https://www.gov.uk/government/news/government-outlines-ambitious-plans-to-level-up-activities-for-young-people">youth services</a> in an effort to boost employability, but clearly this doesn’t go far enough. </p>
<p>The UK could look to other countries for inspiration on how to address this. Germany has a strong <a href="https://www.expatrio.com/studying-germany/german-education-system/german-dual-apprenticeship-system">dual apprenticeship system</a> and Australia’s <a href="https://www.dewr.gov.au/work-dole">work for the dole</a> programme have both helped youth employment in these countries. </p>
<p>A further problem is that so many young people who are employed are <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/theoccupationsmostdependentonolderandyoungerworkers/2023-05-31#:%7E:text=Retail%20was%20the%20largest%20type,working%20in%20retail%20(13%25).">dependent on work</a> in low-paid sectors like retail and hospitality. <a href="https://www.sciencedirect.com/science/article/pii/S0167268122001299">These sectors</a> do not see higher increases in wages even if there are productivity increases, and do not have a great prospect of career progression. </p>
<h2>The challenge of home ownership</h2>
<p>There has been a substantial <a href="https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2023">increase</a> in house prices in the UK in recent decades, particularly in big cities where young people seek job opportunities. The average house price in London is <a href="https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2023">estimated</a> to be well over £500,000, more than three times the price in the north-east of England. </p>
<p>The rising house prices, <a href="https://theconversation.com/why-wages-should-keep-up-with-inflation-the-economic-case-for-getting-a-pay-rise-186851">stagnating wages</a> and increase in mortgage rates have made it <a href="https://ifs.org.uk/books/barriers-homeownership-young-adults">almost impossible</a> for many young people to step on the property ladder. The average age of first-time buyers is <a href="https://www.money.co.uk/mortgages/first-time-buyer-mortgages/statistics">around 33</a>, a two-year increase compared with pre-pandemic estimates.</p>
<p>Decreasing home ownership has been a problem for young people in the <a href="https://www.weforum.org/agenda/2022/01/younger-generations-homeownership-housing-market-wealth-inequality/">US and Europe</a> too. But home ownership among young people in the UK is <a href="https://www.oecd.org/housing/no-home-for-the-young.pdf">lower</a> than the OECD average. And with mortgage rates not <a href="https://theconversation.com/why-mortgage-rates-will-not-return-to-recent-lows-any-time-soon-201619">expected</a> to come down in the near future, the outlook remains bleak.</p>
<h2>Steps you can take</h2>
<p>Almost <a href="https://www.thersa.org/reports/young-peoples-economic-security">half</a> of the population aged 16-24 are in financially precarious positions, and many are in debt. The <a href="https://www.thersa.org/globalassets/_foundation/new-site-blocks-and-images/reports/2022/01/cost_of_independence.pdf">numbers</a> are stark: 50% of those aged 16-18, 75% of those aged 19-21 and 80% of those aged 22-24 are in debt. While a good chunk of this is for study-related loans, it also includes buy-now-pay-later schemes, personal loans and overdrafts. </p>
<p>This speaks to the challenges posed by the cost of living crisis, but also the lack of financial literacy, budgeting and planning habits among young people. According to a recent <a href="https://mybnk.b-cdn.net/wp-content/uploads/2023/05/Report-Summary-Document.pdf">survey</a> by Compare the Market, only 41% of young people are financially literate. </p>
<p>While it won’t mitigate the wider economic problems, you can take <a href="https://www.alanboswell.com/news/financial-tips-for-young-adults-some-of-the-key-tricks-to-help-secure-a-stable-future/#Prioritise%20your%20debts">small steps</a> to improve your financial skills by tracking spending, prioritising debts and wisely using credit cards. It is important to be aware of misinformation, including <a href="https://theconversation.com/scams-and-cryptocurrency-can-go-hand-in-hand-heres-how-they-work-and-what-to-watch-out-for-182033">cryptocurrency scams</a> and <a href="https://theconversation.com/get-rich-quick-schemes-pyramids-and-ponzis-five-signs-youre-being-scammed-205798">get-rich-quick schemes</a>. </p>
<p>The government could also play a role through compulsory financial education. As the Confederation of British Industry has also <a href="https://www.cbi.org.uk/articles/how-can-government-and-business-improve-the-uk-s-financial-literacy/">suggested</a>, there is a need for a national strategy, working with industry and other private sector partners to improve financial literacy and awareness.</p><img src="https://counter.theconversation.com/content/213002/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Youth unemployment is on an upward trajectory.Kausik Chaudhuri, Senior Lecturer in Economics, University of LeedsMuhammad Ali Nasir, Associate Professor in Economics, University of LeedsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2131002023-09-26T13:42:16Z2023-09-26T13:42:16ZThe family home in South African townships is contested – why occupation, inheritance and history are clashing with laws<p>During apartheid, black South Africans could not own land – and therefore their homes – in what were classified as “white” cities. In racially segregated townships, living in “family houses” and passing them on depended officially on a <a href="https://journals.co.za/doi/pdf/10.10520/AJA02586568_844#page=5">range of permits</a>. These were usually to rent from state authorities, but in some cases confusingly to build or buy a house without owning the plot underneath it, which was owned by the state.</p>
<p>A crucial measure in undoing apartheid was transferring ownership of township houses to their long-term residents. <a href="https://journals.co.za/doi/pdf/10.10520/AJA02586568_844#page=8">In 1986</a>, a few years before apartheid’s end, the law changed to enable outright ownership for black people in urban areas. Subsequently, processes for transfer on a large scale were established.</p>
<p>This massive redistribution of public housing stock, alongside legal change, involved hundreds of thousands of homes. Township houses were now assets. The promise was improved security, rights, and inclusion in the property market.</p>
<p>But change did not necessarily give families greater security. Some family members benefited while others were left vulnerable. That is because the transfers – and the legal definitions of property and inheritance – do not account for how many people understand their homes: collective and cross-generational, available to an extended lineage.</p>
<p>This has led to confusion and heartache for hundreds of thousands of people. That confusion, I showed <a href="https://academic.oup.com/afraf/article/120/479/219/6132108">in a paper in 2021</a>, extended to encounters with state administration, which can become the stage on which family disputes are played out.</p>
<p>As I argued in another <a href="https://www.tandfonline.com/doi/full/10.1080/02587203.2019.1632737">paper</a>, with Tshenolo Masha, these understandings of home and kinship warrant legal recognition – indeed, constitutional recognition – as urban custom. Various state officials have taken seriously the collective ownership of family houses, as a matter of customary norms and practice, through administration and court judgments. But they face the rigid limits of existing law.</p>
<p>The family house is central but effectively legally invisible, leaving many people uncertain about what it even means to own or inherit.</p>
<h2>Collective home but individual property</h2>
<p>For many residents, family houses belong collectively to multi-generational lineages. Often, a group of siblings is at the core – the children of an earlier, typically male, household head. Family members might build extra structures on the site to live in. Or they might come and go, but the home is a place to return to. The family house is defended as customary, drawing parallels with the rural homestead.</p>
<p>By the end of apartheid <a href="https://www.britannica.com/question/How-did-apartheid-end">in 1994</a>, regulation was patchy at best, but the occupancy permits were understood to affirm group entitlement because they listed family members, not just the householder.</p>
<p>In statutory law, at stake is an asset with one or more named owners – an indivisible plot or <a href="https://www.saflii.org/za/legis/consol_act/dra1937172/">“erf” of land</a> that includes its built structures. Owners can sell, or they can evict; other occupants have no legal right to stop them. When family houses were transferred, one person was generally registered as owner.</p>
<p>In some cases, the allocation to the registered householder was automatic. In others, there were hearings, but even here residents found their ideas of home and ownership marginalised. A family member would come forward as family “representative” and “custodian” of the collective home. But that representative would typically become the sole titleholder.</p>
<p>In many cases, relatives were unaware that this had happened, or even that an application for title had been made.</p>
<h2>Inheritance: an added layer of complexity</h2>
<p>Inheritance has added another layer to the problem.</p>
<p>Under apartheid there were separate inheritance rules for black people without wills. These were finally struck down by the Constitutional Court in <a href="https://www.saflii.org/za/cases/ZACC/2000/27.html">2000</a> and <a href="http://www.saflii.org/za/cases/ZACC/2004/17.html">2004</a>. Magistrates’ courts were replaced by the dedicated inheritance office, the <a href="https://www.justice.gov.za/master/">Master of the High Court</a>. Inheritance by the eldest son was replaced by rules for all South Africans, prioritising spouses and children in nuclear families.</p>
<p>Once again, essential redress had the effect of narrowing which relationships would be recognised. When a custodian died, wider family members first discovered that they were not collective owners; then they realised they would not even inherit.</p>
<p>The family house is not a static idea in fights over the home. Warring parties may draw on both customary and legal concepts, sometimes at the same time. Among families that approach the state – and many do not – some subsequently drop out of official process. </p>
<p>There is <a href="https://academic.oup.com/afraf/article/120/479/219/6132108">no simple consensus</a> about who gets what or about how this should be decided.</p>
<h2>Efforts to resolve the issue</h2>
<p>The family house is contested, yet it is key to arguments about what is fair – based not just on who owns, but on the nature of ownership.</p>
<p>State officials have repeatedly tried to make the system more responsive. In Gauteng province, where Johannesburg is located, housing tribunals were set up in the late 1990s to decide ownership and to broker family house rights agreements. They were intended to prevent custodians from selling houses or evicting relatives. But it turned out that they held no legal water: from the point of view of deeds registration, custodians’ <a href="https://academic.oup.com/afraf/article/120/479/219/6132108">ownership was unrestricted</a>. </p>
<p>In the Master’s Office, where inheritance is administered, kin complain that their family home somehow became the property of one relative. In Johannesburg, officials <a href="https://academic.oup.com/afraf/article/120/479/219/6132108">try to explain the law</a>, while where appropriate querying how title came to be acquired.</p>
<p>What they cannot do, though, is change the rules.</p>
<p>The courts, too, have highlighted problems with rigid law and procedure. In a 2004 Constitutional Court <a href="http://www.saflii.org/za/cases/ZACC/2004/17.html">decision on inheritance</a>, a dissenting judge warned that customary understandings of home and custodianship risked being sidelined by standardisation.</p>
<p>More recently in 2018, automatically upgrading householders to owners was <a href="http://www.saflii.org/za/cases/ZACC/2018/42.html">declared unconstitutional</a>.
Men were usually documented as householders under apartheid, and gender discrimination was extended by giving them exclusive property rights. </p>
<p>Other judgments recognise the spirit of collective belonging and access, and they stop individuals from taking the house out of the families’ hands by inheritance or sale. But they cannot make legislation, so they send the question of who owns the house back to a tribunal.</p>
<p>Once again, solutions are restricted to workarounds.</p>
<h2>Towards legal recognition</h2>
<p>In 2022, the <a href="http://www.saflii.org/za/cases/ZAGPPHC/2022/441.html#_ftnref78">Shomang judgment</a> in the North Gauteng High Court called for legally recognising the family house. </p>
<p>A sufficiently flexible notion of family title would be challenging to work out, and doubtless the basis for countless disputes. Surviving spouses need as much protection as the siblings in a lineage. But it would enable administrators and judges to mediate disputes in terms recognisable to the families involved. And to offer more than ad hoc workarounds.</p><img src="https://counter.theconversation.com/content/213100/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Maxim Bolt's research was funded by the Economic and Social Research Council of the UK. </span></em></p>The transfer of township rental houses to inhabitants did not necessarily give families greater security. “Family houses” were frequently acquired by individuals.Maxim Bolt, Associate Professor of Development Studies, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2092372023-08-10T02:20:28Z2023-08-10T02:20:28ZAgeing in a housing crisis: growing numbers of older Australians are facing a bleak future<figure><img src="https://images.theconversation.com/files/541828/original/file-20230808-30403-q9ved7.jpg?ixlib=rb-1.1.0&rect=0%2C11%2C7360%2C4891&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Image courtesy of the Housing for the Aged Action Group</span></span></figcaption></figure><p>The collision between an ageing population and a housing crisis has left more older people in Australia enduring housing insecurity and homelessness. Our <a href="https://doi.org/10.26185/87bq-4190">research</a>, released today, explores how the scale of these problems among older people has grown over the past decade. </p>
<p><a href="https://doi.org/10.26185/87bq-4190">Our report</a>, Ageing in a Housing Crisis, shows safe, secure and affordable housing is increasingly beyond the reach of older people. This growing housing insecurity is system-wide. It’s affecting hundreds of thousands of people across all tenures, including home owners and renters. </p>
<p>The federal government released Australia’s first national wellbeing framework,
<a href="https://treasury.gov.au/policy-topics/measuring-what-matters">Measuring What Matters</a> last month. It recognises “financial security and access to housing” as essential for a secure, inclusive and fair society. However, urgent policy action is needed to reshape the Australian housing system so all older people have secure, affordable housing. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/541664/original/file-20230808-29-p343gp.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graphic showing increasing proportions of marginally housed and homeless older people" src="https://images.theconversation.com/files/541664/original/file-20230808-29-p343gp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541664/original/file-20230808-29-p343gp.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=496&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541664/original/file-20230808-29-p343gp.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=496&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541664/original/file-20230808-29-p343gp.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=496&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541664/original/file-20230808-29-p343gp.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=623&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541664/original/file-20230808-29-p343gp.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=623&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541664/original/file-20230808-29-p343gp.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=623&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://doi.org/10.26185/87bq-4190">Authors & Housing for the Aged Action Group</a></span>
</figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/weve-all-done-the-right-things-in-under-cover-older-women-tell-their-stories-of-becoming-homeless-188356">'We've all done the right things': in Under Cover, older women tell their stories of becoming homeless</a>
</strong>
</em>
</p>
<hr>
<h2>Older people are increasingly at risk</h2>
<p>We analysed the most recent Australian Bureau of Statistics (ABS) <a href="https://www.abs.gov.au/tags/2021-census-articles">census data</a> and <a href="https://www.abs.gov.au/statistics/people/housing/estimating-homelessness-census/latest-release">homelessness estimates</a>. More older people lived in <a href="https://www.abs.gov.au/census/guide-census-data/census-dictionary/2021/variables-topic/housing/homelessness-operational-groups-opgp">marginal housing</a> – defined by the ABS as including crowding (less severe), improvised dwellings and caravans – and more were homeless in 2021 than a decade earlier. </p>
<h3>Older people experiencing homelessness by gender and category in 2011, 2016 and 2021</h3>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/541594/original/file-20230808-17-p5ddl5.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/541594/original/file-20230808-17-p5ddl5.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541594/original/file-20230808-17-p5ddl5.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=757&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541594/original/file-20230808-17-p5ddl5.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=757&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541594/original/file-20230808-17-p5ddl5.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=757&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541594/original/file-20230808-17-p5ddl5.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=951&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541594/original/file-20230808-17-p5ddl5.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=951&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541594/original/file-20230808-17-p5ddl5.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=951&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
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<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/541668/original/file-20230808-19-voz4jb.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graphic showing the decreasing proportion of older people living in social housing" src="https://images.theconversation.com/files/541668/original/file-20230808-19-voz4jb.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/541668/original/file-20230808-19-voz4jb.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=253&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541668/original/file-20230808-19-voz4jb.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=253&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541668/original/file-20230808-19-voz4jb.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=253&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541668/original/file-20230808-19-voz4jb.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=318&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541668/original/file-20230808-19-voz4jb.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=318&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541668/original/file-20230808-19-voz4jb.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=318&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/541670/original/file-20230808-24-9qgvng.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graphic showing increasing proportion of older people living in private rental housing" src="https://images.theconversation.com/files/541670/original/file-20230808-24-9qgvng.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/541670/original/file-20230808-24-9qgvng.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=279&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541670/original/file-20230808-24-9qgvng.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=279&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541670/original/file-20230808-24-9qgvng.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=279&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541670/original/file-20230808-24-9qgvng.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=351&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541670/original/file-20230808-24-9qgvng.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=351&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541670/original/file-20230808-24-9qgvng.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=351&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://doi.org/10.26185/87bq-4190">Authors & Housing for the Aged Action Group. (Click on graphics to enlarge.)</a></span>
</figcaption>
</figure>
<p>The proportion of older people in private rental housing has also increased. This means more older people are exposed to the <a href="https://www.pc.gov.au/research/completed/renters">insecurity of renting</a> and <a href="https://news.anz.com/posts/2023/05/anz-news-corelogic-housing-affordability-report-2023?pid=bln-link-td-bln-03-23-tsk-corelogic-har23">rising rents</a>. Our work shows they are struggling to afford private rental housing.</p>
<p>The lowest-income households are the hardest hit. The private rental market is <a href="https://www.anglicare.asn.au/publications/2023-rental-affordability-snapshot/">failing to supply</a> housing they can afford. The shortfall in subsidised social housing is huge. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/its-soul-destroying-how-people-on-a-housing-wait-list-of-175-000-describe-their-years-of-waiting-210705">'It's soul-destroying': how people on a housing wait list of 175,000 describe their years of waiting</a>
</strong>
</em>
</p>
<hr>
<p>Older people who receive government benefits and allowances are at most risk because their incomes are not keeping up with housing costs. </p>
<p>In 2019-20 only 19% of older people on very low incomes (the lowest 20% of household incomes) lived in households whose rent was affordable. This means four out of five were spending more than 30% of their income on rent (the affordability benchmark for low-income households). Two in five were paying severely unaffordable rents – more than 50% of their income.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/541659/original/file-20230808-23-rzkgxq.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graphic showing 73% increase in the total number of older private renters in a decade" src="https://images.theconversation.com/files/541659/original/file-20230808-23-rzkgxq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541659/original/file-20230808-23-rzkgxq.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=626&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541659/original/file-20230808-23-rzkgxq.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=626&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541659/original/file-20230808-23-rzkgxq.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=626&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541659/original/file-20230808-23-rzkgxq.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=787&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541659/original/file-20230808-23-rzkgxq.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=787&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541659/original/file-20230808-23-rzkgxq.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=787&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://doi.org/10.26185/87bq-4190">Authors & Housing for the Aged Action Group</a></span>
</figcaption>
</figure>
<p>For older people who don’t own their homes, rising housing prices create <a href="https://www.ahuri.edu.au/research/final-reports/373">financial risk rather than windfall</a>. At the same time, more older people have mortgages. This increases their risk of housing insecurity or financial stress in retirement. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/fall-in-ageing-australians-home-ownership-rates-looms-as-seismic-shock-for-housing-policy-120651">Fall in ageing Australians' home-ownership rates looms as seismic shock for housing policy</a>
</strong>
</em>
</p>
<hr>
<h2>Ageing magnifies unaffordable housing impacts</h2>
<p>Rising housing costs, falling home ownership rates, mortgage debt carried into retirement, insecure private rental tenures and the worsening shortage of social housing are markers of system-wide housing insecurity. </p>
<p>Insecure or marginal housing affects all generations. However, for older people the risks are made worse by limited income-earning ability, increasing frailty, illness and/or caring responsibilities, growing need for at-home support, and age-based discrimination. These factors make it even harder to meet rising housing costs. </p>
<p>Housing insecurity widens the gap between the housing older people have and the housing they need to live safe, secure and dignified lives as they age. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/541665/original/file-20230808-21-l54cpd.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graphic showing breakdown of 270,000 older people who are homeless, marginally housed or renting a home they can't afford" src="https://images.theconversation.com/files/541665/original/file-20230808-21-l54cpd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/541665/original/file-20230808-21-l54cpd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=653&fit=crop&dpr=1 600w, https://images.theconversation.com/files/541665/original/file-20230808-21-l54cpd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=653&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/541665/original/file-20230808-21-l54cpd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=653&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/541665/original/file-20230808-21-l54cpd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=821&fit=crop&dpr=1 754w, https://images.theconversation.com/files/541665/original/file-20230808-21-l54cpd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=821&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/541665/original/file-20230808-21-l54cpd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=821&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://doi.org/10.26185/87bq-4190">Authors & Housing for the Aged Action Group</a></span>
</figcaption>
</figure>
<h2>System-wide risks demand system-wide action</h2>
<p>Growing housing insecurity among older people is a result of system-wide problems. This means system-wide solutions are needed. </p>
<p>We call for: </p>
<ul>
<li><p>adequate social housing supply that reflects population growth and ensures it’s available for older people across all states and territories, including by increasing aged-specific options and reducing the age at which social housing applicants are given priority to 45-55 </p></li>
<li><p>stronger national <a href="https://theconversation.com/how-5-key-tenancy-reforms-are-affecting-renters-and-landlords-around-australia-187779">tenancy regulations</a> that prioritise homes over profit </p></li>
<li><p>dedicated marginal and specialist homelessness services that are well designed with and for older people who have experienced housing insecurity and support systems </p></li>
<li><p>support for people to remain in their own homes, across all tenures. </p></li>
</ul>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1683318520061526017"}"></div></p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-5-key-tenancy-reforms-are-affecting-renters-and-landlords-around-australia-187779">How 5 key tenancy reforms are affecting renters and landlords around Australia</a>
</strong>
</em>
</p>
<hr>
<p>Responses and assistance models must allow for gender diversity, income difference, Aboriginal and/or Torres Strait Islander people’s cultural needs, as well as those of other culturally and linguistically diverse older people. Disability, caring responsibilities, history of trauma, and individuals’ unique housing pathways and experiences must all be considered. </p>
<p>Older people must have a say in reshaping the housing system. The Albanese government is developing a <a href="https://www.dss.gov.au/housing-support-programs-services-housing/developing-the-national-housing-and-homelessness-plan">National Housing and Homelessness Plan</a>. It’s essential that this plan, along with state, territory and local government implementation plans, consider the voices, experiences, concerns and aspirations of older people. </p>
<h2>Housing reform is good for everyone</h2>
<p>Older people are only one part of the population facing housing insecurity and homelessness. A comprehensive national housing plan must respond to all generational needs. Housing solutions for older people must not come at the expense of – or compete with – the needs of other generations. </p>
<p>Housing insecurity and homelessness in childhood, younger years and early adult life all warrant meaningful and urgent housing solutions. Making sure all people have lifelong access to secure housing will begin to reverse the growing problems identified by our report. Otherwise, Australia faces a future where more and more older people struggle with inadequate and unaffordable housing. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/efforts-to-find-safe-housing-for-homeless-youth-have-gone-backwards-heres-what-the-new-national-plan-must-do-differently-210704">Efforts to find safe housing for homeless youth have gone backwards. Here's what the new national plan must do differently</a>
</strong>
</em>
</p>
<hr>
<p>National reform that includes a focus on generational needs can deliver a housing system that provides affordable homes for everyone. This will ensure everyone is able to maintain community connections, which for older people means being able to age in safe, secure and affordable homes.</p><img src="https://counter.theconversation.com/content/209237/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Emma Power receives funding from the Australian Research Council and the Housing for the Aged Action Group. </span></em></p><p class="fine-print"><em><span>Amity James receives funding from the Australian Housing and Urban Research Institute and the Housing for the Aged Action Group.</span></em></p><p class="fine-print"><em><span>Francesca Perugia receives funding from the Australian Housing and Urban Research Institute and the Housing for the Aged Action Group.</span></em></p><p class="fine-print"><em><span>Margaret Reynolds receives funding from the Australian Housing and Urban Research Institute and the Housing for the Aged Action Group</span></em></p><p class="fine-print"><em><span>Piret Veeroja receives funding from the Australian Research Council, the Australian Housing and Urban Research Institute, the Housing for the Aged Action Group and Kids Under Cover.</span></em></p><p class="fine-print"><em><span>Wendy Stone receives funding from the Australian Research Council, the Australian Housing and Urban Research Institute, the Housing for the Aged Action Group and Kids Under Cover. </span></em></p>An ageing population is caught in a perfect storm of rising house prices and rents, falling home ownership rates, mortgage debt carried into retirement, insecure rentals and a lack of social housing.Emma Power, Associate Professor, Geography and Urban Studies, Western Sydney UniversityAmity James, Associate Professor and Discipline Lead Property, Curtin UniversityFrancesca Perugia, Senior Lecturer, School of Design and the Built Environment, Curtin UniversityMargaret Reynolds, Research Fellow, Centre for Urban Transitions, Swinburne University of TechnologyPiret Veeroja, Research Fellow, Centre for Urban Transitions, Swinburne University of TechnologyWendy Stone, Professor of Housing & Social Policy, Centre for Urban Transitions, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2084132023-07-06T21:05:34Z2023-07-06T21:05:34ZWhat you need to know about Canada’s new first home savings account<figure><img src="https://images.theconversation.com/files/536120/original/file-20230706-23-sa3997.jpg?ixlib=rb-1.1.0&rect=0%2C18%2C4167%2C3080&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The first home savings account is designed to help more Canadians reach the goal of home ownership.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/what-you-need-to-know-about-canadas-new-first-home-savings-account" width="100%" height="400"></iframe>
<p>Buying a home is becoming <a href="https://macleans.ca/longforms/the-end-of-homeownership/">increasingly challenging for Canadians</a>. But there is a new solution available to help buyers take their first step onto the housing ladder.</p>
<p>As of April, first-time buyers can open a first home savings account (<a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html">FHSA</a>). This account is specifically designed to help first-time buyers purchase their first home. </p>
<p>It combines the benefits found in two existing registered accounts: the registered retirement savings plan (<a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/registered-retirement-savings-plan-rrsp.html">RRSP</a>) and the <a href="https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4466/tax-free-savings-account-tfsa-guide-individuals.html">tax-free savings account</a>.</p>
<p>An FHSA provides a tax shelter for investments, turbo-charging the growth of savings for a home down payment. When a taxpayer contributes to their FHSA, their tax bill is lowered for that year. Additionally, when the funds are withdrawn to buy a first-time home, <a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawing-money-from-your-fhsa.html">no tax is owed</a>.</p>
<p>Initially, the federal government said the FHSA could not be combined with the <a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html">Home-Buyers Plan</a>, which lets people borrow from their RRSP to finance a home purchase. This has since changed and taxpayers have been assured <a href="https://www.canada.ca/en/department-finance/news/2022/08/design-of-the-tax-free-first-home-savings-account.html">they can use both programs in combination</a>.</p>
<h2>The finer details</h2>
<p>Is there a catch? Not really, but there are specific rules to follow. To use the FHSA, you must be 18 years of age and can’t have owned a home within the past four years.</p>
<p>Contributions are limited to $8,000 annually, up to $40,000 over a lifetime. The funds to purchase a home must be used within 15 years (or by the time you turn 71).</p>
<p>Many first-time buyers may find it difficult to save $8,000 in a single year. But the good news is you can carry over the contribution room to the following year.</p>
<figure class="align-center ">
<img alt="A person in a hooded jacket and track pants walks their dog on a sidewalk lined with real estate sale signs." src="https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&rect=0%2C50%2C4792%2C3204&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/535883/original/file-20230705-15-rlvnyi.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A person walks past multiple for-sale and sold real estate signs in Mississauga, Ont., on May 24, 2023.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Nathan Denette</span></span>
</figcaption>
</figure>
<p>It’s important to note that the maximum amount you can pay into the FHSA in any year is $16,000. This includes $8,000 from the current year and <a href="https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html#h_3">$8,000 of the unused from the year prior</a>.</p>
<p>But what if circumstances change and you decide not to purchase a home? Or maybe you do buy a home, and there are funds left over? No worries — you can transfer the funds to your RRSP without impacting your RRSP contribution room.</p>
<h2>Should millennials rejoice?</h2>
<p>Statistics Canada data shows that <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220921/mc-b001-eng.htm">home ownership has declined from 2011 to 2021</a>, with the greatest decline occurring for <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm">millennials ages 25 to 34</a>. </p>
<p>The main challenges to owning a home are high real estate prices, high borrowing costs and the cost of living rising faster than wages (<a href="https://www.thestar.com/business/opinion/2023/06/10/your-paycheque-has-finally-closed-the-gap-with-inflation-a-good-thing-despite-the-bank-of-canadas-opinion.html?rf">though wages are now slowly starting to catch-up</a>). One way to measure this challenge is with the <a href="https://www.bankofcanada.ca/rates/indicators/capacity-and-inflation-pressures/real-estate-market-definitions/">Bank of Canada’s housing affordability index</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A bar graph that increases over time." src="https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=300&fit=crop&dpr=1 600w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=300&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=300&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=377&fit=crop&dpr=1 754w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=377&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/534921/original/file-20230629-27-fp6hqv.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=377&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A graph showing the housing affordability index in Canada from 2000 to 2023.</span>
<span class="attribution"><span class="source">(The Bank of Canada)</span></span>
</figcaption>
</figure>
<p>The housing affordability index illustrates how difficult it is to afford a home by measuring housing-related costs (mortgage payments and utility fees) relative to average household disposable income. It has been around 45 to 50 per cent recently — far higher than previous years. </p>
<p>The current index shows that the average household needs to give up approximately half of their disposable income to own a home. So while the FHSA may provide hope for those saving for a down payment for their first home, the ongoing costs remain very high.</p>
<h2>FHSA improves first-time buyers’ chances</h2>
<p>If a first-time buyer is willing to sacrifice a potentially significant part of their monthly income to buy their first home, they first need a down payment. So is the FHSA sufficient to make a difference for first-time buyers trying to save for their down payment?</p>
<p>Some might see the maximum contribution of $40,000 to a FHSA as a drop in the ocean compared to the down payment required for homes in more expensive Canadian markets. In Vancouver, Toronto and Victoria, a 20 per cent down payment for a median home price is <a href="https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf">$238,471, $227,514, and $204,149</a>, respectively.</p>
<p>A <a href="https://www.royallepage.ca/en/realestate/news/down-payment-dilemma-canadian-first-time-homebuyers-fear-of-falling-short-is-escalating/">recent survey</a> found that 25 per cent of first-time buyers relied on help from parents or relatives with their monthly mortgage payments. Thirty-five per cent needed help with their down payment.</p>
<p>The same survey of first-time buyers found that <a href="https://financialpost.com/real-estate/first-time-homebuyers-worried-afford-down-payments">67 per cent of respondents feared missing out on owning a home</a> due to an inadequate down payment.</p>
<p>However, many first-time buyers start by buying more modest properties initially, and the FHSA could help them get into the housing market earlier. Of course, this will still take time given the $8,000 per year contribution limit. </p>
<p>While the impact of the FHSA won’t be instant, and while it’s not a complete solution, it’s a step in the right direction. For many Canadians, owning a home provides security and a sense of belonging. The FHSA could play a significant role in making this dream more attainable for first-time buyers, helping them reach the moment when they finally get the keys to their own front door.</p><img src="https://counter.theconversation.com/content/208413/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A new tax-free savings account could play a role in making the dream of home ownership more attainable for first-time buyers in Canada.Stuart Snaith, Associate Professor, Gustavson School of Business, University of VictoriaAlison Jean Parker, Assistant Teaching Professor, Gustavson School of Business, University of VictoriaDouglas A. Stuart, Assistant Teaching Professor, Gustavson School of Business, University of VictoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2068622023-06-15T03:44:16Z2023-06-15T03:44:16ZBuilding in the same old ways won’t end the housing crisis. We need innovation to boost productivity<p>Have we reached peak affordable-housing-debate in Australia? Or is it a case of that old mountaineering saying: the fog is thickest just before the summit?</p>
<p>As someone who has been involved in building innovation for the past decade, what strikes me about the current debate is not its height, but its flatness. By this I mean how something as complex as housing can be reduced to one or two issues of the moment. Is the key to ending our housing woes really just “supply”? And will the Albanese government’s new $A10 billion <a href="https://ministers.treasury.gov.au/ministers/julie-collins-2022/media-releases/housing-australia-future-fund-draft-legislation">Housing Australia Future Fund</a> (HAFF) solve that problem?</p>
<p>Yes, this flatness is inherent to politics, but if we don’t attempt to unflatten the problem we’ll be stuck in the very public game of housing affordability “Whac-A-Mole” for quite some time. It goes something like this: release more land … ease planning restrictions … end NIMBY-ism … rent freeze … build-to-rent … early access to super … negative gearing … prefab housing … developer greed … skills shortage … gentrification … supply-chain disruption … inclusionary zoning … capital gains tax reform … industrial action … and so on and so forth.</p>
<p>So much froth for so little beer. So how do we build the industry’s productivity and capacity? The answer is the same as it has been in every other sector: the building industry desperately needs to innovate.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1623460988673757184"}"></div></p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/to-deliver-enough-affordable-housing-and-end-homelessness-what-must-a-national-strategy-do-207120">To deliver enough affordable housing and end homelessness, what must a national strategy do?</a>
</strong>
</em>
</p>
<hr>
<h2>But what about the new housing fund?</h2>
<p>The federal government says its new fund will provide <a href="https://www.theguardian.com/australia-news/2023/mar/22/what-is-labors-10bn-social-housing-fund-and-will-it-be-torn-down-by-parliament">A$500 million a year</a> to build much-needed social housing. The opposition <a href="https://www.abc.net.au/news/2023-05-11/housing-australia-future-fund-senate-vote/102327244">says</a> this will fuel inflation. The Greens are <a href="https://www.abc.net.au/news/2023-06-04/greens-offer-compromise-to-break-housing-stalemate/102438258">demanding more direct funding</a> of housing (at first $5 billion a year, now reduced to $2.5 billion) and a rent freeze.</p>
<p>Is the new fund inflationary? Yes and no.</p>
<p>Unless the bill is coupled with measures that increase the industry’s productivity and capacity, it will be inflationary. The industry <a href="https://www.afr.com/property/commercial/home-building-faces-a-shallow-20-per-cent-decline-20220524-p5ao0y">lacks the capacity</a> to build as many dwellings as the market needs, or the extra <a href="https://ministers.treasury.gov.au/ministers/julie-collins-2022/media-releases/housing-australia-future-fund-draft-legislation">30,000 social and affordable homes</a> the government says the fund will deliver in the first five years. Remember, property prices are <a href="https://www.news.com.au/finance/real-estate/buying/proptrack-data-reveals-possible-new-peak-in-property-prices-in-2024/news-story/cb0c457834d995d6d1b3fcc6d72694df">just off an all-time high</a>, with construction costs up by more than <a href="https://napierblakeley.info/quantity-surveying/2022-napier-blakeley-construction-costs-datacards/">50% over the past decade</a>.</p>
<p>To meet our housing targets, we need to find new ways of building more with less.</p>
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<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/albanese-government-tackles-housing-crisis-on-3-fronts-but-theres-still-more-to-do-198509">Albanese government tackles housing crisis on 3 fronts, but there's still more to do</a>
</strong>
</em>
</p>
<hr>
<h2>Supply is only one piece of the puzzle</h2>
<p>The problem with seeing housing provision solely as a matter of “supply” (read “funding”) is that this accounts for only one phase of the process. It takes more than dollars to deliver a building. We must address all the phases: development, design, construction, operation and, after all that, end of life. </p>
<p>If we don’t do that, we won’t solve the root problems. And we risk missing opportunities ripe for innovation. </p>
<p>Let’s consider some innovative ideas for each of the building phases.</p>
<h2>Development</h2>
<p>New business and ownership models are needed. These include:</p>
<ul>
<li><p>housing-as-a-service (HaaS) – the space between short-term rental and long-term hotels, which suits mobile or itinerant populations and which AirBnB is increasingly exploiting </p></li>
<li><p><a href="https://theconversation.com/reinventing-density-how-baugruppen-are-pioneering-the-self-made-city-66488">co-housing</a> – residents band together to develop housing themselves or with help from an agent, such as <a href="https://www.nightingalehousing.org">Nightingale</a> or <a href="https://cohousing.com.au/services/">others</a></p></li>
<li><p><a href="https://theconversation.com/build-to-rent-could-be-the-missing-piece-of-the-affordable-housing-puzzle-82320">build-to-rent</a> – instead of building to sell to residents or investors, housing is retained for the purpose of renting it out, with recent <a href="https://ministers.treasury.gov.au/ministers/julie-collins-2022/media-releases/billions-boost-social-and-affordable-rental-homes">federal tax changes</a> supporting this approach</p></li>
<li><p><a href="https://www.afr.com/property/residential/rent-to-own-a-home-can-anyone-do-it-in-australia-20220214-p59w70">rent-to-buy</a> – residents have the right to buy (progressively or outright) their rental housing</p></li>
<li><p><a href="https://theconversation.com/affordable-home-ownership-scheme-offers-a-pathway-out-of-social-housing-102635">shared equity schemes</a> – a way for buyers to own a more “affordable” fraction of the home and get a foot in the door.</p></li>
</ul>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/ev1tveSD23M?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Co-housing developments are increasingly common.</span></figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/build-to-rent-is-seen-as-affordable-but-its-yet-to-help-those-most-in-need-194623">Build-to-rent is seen as affordable, but it's yet to help those most in need</a>
</strong>
</em>
</p>
<hr>
<p>These alternative approaches will change the calculus of property development. Let’s not aim to centralise housing development. Rather, we should crowd-source it to as many organisations as possible.</p>
<p>A final area for innovation in the development phase is <a href="https://ministers.dss.gov.au/transcripts/11426">planning</a>. We can use <a href="https://building4pointzero.org/projects/eplanning-and-eapprovals-scoping-study/">digital tools</a> to make the planning system more transparent and efficient.</p>
<h2>Design</h2>
<p>Make houses more efficient. Australian houses are <a href="https://www.smh.com.au/environment/sustainability/that-s-a-crazy-amount-of-floor-area-top-architect-on-boom-in-big-homes-20220107-p59mla.html">among the world’s largest</a> even though <a href="https://www.rba.gov.au/publications/bulletin/2023/mar/a-new-measure-of-average-household-size.html">households are shrinking</a>. As the Swedish saying goes: “The cheapest square metre is the square metre you don’t build!”</p>
<p>Make houses <a href="https://theconversation.com/we-need-more-flexible-housing-for-21st-century-lives-102636">more flexible</a> and <a href="https://theconversation.com/people-want-and-need-more-housing-choice-its-about-time-governments-stood-up-to-deliver-it-122390">diverse</a>. Housing could then <a href="https://theconversation.com/life-in-lockdown-has-shown-us-our-houses-need-to-work-harder-for-us-138307">accommodate different uses</a>, such as home offices or sublettable units, and various family structures and sizes, including extended families.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/531059/original/file-20230609-17-975cto.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/531059/original/file-20230609-17-975cto.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=219&fit=crop&dpr=1 600w, https://images.theconversation.com/files/531059/original/file-20230609-17-975cto.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=219&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/531059/original/file-20230609-17-975cto.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=219&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/531059/original/file-20230609-17-975cto.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=275&fit=crop&dpr=1 754w, https://images.theconversation.com/files/531059/original/file-20230609-17-975cto.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=275&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/531059/original/file-20230609-17-975cto.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=275&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Building the world’s largest houses strains construction capacity and adds to housing costs.</span>
<span class="attribution"><span class="license">Author provided</span></span>
</figcaption>
</figure>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/people-want-and-need-more-housing-choice-its-about-time-governments-stood-up-to-deliver-it-122390">People want and need more housing choice. It's about time governments stood up to deliver it</a>
</strong>
</em>
</p>
<hr>
<h2>Construction</h2>
<p>Develop new building systems and supply chains. We need faster, cheaper and higher-quality ways of building. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/531550/original/file-20230613-8848-c47rc9.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A production line in a factory producing modular housing" src="https://images.theconversation.com/files/531550/original/file-20230613-8848-c47rc9.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/531550/original/file-20230613-8848-c47rc9.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=899&fit=crop&dpr=1 600w, https://images.theconversation.com/files/531550/original/file-20230613-8848-c47rc9.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=899&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/531550/original/file-20230613-8848-c47rc9.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=899&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/531550/original/file-20230613-8848-c47rc9.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1130&fit=crop&dpr=1 754w, https://images.theconversation.com/files/531550/original/file-20230613-8848-c47rc9.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1130&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/531550/original/file-20230613-8848-c47rc9.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1130&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Modular housing – made here in Lindbäcks’ Factory in Luleå, Sweden – can cut construction times and costs.</span>
<span class="attribution"><span class="source">Mathew Aitchison</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>In contrast to building on site from the ground up, prefabricated, modular or industrialised house-building happens in factories. These approaches could increase capacity, <em>on top of</em> traditional approaches.</p>
<p>More people, more people, more people: the industry needs a new generation with different skill sets. </p>
<p>Up entering Swedish and German house-building factories, it is clear these are more inclusive workplaces. A key benefit of industrialised building is it promotes greater workforce participation. These are the diverse and high-skill jobs of the future.</p>
<h2>Operation</h2>
<p>Improve building performance through better development, design and operation of housing. Occupants won’t be left with unaffordable “utility timebombs” with high running costs.</p>
<p>Make houses more durable and easy to maintain. Well-designed and well-built housing can be used for decades past current buildings’ “use-by” dates. Longer-lived buildings will help to plug the holes in the leaky bucket of housing provision.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-need-a-lemon-law-to-make-all-the-homes-we-buy-and-rent-more-energy-efficient-204369">We need a 'lemon law' to make all the homes we buy and rent more energy-efficient</a>
</strong>
</em>
</p>
<hr>
<h2>End of life</h2>
<p>An increased focus on decarbonisation and sustainable use of resources will enable new approaches to reusing and recycling building materials.</p>
<p>Re-using existing and obsolete buildings for new housing – adaptive re-use – is another way to provide more housing. </p>
<h2>Where to from here?</h2>
<p>Innovations like these could be applied tomorrow to help us do more with less.</p>
<p>A final challenge to government: as we prepare to spend billions on building housing across the country, is it too outlandish to imagine we could invest a mere 1% of those vast sums in innovation programs? Innovation can deliver the increases in building productivity and capacity that Australia so badly needs.</p><img src="https://counter.theconversation.com/content/206862/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mathew Aitchison receives funding from the Department of Industry’s CRC Program.</span></em></p>Without innovation in all five building phases, the industry won’t have the capacity to meet market demands or to deliver the social and affordable housing the government is promising.Mathew Aitchison, Professor of Architecture and CEO of Building 4.0 CRC, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2043412023-06-05T12:10:20Z2023-06-05T12:10:20ZHow building more backyard homes, granny flats and in-law suites can help alleviate the housing crisis<figure><img src="https://images.theconversation.com/files/528095/original/file-20230524-7504-rz4zwj.jpg?ixlib=rb-1.1.0&rect=0%2C10%2C3594%2C2371&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A newly built accessory dwelling unit in Los Angeles.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/the-accessory-dwelling-unit-behind-grove-pashleys-main-home-news-photo/1256258319?adppopup=true">Alisha Jucevic/The Washington Post via Getty Images</a></span></figcaption></figure><p>To many people, the image of a nuclear family in a stand-alone house with a green lawn and white picket fence still represents a fulfillment of the American dream. </p>
<p>However, this ideal is relatively new within a broader history of housing and development in the U.S. It’s also a goal that has become <a href="https://www.nytimes.com/2022/09/25/upshot/starter-home-prices.html">increasingly unattainable</a>.</p>
<p><a href="https://www.researchgate.net/profile/Jeffrey-Kruth">As professors</a> <a href="https://scholar.google.com/citations?user=Tk2hQ7kAAAAJ&hl=en">of architecture</a>, we explore how cities change over time, and how certain building trends become commonplace through cultural, political, technological and economic shifts. </p>
<p>Over the past century, the U.S. has lost a rich variety of living options because of the homogenization of zoning policies that prioritize single-family housing, as well as developers’ desire to have inexpensive and easily replicated building plans.</p>
<p>These development prescriptions are so pervasive that it is now illegal to build anything other than a single-family house <a href="https://www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html">on 75% of residential land</a> in American cities. <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3768264">Single-family zoning restricts</a> the supply of affordable housing, leading to higher costs, displacement and segregation.</p>
<h2>Enter the ADU</h2>
<p>Diverse patterns of living arrangements across families, communities and plots of land <a href="https://placesjournal.org/article/housing-and-the-cooperative-commonwealth/">were far more common</a> in the 19th and early 20th centuries.</p>
<p>To accommodate these living situations, a range of housing types emerged: multifamily apartment complexes, housing cooperatives, and duplexes and triplexes. </p>
<p>There were also accessory dwelling units, or ADUs, which are sometimes called “granny flats,” “backyard homes,” “in-law suites” or “backyard cottages.”</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/529640/original/file-20230601-29-iy1g1o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Graphic showing three different forms of ADUs." src="https://images.theconversation.com/files/529640/original/file-20230601-29-iy1g1o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/529640/original/file-20230601-29-iy1g1o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=659&fit=crop&dpr=1 600w, https://images.theconversation.com/files/529640/original/file-20230601-29-iy1g1o.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=659&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/529640/original/file-20230601-29-iy1g1o.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=659&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/529640/original/file-20230601-29-iy1g1o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=828&fit=crop&dpr=1 754w, https://images.theconversation.com/files/529640/original/file-20230601-29-iy1g1o.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=828&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/529640/original/file-20230601-29-iy1g1o.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=828&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The many faces of an ADU.</span>
<span class="attribution"><a class="source" href="https://bostonthecityuponahill.files.wordpress.com/2020/01/accessory-dwelling-units_2.jpg">City of St. Paul</a></span>
</figcaption>
</figure>
<p>These terms all refer to essentially the same thing: an additional unit of housing on a single lot, typically smaller in square footage than the main residence. They include full amenities – a kitchen and a bathroom, along with a separate entry from the primary dwelling. ADUs can either be attached to or detached from an existing house and can either be built from the ground up or be converted from existing spaces, like garages, basements or attics.</p>
<p>You may have heard of minimalist living trends such as <a href="https://www.nytimes.com/2022/04/20/magazine/van-life-dwelling.html">van life</a> and <a href="https://www.bloomberg.com/news/articles/2013-12-03/tiny-homes-a-new-model-for-super-chic-affordable-housing">tiny homes</a>, but the ADU was the original compact housing. </p>
<p>While ADUs are not new, many Americans are unfamiliar with them. A recent <a href="https://www.freddiemac.com/research/consumer-research/20230124-adus-can-increase-housing-stock-most-are-unfamiliar">Freddie Mac consumer survey</a> found that 71% of homeowners were unfamiliar with the concept, though 32% expressed interest in having one on their property once they learned about it.</p>
<h2>Addressing the ‘missing middle’</h2>
<p>More diverse living arrangements are both desirable and necessary. </p>
<p>Recent trends – <a href="https://time.com/6243148/working-from-home-is-the-trend-of-the-year-and-next-year-too/">working from home</a> and <a href="https://www.bcg.com/publications/2022/aging-in-place-plan-for-next-generation">aging in place</a>, along with <a href="https://www.washingtonpost.com/business/2022/11/30/housing-market-shuts-out-millennials/">a homeownership market that’s pricing out younger adults</a> – all demand housing types that are not readily available in a market <a href="https://www.brookings.edu/essay/trend-2-americas-demographics-are-transforming-but-our-housing-supply-is-not/">dominated by single-family housing</a>. </p>
<p>We believe ADUs – with their social, economic and environmental benefits – should become a more common housing option. </p>
<p>ADUs contribute to sustainability goals primarily because they encourage density. Rather than clearing another lot in a sprawling suburb for a new single-family home, the ADU stealthily adds density to existing neighborhoods, which allows them to tap into the existing infrastructure grid. They can also lead to fewer emissions by encouraging shorter commutes. </p>
<p>Because ADUs are smaller, they also require fewer building materials to construct and less energy to heat; they can be passively cooled and need less electricity. Together, these result in reduced energy costs for the building. Additionally, <a href="https://zennihome.com">prefabricated ADUs</a> <a href="https://www.symbihom.com">can be directly purchased</a>, which further reduces construction time, can sidestep regulatory burdens, such as site inspections, and lead to lower costs and waste.</p>
<p>ADUs are also nimble. Twentieth-century forms of development often took a scorched-earth approach to redevelopment by <a href="https://www.bostonreview.net/articles/brent-cebul-tearing-down-black-america/">tearing down entire communities</a> – often communities of color – to build entirely new districts through urban renewal programs.</p>
<p>ADUs do not disrupt local communities. Because they don’t require buying up more land, they help add to the density, introducing new people from different walks of life. As neighborhood populations grow, they become more attractive to small businesses. Coffee shops, restaurants and grocery stores are more likely to flourish with more residents in a given area.</p>
<figure class="align-center ">
<img alt="Black and white photo of a small home built behind a larger home." src="https://images.theconversation.com/files/528096/original/file-20230524-29-squ9xz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/528096/original/file-20230524-29-squ9xz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=390&fit=crop&dpr=1 600w, https://images.theconversation.com/files/528096/original/file-20230524-29-squ9xz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=390&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/528096/original/file-20230524-29-squ9xz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=390&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/528096/original/file-20230524-29-squ9xz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=490&fit=crop&dpr=1 754w, https://images.theconversation.com/files/528096/original/file-20230524-29-squ9xz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=490&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/528096/original/file-20230524-29-squ9xz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=490&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An early-20th-century backyard home in Canada.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/the-one-person-granny-flat-units-are-520-sq-ft-and-the-two-news-photo/499310047?adppopup=true">Toronto Star Archives/Getty Images</a></span>
</figcaption>
</figure>
<p>ADUs can also fill the gap of much-needed “<a href="https://www.enterprisecommunity.org/sites/default/files/2021-06/overcoming-barriers-to-bringing-adu-development-to-scale.pdf">missing middle</a>” housing. Many new neighborhood developments are marketed as “luxury” and try to take advantage of hot markets by maximizing price points. Affordable housing is typically developed by government housing authorities and nonprofit developers who attempt to meet the pressing housing needs at the lower end of the economic spectrum. </p>
<p>Alternatively, housing that caters to middle-income people is typically nonsubsidized through traditional government funding mechanisms but fills a need that many for-profit developers can’t meet. These are usually smaller homes that attempt to appeal to a variety of <a href="https://americanassembly.org/publications-blog/on-the-edge-americas-middle-neighborhoods-americas-middle-neighborhoods">price points and lifestyles</a>. Many ADUs could fall into that category. </p>
<p>Finally, at the scale of the household, there are numerous benefits to ADUs.</p>
<p>Going back to its moniker as a “granny flat,” ADUs offer the opportunity for intergenerational living. They are typically a single story, which makes it easier for older family members to age in place. But they also provide space and privacy for younger people who may not be able to afford a larger single-family home. </p>
<p>Some ADUs <a href="https://www.hcd.ca.gov/policy-research/docs/understandingadusimportance.pdf">serve as rental units or short-term rentals</a>. By adding units to the existing rental market, they can stanch <a href="https://nypost.com/2022/02/01/us-rent-prices-highest-in-decades-and-theyre-not-coming-down-data-shows/">soaring rental costs</a>. They can also provide passive income for homeowners who need help paying off their mortgage.</p>
<h2>California leads the way</h2>
<p>To be sure, <a href="https://sdnews.com/groups-voice-opposition-to-adu-rules/">there is plenty of opposition to ADUs</a>. It often appears from local residents who fear that there won’t be enough parking spaces to accommodate new neighbors and that adding more dwellings to their neighborhoods could decrease property values. </p>
<p>Similarly, bureaucratic hurdles can sometimes discourage homeowners who might otherwise be interested in <a href="https://www.lincolninst.edu/pt-br/publications/working-papers/accessory-dwelling-units-beyond">having their own ADU</a>. Sometimes six or seven separate permits are required, significantly delaying construction. </p>
<p>Los Angeles has had a unique approach to encourage ADUs. The city recently launched its <a href="https://www.ladbs.org/adu/standard-plan-program/approved-standard-plans">Accessory Dwelling Unit Standard Plan Program</a>, which offers homeowners and developers the option to select from 20 preapproved ADU models for construction. Plans range from a studio structure of less than 400 square feet to a 1,200-square-foot house with three bedrooms. </p>
<p>Since construction or conversion is still relatively expensive and out of reach for many homeowners, the state of California also offers homeowners a $40,000 subsidy to encourage the construction of ADUs to make them more affordable. Meanwhile, CityLAB, a university-affiliated research center at UCLA, <a href="https://citylab.ucla.edu/adu-guidebook">designed a guidebook</a> for homeowners looking to build one of these small homes. The guidebook provides a step-by-step process to walk people through information needed to submit an application to the city and find lenders, designers and contractors.</p>
<p>California’s various initiatives have largely been successful. ADU permits increased from 9,000 in 2018 to 12,392 in 2020, <a href="https://www.aducalifornia.org/">according to the UC Berkeley Center for Community Innovation</a>. Seeing the success of ADU policies in cities like Los Angeles and <a href="https://www.seattletimes.com/seattle-news/politics/seattle-is-now-building-more-adus-than-single-houses/">Seattle</a>, <a href="https://apps.pittsburghpa.gov/redtail/images/2204_ADU_PC__Hearing_and_Action_Presentation.pdf">Pittsburgh</a> is testing an ADU pilot project in a handful of neighborhoods. <a href="https://www.wvxu.org/politics/2023-03-16/cincinnati-council-accessory-dwelling-units-single-family-neighborhoods">Cincinnati</a> is also currently advancing legislation to reverse policies that forbid ADUs. </p>
<p>As the country grapples with alleviating its housing crisis, solutions will require rethinking existing policies and re-imagining what housing development and neighborhood cohesion looks like. ADUs can be one of those solutions.</p><img src="https://counter.theconversation.com/content/204341/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Though accessory dwelling units have been around for centuries, a recent survey found that 71% of Americans were unfamiliar with the concept.Jeff Kruth, Assistant Professor of Architecture, Miami UniversityMurali Paranandi, Professor of Architecture, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2038002023-05-17T14:50:28Z2023-05-17T14:50:28ZHome ownership is shrinking, private renting isn’t working – what’s next?<figure><img src="https://images.theconversation.com/files/525140/original/file-20230509-15-7ivft.jpg?ixlib=rb-1.1.0&rect=8%2C0%2C5982%2C3988&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/estate-agency-let-sign-board-large-1350916184">William Barton/Shutterstock</a></span></figcaption></figure><p>Not long after the global financial crisis, soaring house prices through the 2010s turned residential property into the largest capital asset and best long-term investment in the world. In the same period, rates of owner-occupation fell across the UK, US and Australia. Now, for the first time in 50 years, a growing proportion of households in these countries rent.</p>
<p>Some households in every age group have dropped out of ownership because of unsustainable costs and risks, but the young in particular are being priced out as the sector shrinks. In the UK, ownership rates among 25-34 year-olds <a href="https://www.tandfonline.com/doi/full/10.1080/03085147.2021.2003086">halved to 30%</a> in less than two decades. </p>
<p>It feels like the end of an era. Experts are already talking about <a href="https://link.springer.com/article/10.1007/s10901-017-9551-8">“post-homeownership”</a>, with private renting as the go-to alternative – even in the UK, where social (council) housing once played such a central role.</p>
<p>The long-awaited <a href="https://publications.parliament.uk/pa/bills/cbill/58-03/0308/220308.pdf">renters’ reform bill</a> promises to improve conditions for renters, primarily by getting rid of no-fault evictions. But this won’t do enough to fix the problem of declining supply and quality, or rising prices, that are defining the private rented sector today. </p>
<p>The UK private rental sector has doubled in size since the mid-1990s, and accommodates around 4.5 million (one in five) households. It has not, however, done so well in terms of housing quality, supply and cost. </p>
<p>Private renting has traditionally been the province of the young and mobile: even today two-fifths of tenants are <a href="https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1088486/EHS_20-21_PRS_Report.pdf">under 35</a>. Yet, compared with 20 years ago, private renters are now <a href="https://publications.parliament.uk/pa/cm5803/cmselect/cmcomloc/624/report.html">older, on lower incomes</a>, and more likely to be living with children. The sector may have expanded but it has not adjusted to the needs of this new demographic.</p>
<p>Furthermore, one third of privately rented homes were built before 1919, and a quarter now fall below the government’s <a href="https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/livinglonger/implicationsofhousingtenureinlaterlife">“decent homes” threshold</a>. The over-55s with few savings or investments, who are vulnerable to fuel poverty, live disproportionately in these properties. The private rental sector also shelters <a href="https://www.citizensadvice.org.uk/about-us/about-us1/media/press-releases/more-than-one-and-a-half-million-children-in-england-live-in-cold-damp-or-mouldy-private-rented-homes-citizens-advice-reveals2/">1.6 million children</a>, often in homes that are damp, mouldy, excessively cold, overcrowded and with the least <a href="https://assets.ctfassets.net/6sxvmndnpn0s/77ViBSpWpGzZdUcsXu77of/f7b8b461208d6207d87f4295aefd112d/Growing_up_renting.pdf">security of tenure</a>.</p>
<h2>Supply and demand</h2>
<p>As well as the challenge of quality and condition, there is the matter of supply. Britain’s private rental sector is dominated by small landlords drawn into the post-1990 buy-to-let boom. However, tax and regulatory changes have curbed that trend, and one third of these landlords now <a href="https://www.gov.uk/government/statistics/english-private-landlord-survey-2021-main-report/english-private-landlord-survey-2021-main-report--2">plan to sell</a> or reduce the size of their portfolios. </p>
<p>With demand for tenancies also rising, rental listings have <a href="https://www.propertyreporter.co.uk/property/number-of-available-rental-homes-falls-by-40.html">fallen by 40% against pre-pandemic norms</a>, causing <a href="https://www.theguardian.com/money/2023/apr/08/bidding-wars-inside-the-super-charged-fight-for-rental-properties">mayhem on the market</a>, with long queues to view and bidding wars adding to costs. </p>
<p>Europe-wide <a href="https://journals.sagepub.com/doi/10.1177/0042098017729077">rent increases</a>, affecting every demographic, are particularly marked in the UK, growing by nearly 17% in the eight years to December 2022. The latest hike (4.2% to the end of last year) was the largest since the Office for National Statistics launched its <a href="https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/december2022">rental price index</a> in 2016. </p>
<p>Private renters now spend a higher proportion of their incomes on housing than any other tenure group. One in four are <a href="https://lordslibrary.parliament.uk/through-the-roof-housing-and-the-cost-of-living/">struggling to pay</a>, and two thirds of the over-65s are <a href="https://www.theguardian.com/money/2022/may/14/older-uk-renters-spending-living-costs-tenants">cutting back on essentials</a>.</p>
<h2>Reviving the private rental sector</h2>
<p>There is growing dissatisfaction with the quality, cost, supply and management of private rental housing. As small landlords scale back, therefore, all eyes are on the growth of large corporate landlords whose expanding property portfolios are proving attractive to institutional investors like pension funds, listed property companies and <a href="https://www.investopedia.com/terms/r/reit.asp">residential real estate investment trusts</a>. </p>
<p>Corporate landlords aim to professionalise and grow the sector, eventually, perhaps, through bulk buy-to-let. But the current trend is <a href="https://btrnews.co.uk/rent-smart-live-smart-the-emergence-of-build-to-rent/">build-to-rent</a>, which promises to couple socially and environmentally responsible investment with stable rental returns and long-run capital gains.</p>
<p>This style of renting appeals particularly to young, higher earners who are locked out of ownership by high deposit requirements – <a href="https://blogsmedia.lse.ac.uk/blogs.dir/119/files/2017/12/Home-Ownership-Safety-Net-11-December-2017.pdf">“rental prisoners”</a> who can afford to pay a premium to bundle accommodation with hotel-style amenities and services. Others are <a href="https://www.theguardian.com/business/2022/jan/22/build-to-rents-glitzy-goldrush-raises-fears-for-social-housing">not so fortunate</a>.</p>
<p>This is, moreover, no quick fix for supply. At best, build-to-rent will account for 8% of the private rented sector by <a href="https://www.mrgpeople.co.uk/should-we-still-be-as-excited-about-built-to-rent/">the early 2030s</a>. Neither is there good news on affordability. In North America, large (global) corporate landlords have been scaling up their portfolios by raising rents, fees and ancillary revenues as well as by <a href="https://escholarship.org/uc/item/07d6445s">growing supply</a>. Concerns have also been raised <a href="https://theconversation.com/the-rise-of-corporate-landlords-how-they-are-swallowing-city-centres-like-manchester-one-block-of-flats-at-a-time-198804">in the UK</a>, while Berliners <a href="https://www.theguardian.com/commentisfree/2021/sep/29/berlin-vote-landlords-referendum-corporate">voted decisively against this corporate model</a>. </p>
<figure class="align-center ">
<img alt="Balconies on the exterior of a new build apartment building in London" src="https://images.theconversation.com/files/523866/original/file-20230502-18-471vls.jpg?ixlib=rb-1.1.0&rect=65%2C114%2C5398%2C3522&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/523866/original/file-20230502-18-471vls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/523866/original/file-20230502-18-471vls.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/523866/original/file-20230502-18-471vls.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/523866/original/file-20230502-18-471vls.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/523866/original/file-20230502-18-471vls.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/523866/original/file-20230502-18-471vls.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Build to rent properties won’t make up for the supply shortage in the rental market.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/brand-new-empty-apartments-around-stratford-1736862350">I Wei Huang/Shutterstock</a></span>
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<h2>What’s next?</h2>
<p>If private renting can’t compensate for the retreat of owner occupation, is there anything more imaginative on the table?</p>
<p>One must-have is investment in social housing, which the UK championed a generation ago. Reinvigorating the vision and values that drove that movement is surely the only way to address the present crisis of <a href="https://england.shelter.org.uk/support_us/campaigns/a_vision_for_social_housing">homelessness and affordability</a>. More generally, the idea of housing according to need, rather than just ability to pay, is attracting <a href="https://www.oecd.org/social/social-housing-policy-brief-2020.pdf">renewed enthusiasm across the OECD</a>.</p>
<p>Second, small landlords are struggling with costs and regulatory changes. Why not incentivise them to sell to not-for-profit providers, diversifying and enlarging an important community-based housing movement? If corporates also earmarked more of their portfolios <a href="https://www.thestar.com/opinion/contributors/2023/04/07/federal-budget-fails-to-address-housing-crisis.html">for affordability</a>, there could be a further opportunity to reform rental housing in a way that prioritises tenant wellbeing and support.</p>
<p>Both government and opposition, on the other hand, have their sights on a <a href="https://www.gov.uk/government/publications/a-fairer-private-rented-sector/a-fairer-private-rented-sector">new “generation buy”</a>. To this end, one bank has already <a href="https://www.lbc.co.uk/news/skipton-100-mortgage-building-society-deposit-free-zero/">reintroduced 100% mortgages</a>. But old-style home ownership has probably <a href="https://journals.sagepub.com/doi/pdf/10.1177/0042098019895227">had its day</a>. A rethink is long overdue.</p>
<p>What if, for example, a fraction of house price appreciation were top-sliced and used to maintain, decarbonise and future-proof the housing stock? What if homeowners were positioned as the temporary occupants of properties built for stewardship rather than possession? Shifts like this could be funded by reforming housing’s <a href="https://www.oecd-ilibrary.org/taxation/measuring-effective-taxation-of-housing_0a7e36f2-en">incoherent tax position</a>, itself an important step towards a fairer, more inclusive future.</p>
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Read more:
<a href="https://theconversation.com/rent-or-buy-does-the-british-obsession-with-home-ownership-pay-off-113229">Rent or buy: does the British obsession with home ownership pay off?</a>
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<img src="https://counter.theconversation.com/content/203800/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Susan Smith has received research funding from the ESRC, the ARC, some government departments, and charitable trusts including the Joseph Rowntree Foundation. </span></em></p>An expert on what the post-homeownership world looks like.Susan Smith, Honorary Professor of Geography, University of CambridgeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2048162023-05-15T13:50:25Z2023-05-15T13:50:25ZEthiopia has one of Africa’s most ambitious housing policies – but the lottery-based system is pulling communities apart<figure><img src="https://images.theconversation.com/files/523843/original/file-20230502-1435-2maof.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">New apartments blocks in Addis Ababa, Ethiopia.</span> <span class="attribution"><span class="source">Eric Lafforgue/Art in All of Us/Corbis via Getty Images</span></span></figcaption></figure><p>The shortage of adequate housing in cities is an issue around the globe, particularly among developing countries that are rapidly urbanising. <a href="https://unstats.un.org/sdgs/report/2019/goal-11/">The UN estimates</a> that more than one billion people live in slums or informal settlements, 80% of them in Africa and Asia. Globally, three billion people will require adequate and affordable housing by 2030. </p>
<p>Governments, particularly in developing countries, are responding with mass housing programmes built with state money or in partnerships with private developers. The <a href="https://www.jstor.org/stable/43192341">mass housing projects</a> implemented in Europe after the second world war have been emulated in many African, Latin American and Asian countries.</p>
<p>In Ethiopia, the German aid organisation GIZ successfully advocated this model in the early 2000s and <a href="https://www.doc-developpement-durable.org/file/Construction-Maisons_et_routes/MaisonsABasCout/en-low-cost-housing-ethiopia-technical-manual-I.pdf">provided technical support</a> to pilot it. </p>
<p>As a result, Ethiopia rolled out <a href="https://www.reuters.com/article/us-ethiopia-landrights-cities-idUSKCN12P1SL">one of the largest housing programmes</a> in sub-Saharan Africa. Under the <a href="https://publicadministration.un.org/en/Research/Case-Studies/unpsacases/ctl/NominationProfilev2014/mid/1170/id/3250">Integrated Housing Development Programme</a>, launched in 2006, about half a million housing units nationwide have been built and <a href="https://www.theguardian.com/cities/2017/dec/04/addis-ababa-ethiopia-redesign-housing-project">transferred to individuals</a>. An estimated two million people have moved in. About a million others have registered for units in the capital city of Addis Ababa alone. The government heavily subsidises the programme, lowering the price per house. </p>
<p>In 2021 and 2022, I spent six months of <a href="https://www.concordia.ca/sgs/public-scholars/profiles/hone-mandefro-belaye.html">doctoral fieldwork</a> researching everyday life for beneficiaries of the programme. In particular, I examined the social fabric of residents who had relocated to new neighbourhoods developed under the housing programme in the Lemi-Kura sub-city, in the outskirts of Addis Ababa. </p>
<p>The fieldwork is part of my PhD project, which examines the change and continuity in relationships among neighbours as their living spaces in Addis Ababa change from single-storey houses to high-rise condominiums.</p>
<p>Based on this research, I have identified some of the problems facing the housing programme. </p>
<p>First, the programme is creating weak and fragmented communities. Most houses are located away from the city centre, where job opportunities are concentrated, which means residents spend more time and money travelling to work, and less time interacting and building relationships with their neighbours. The lottery system used to distribute houses has also dismantled residents’ social networks.</p>
<p>Second, not enough condominiums are being built. While about half a million units have been built nationwide, this is insignificant considering the government estimates a need for 5.5 million houses by 2030. </p>
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Read more:
<a href="https://theconversation.com/megaprojects-in-addis-ababa-raise-questions-about-spatial-justice-141067">Megaprojects in Addis Ababa raise questions about spatial justice</a>
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<p>Third, because of challenges of leadership and financing, the programme has delivered a tiny percentage of its promise. The government has stopped taking new registrations. There are already several hundred thousand people on the waiting list from previous registration rounds. Some of them have been on the list for 17 years. </p>
<p>Fourth, price increases in units due to the <a href="https://www.thereporterethiopia.com/32758/#:%7E:text=The%20increase%20in%20construction%20costs%20has%20already%20been%20reflected,final%20pricing%20of%20housing%20units.&text=Residential%20flats%20can%20now%20cost,charging%20up%20to%20120%2C000%20birr.">increasing cost of supplies</a> and <a href="https://docplayer.net/52244884-Manipulating-ambiguous-rules-informal-actors-in-urban-land-management-a-case-study-in-kolfe-keranio-sub-city-addis-ababa.html">corruption</a> are making the units unaffordable for the intended lower- and middle-income residents. Others have called out the poor quality of the houses, suggesting the condos could be <a href="https://addisstandard.com/condominiums-in-addis-ababa-slums-in-the-making/">slums in the making</a>. </p>
<h2>How the programme works</h2>
<p>The Integrated Housing Development Programme promotes individual house ownership. It builds standardised housing blocks, ranging from studios to three-bedroom units. These homes are cheaper but smaller than similar units built by private developers. The government officials I interviewed said the programme had built 63 new neighbourhoods <a href="https://theconversation.com/addis-ababa-yet-to-meet-the-needs-of-residents-what-has-to-change-174612">in Addis Ababa</a> alone. These consist of blocks of usually five-storey buildings. </p>
<p>To be eligible for registration in <a href="https://publicadministration.un.org/en/Research/Case-Studies/unpsacases/ctl/NominationProfilev2014/mid/1170/id/3250">the programme</a>, individuals should not already own a house and should be in the low- and middle-income category, although no defined income category <a href="https://www.phenomenalworld.org/analysis/socialhousing-addis/">is enforced</a>. Once registered, individuals have to save 10%, 20% or 40% of the price of the units (depending on the housing category they register for) as a down payment. </p>
<p>The remaining percentage is financed through a mortgage from the state-owned Commercial Bank of Ethiopia, with the units used as the collateral. The government subsidises the programme by providing land, and covering the costs of programme administration and infrastructure development, such as roads, water, electricity and sewerage lines. </p>
<p>The units are distributed through a lottery system. Individuals who have the down payment are entered into a digital system that generates winners. While this portrays equity through chance, allegations of corruption and system tampering are common. In July 2022, for instance, Addis Ababa administrators <a href="https://addisfortune.news/city-admin-annuls-condominium-lottery-draw/">annulled the lottery of 25,000 units</a> and charged officials with corruption. </p>
<h2>What’s working, and what’s not working</h2>
<p><a href="https://www.concordia.ca/news/stories/2023/01/24/concordia-public-scholar-hone-mandefro-belaye-uncovers-how-a-city-s-social-fabric-changes-during-rapid-urban-growth.html?c=/sgs/public-scholars/profiles/hone-mandefro-belaye">My research</a> found that people appreciate the quality of the new houses as many inhabitants used to live in dense, slum-like conditions. They didn’t have private facilities. Now, they have a bathroom, kitchen and tap water in their homes. They have more privacy.</p>
<p>However, the long commute to job sites, the exclusion of tenants from neighbourhood committee leadership, and limited financial and political spaces for local committees has reduced opportunities for activities that promote social cohesion. Additionally, the lottery-based distribution of houses has dismantled residents’ social networks, and many expressed feeling lonely and isolated.</p>
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Read more:
<a href="https://theconversation.com/addis-ababa-yet-to-meet-the-needs-of-residents-what-has-to-change-174612">Addis Ababa yet to meet the needs of residents: what has to change</a>
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<p>These observations are not unique to the neighbourhoods in Addis Ababa’s outskirts. <a href="https://www.cogitatiopress.com/urbanplanning/article/view/1239">A study done in a condominium</a> in the city that was built under the housing programme found that only 7% of residents felt secure in their condo neighbourhood, while 95% said they used to feel secure in their previous neighbourhoods. Additionally, 97% of condo residents said they trusted their neighbours in the previous neighbourhood, while only 34% trusted their neighbours in their current neighbourhood. </p>
<p><a href="https://mdl.donau-uni.ac.at/ses/pluginfile.php/405/mod_page/content/18/UoG_BekeleV1-SOCIAL%20CAPITAL.pdf">My previous research in Gondar</a>, a small city in northern Ethiopia, found similar trends. Condominium residents had lower social capital compared to residents in other neighbourhoods.</p>
<p>These findings indicate that Ethiopia’s condominium housing programme is creating a new problem: weak and fragmented communities. Standardised mass housing programmes have become less popular in the west after it was found that they <a href="https://www.tandfonline.com/doi/abs/10.1080/01944360108976236">intensified inequality and social exclusion</a>. </p>
<h2>What needs to be done</h2>
<p>Public housing projects are <a href="https://www.researchgate.net/publication/352011169_Housing_systems_in_the_Global_South_The_relevance_of_the_'social_housing'_approach_in_meeting_housing_needs">critical to solving the housing crisis</a> in the global south. However, they need to be part of a healthy and socially inclusive process of urbanism. </p>
<p>In Ethiopia’s case, this would mean:</p>
<ul>
<li><p>redeveloping slums without randomly distributing current residents through a lottery system </p></li>
<li><p>offering the option of relocating community members into neighbourhoods of their choice – or considering group relocation so that people can move while retaining the support system in their neighbours</p></li>
<li><p>enabling residents to decide on neighbourhood matters through duly elected and empowered local committees</p></li>
<li><p>promoting employment opportunities in and around social housing neighbourhoods.</p></li>
</ul><img src="https://counter.theconversation.com/content/204816/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hone Mandefro's research was supported by a Vanier Scholarship from Social Sciences and Humanities Research Council and Wadsworth International Fellowship from the Wenner-Gren Foundation. </span></em></p>Ethiopia’s mass housing project has built and transferred half-a-million houses in two decades – but it’s damaging the social fabric of communities.Hone Mandefro, Ph.D Candidate and Public Scholar, Concordia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2040262023-05-08T20:11:13Z2023-05-08T20:11:13ZAustralia’s housing crisis is deepening. Here are 10 policies to get us out of it<figure><img src="https://images.theconversation.com/files/522425/original/file-20230422-16-zcb1dy.jpg?ixlib=rb-1.1.0&rect=407%2C5%2C2742%2C1790&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Homeless tents in Musgrave Park, Brisbane</span> <span class="attribution"><span class="source">Photo: Dorina Pojani</span>, <span class="license">Author provided</span></span></figcaption></figure><p>As Australia’s <a href="https://www.youtube.com/watch?v=pbCMaMl69VA">housing crisis deepens</a>, governments at all levels are being called on to help. The federal budget will be handed down today, and housing will be a key talking point. </p>
<p>The current public debate about housing is focused on “silver bullet” solutions. What is needed instead is a comprehensive package of bold interventions, coordinated between all levels of government and the private sector. </p>
<p>While home ownership has been the Australian tradition, it should not be the only option for secure and affordable housing. Tenants, particularly long-term or life-long tenants, must be supported as much as aspiring home owners. Rental housing policies, as opposed to policies aimed at construction, have an immediate widespread impact on housing affordability and security of tenure. </p>
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<h2>5 policies for rental housing</h2>
<p>Here are five key measures for the rental market: </p>
<p><strong>1. Caps on annual rent increases</strong>. These have been common in <a href="https://doi.org/10.1080/14616710802037466">Western Europe</a> and parts of <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9780429338465-2/rent-control-legislation-administration-dennis-keating">North America</a>. Allowable increases should be tied to the inflation rate. This will provide owners with adequate income to maintain the property while providing security for renters. </p>
<p><strong>2. No-fault eviction controls</strong>. Such policies typically accompany caps on annual rent increases. They protect long-term tenants from many risks, including <a href="https://www.citizensadvice.org.uk/cymraeg/amdanom-ni/about-us1/media/press-releases/complain-and-youre-out-research-confirms-link-between-tenant-complaints-and-revenge-eviction/">revenge evictions</a> of tenants who make a complaint and <a href="https://www.google.com.au/books/edition/Airbnb_Short_Term_Rentals_and_the_Future/8g4HEAAAQBAJ?hl=en&gbpv=0">disruptive digital platforms such as Airbnb</a>. Exceptions could be made in cases in which owners and tenants are living on the same properties, since such transactions may be personal as well as financial.</p>
<p><strong>3. Rent assistance</strong>. This can be in the form of housing vouchers delivered directly to tenants. The <a href="https://www.dss.gov.au/housing-support-programs-services-housing-national-rental-affordability-scheme/about-the-national-rental-affordability-scheme-nras">National Rental Affordability Scheme</a> approach of working with landlords is also effective. The amounts of rental assistance should be adjusted to reflect the actual rental cost trends of recent years. </p>
<p><strong>4. Social and public housing rentals.</strong> These include apartments built by the public or non-profit sectors to rent at affordable prices. To avoid <a href="https://www.jstor.org/stable/41107263">stigmatisation and ghettoisation</a>, social housing should house people on a range of incomes. Some buildings may even offer <a href="https://www.realestate.com.au/advice/rent-to-own-home-schemes/">rent-to-own options</a>. </p>
<p><strong>5. Student housing</strong>. While education is <a href="https://www.rba.gov.au/publications/bulletin/2008/jun/pdf/bu-0608-2.pdf">Australia’s third-largest export</a>, students – both domestic and international – receive <a href="https://www.theguardian.com/australia-news/2023/feb/05/university-property-sell-offs-heighten-dire-housing-shortage-as-students-return-to-australia">little accommodation help</a>. This puts them at risk of exploitation and increases the overall housing pressure. Universities must be required to provide <a href="https://doi.org/10.19030/cier.v3i10.238">affordable dormitories</a> on campus for the students they enrol. </p>
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<h2>5 policies for home ownership</h2>
<p>Assistance for people who wish to buy a home but have low incomes and lack access to the “bank of mum and dad” must be guided by the principle that affordable housing is a necessity, just like healthcare and schooling. With that in mind, the government should prioritise the following measures: </p>
<p><strong>6. Increases in market-rate housing supply</strong>. If enough housing is built to meet buyer demand, and the population remains stable in an area, <a href="https://www.smh.com.au/property/news/how-to-make-housing-cheaper-according-to-new-research-20220725-p5b4e0.html">house prices at the metropolitan level will reduce</a>. That’s the law of supply and demand. </p>
<p>Height bonuses and tax incentives should be provided to developers who build dense housing – especially in inner cities and next to public transport stations. New housing should be in the form of townhouses, condominium towers of varied sizes, and even <a href="https://doi.org/10.1111/fcsr.12205">tiny houses</a> and <a href="https://www.google.com.au/books/edition/Contemporary_Co_housing_in_Europe/INS-DwAAQBAJ?hl=en&gbpv=0">co-housing compounds</a> where households live as a community with shared spaces.</p>
<p>The negative phenomenon of NIMBYism should be resisted. It <a href="https://link.springer.com/article/10.1007/s10901-021-09857-6">stems from upper-income classes</a> who cast themselves as progressives defending the local character while in fact they seek exclusivity.</p>
<p><strong>7. Auxiliary units</strong>. Where larger lots cannot be assembled for higher-density housing, the construction of small secondary units next to (or even within) existing houses should be encouraged. To this end, requirements around minimum lot sizes and parking provision should be relaxed. Auxiliary units can serve, among other things, to house older home owners who wish to downsize - hence their traditional name “granny flat”. </p>
<p><strong>8. Inclusionary units</strong>. These are units in new developments that are sold at below-market rates to qualifying lower-income households. Offering a percentage of inclusionary units in large-scale developments should be required nationwide. Inclusionary housing would lead to <a href="https://commongroundorwa.org/Inclus%20H%20&%20ValCap_Calavita.pdf">adjustments in land values</a> rather than making projects unviable. </p>
<p><strong>9. Transition housing</strong>. This type of housing is for people in crisis situations, such as victims of domestic violence, or who are homeless. It must be free and combined with support services. It largely pays for itself because it <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4679128/">offsets the social costs of homelessness</a> and offers major benefits for the beneficiaries. </p>
<p><strong>10. Financial sticks and carrots</strong>. Governments should offer <a href="https://www.urban.org/sites/default/files/publication/104134/an-essential-role-for-down-payment-assistance-in-closing-americas-racial-homeownership-and-wealth-gaps.pdf">assistance with both down payments</a> and loans for first-time buyers. At the same time, <a href="https://apo.org.au/node/54413">investment properties</a> and <a href="https://doi.org/10.1111/j.1467-923X.2008.00914.x">inheritance properties</a> should be taxed at a higher rate to avoid market distortions and property hoarding by small-scale speculators. Tax rules such as <a href="https://doi.org/10.1080/02673037.2015.1080820">negative gearing</a> should be abolished. </p>
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<h2>The risks of sticking to the status quo</h2>
<p>Why haven’t the problems with our housing system been fixed yet? Why was the crisis allowed to develop in the first place? Because <a href="https://www.afr.com/policy/economy/australians-are-the-world-s-richest-people-20220920-p5bjg4">many profit a great deal</a> from a broken housing system – disregarding the <a href="https://doi.org/10.1080/02673037.2016.1229757">inequalities</a> and <a href="https://doi.org/10.1080/07293682.2020.1775666">gentrification waves</a> that come about as a result. </p>
<p>Australian society should come to share an understanding that a dwelling is a space needed for living. It is not a vehicle to store and showcase wealth and extract excessive rents from the “houseless”. Nor is its purpose to sustain class divisions from one generation to the next.</p>
<p>Ignoring the housing crisis will result in the <a href="https://americanaffairsjournal.org/2021/05/the-brazilianization-of-the-world/">Brazilianization</a> of Australia, changing us into a country of high inequality and exclusion in our lifetime. This represents a dark future in which Australia’s long-held <a href="https://www.anu.edu.au/news/all-news/australia-far-from-a-classless-society">myth of a classless society</a> will be shattered.</p><img src="https://counter.theconversation.com/content/204026/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Dorina Pojani has received funding from the ARC, AURIN, the EFL Foundation, and the AAD Foundation. </span></em></p>There are no ‘silver bullet’ solutions to a crisis that has left both renters and owners struggling. Only a comprehensive package of bold policies can ensure all Australians are securely housed.Dorina Pojani, Associate Professor in Urban Planning, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1995142023-03-20T01:11:33Z2023-03-20T01:11:33ZThe post-COVID crisis hit Queensland hardest. With 100,000 households needing low-cost housing, here’s how it can recover<p>Pandemic-generated pressures have left our rental housing market reeling. Australia-wide, vacancy rates are at <a href="https://www.corelogic.com.au/news-research/news/2022/national-vacancy-rates-hit-record-low-as-affordability-starts-to-impact-rent-hikes">rock-bottom levels</a>. Rents are <a href="https://www.9news.com.au/national/domain-report-shows-rental-prices-shoot-up-australian-cities/ea06867b-5c30-479f-8d9b-3755d29f2981">soaring at record rates</a>. </p>
<p>Queensland has been at the epicentre of the post-COVID housing storm. Since the pandemic began, <a href="https://www.domain.com.au/research/rental-report/">house rents have surged by 23%</a> nationally, but by a punishing (for tenants) <a href="https://www.domain.com.au/research/rental-report/">34% in Brisbane</a>. The state’s recent increases in homelessness have likewise <a href="https://theconversation.com/homeless-numbers-have-jumped-since-covid-housing-efforts-ended-and-the-problem-is-spreading-beyond-the-big-cities-194624">outpaced all other states and territories</a>. </p>
<p><a href="https://townofnowhere.com/housingcrisis/">Our report</a> for Queensland Council of Social Service (QCOSS), released today, outlines the huge scale of the state’s housing challenge. Our analysis shows that unmet need for social housing in Queensland now exceeds 100,000 households. That’s five times the <a href="https://www.pc.gov.au/ongoing/report-on-government-services/2023/housing-and-homelessness/housing/rogs-2023-partg-section18-housing-data-tables.xlsx">official waiting list number</a>. </p>
<p>Little wonder Premier Annastacia Palaszczuk convened an extraordinary <a href="https://www.qld.gov.au/about/queensland-housing-summit">housing summit</a> in October 2022. Yet, while partly primed by the pandemic, many current housing policy challenges, for both Queensland and Australia, have been building for decades. Perhaps the most important of these have been the <a href="https://www.abs.gov.au/media-centre/media-releases/owning-home-has-decreased-over-successive-generations">ongoing fall in home ownership rates</a>, especially among younger adults, and our <a href="https://theconversation.com/australias-social-housing-system-is-critically-stressed-many-eligible-applicants-simply-give-up-183530">increasingly inadequate</a> social housing system. </p>
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<img alt="Caravans and cars under trees at the roadside" src="https://images.theconversation.com/files/515996/original/file-20230317-26-593sv8.jpg?ixlib=rb-1.1.0&rect=566%2C675%2C4221%2C2770&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/515996/original/file-20230317-26-593sv8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/515996/original/file-20230317-26-593sv8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/515996/original/file-20230317-26-593sv8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/515996/original/file-20230317-26-593sv8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/515996/original/file-20230317-26-593sv8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/515996/original/file-20230317-26-593sv8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A camp set up by people without homes in Queensland, where recent increases in homelessness have outpaced all other states.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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Read more:
<a href="https://theconversation.com/homeless-numbers-have-jumped-since-covid-housing-efforts-ended-and-the-problem-is-spreading-beyond-the-big-cities-194624">Homeless numbers have jumped since COVID housing efforts ended – and the problem is spreading beyond the big cities</a>
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<h2>Recent policies fall far short</h2>
<p>None of this is to say that Queensland’s current situation can simply be blamed on state government inaction in the immediate past. <a href="https://townofnowhere.com/housingcrisis/">Our report</a> recognises the state government has made progress, for example, on significant rental reforms in its current term. </p>
<p>The Queensland treasurer also announced substantial new <a href="https://cityfutures.ada.unsw.edu.au/documents/673/COVID-19_rental_housing_and_homelessness_impacts_-_FINAL.pdf">funding for social housing</a> as part of the state’s 2021 post-pandemic economic recovery package. This investment built on commitments made before the public health crisis.</p>
<p>Then, at the 2022 housing summit, Palaszczuk pledged to double the government’s Housing Investment Fund to $2 billion. This will generate a flow of investment subsidies for social and affordable house-building. This is housing available at subsidised rents to very low-income households and workers on modest incomes respectively. </p>
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<p>The 2022 change of government in Canberra means there is also now a prospect of renewed <a href="https://theconversation.com/1-million-homes-target-makes-headlines-but-cant-mask-modest-ambition-of-budgets-housing-plans-193289">Commonwealth investment in such housing</a>. Some of this funding will flow to Queensland.</p>
<p>But such initiatives follow a decade of generally intensifying housing stress. Only recently have federal and (some) state governments woken up to this policy challenge. </p>
<p>For example, social housing construction in Queensland averaged only around <a href="https://townofnowhere.com/housingcrisis/">500 dwellings a year</a> in the decade to 2020. While the state’s population grew by 17% in the decade to 2021, social housing stock expanded by just 2%. So, effectively there has been a big cut in capacity.</p>
<p>Recently-promised Queensland and Commonwealth investments in social housing signal a welcome supply boost in coming years. But there’s a vast amount of ground to make up. </p>
<p>The Queensland government’s expanded use of private rental assistance products, such as bond loans and rental grants, is unlikely to greatly reduce housing need in current market conditions. </p>
<p>Likewise, recently-pledged social housing investment is only a start. By <a href="https://townofnowhere.com/housingcrisis/">our calculations</a>, even to prevent an increase in the current scale of need, at least 1,500 new units per year – and possibly as many as 2,700 – are needed. Either way, that’s well above annual output expected under existing state commitments.</p>
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Read more:
<a href="https://theconversation.com/australias-social-housing-system-is-critically-stressed-many-eligible-applicants-simply-give-up-183530">Australia's social housing system is critically stressed. Many eligible applicants simply give up</a>
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<h2>How can we make up so much lost ground?</h2>
<p><a href="https://townofnowhere.com/housingcrisis/">Our report</a> argues that the scale, intricacy and deep-rootedness of Australia’s housing problems demand radical, wide-ranging and sustained action by both levels of government. </p>
<p>In some cases, it’s mainly a matter of building on recent or ongoing state initiatives. For example, Queensland could – and should – further expand the Housing Investment Fund to ramp up social housing construction. It should also extend rental reform.</p>
<p>Some other recommended measures partially echo proposals by construction and real estate industry bodies. The government could, for example, encourage purpose-built – “build to rent” – rental housing. While not directly contributing to low-cost housing, these projects will expand overall housing supply and broaden consumer choice. </p>
<p>Another recommended measure is for Queensland to <a href="https://www.prosper.org.au/campaigns/stamp-duty-to-land-tax/a-c-t-land-tax-transition/">follow the ACT</a> by phasing in a broad-based land tax to replace stamp duty. Overwhelmingly backed by mainstream economists, this change would remove a barrier to moving house. It would also promote more efficient use of existing housing stock and discourage speculative investment.</p>
<p>We also urge, <a href="https://theconversation.com/one-issue-matters-more-to-top-economists-than-any-other-this-election-climate-change-180948">in line with most of Australia’s top economists</a>, the phasing out of private landlord tax concessions. The budget savings could enable the government to invest more directly in meeting housing need. Such reform would also support a <a href="https://theconversation.com/how-housing-made-rich-australians-50-richer-leaving-renters-and-the-young-behind-and-how-to-fix-it-195189">gradual recovery in young adult home ownership rates</a>, as investor landlord advantages over aspiring first home buyers are reduced.</p>
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<strong>
Read more:
<a href="https://theconversation.com/the-housing-wealth-gap-between-older-and-younger-australians-has-widened-alarmingly-in-the-past-30-years-heres-why-197027">The housing wealth gap between older and younger Australians has widened alarmingly in the past 30 years. Here's why</a>
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<p>Importantly, many desirable measures would benefit the housing system, yet at little or no cost to government. For example, regulatory reforms are needed to better <a href="https://townofnowhere.com/housingcrisis/">protect hard-pressed private renters</a> by reducing insecurity and limiting rent increases. The state could also use its supervisory powers more purposefully to reduce underlying pressure on rents resulting from <a href="https://www.theguardian.com/australia-news/2022/dec/29/most-airbnb-style-short-rentals-in-tasmania-used-to-be-long-term-leases-study-finds">unchecked flows</a> of long-term rental properties into short-term Airbnb lets.</p>
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<p>Another important but near-costless measure for the Queensland government would be to mandate affordable housing contributions by private developers. This is <a href="https://www.sgsep.com.au/publications/insights/the-affordable-housing-beacon-we-sailed-past">routine practice in the City of Sydney</a>. It’s also applied on a large scale <a href="https://theconversation.com/england-expects-40-of-new-housing-developments-will-be-affordable-why-cant-australia-94581">in countries such as the UK</a> and in many American cities. Contrary to the way this approach is sometimes portrayed, <a href="https://www.sgsep.com.au/publications/insights/the-affordable-housing-beacon-we-sailed-past">it is landowners who bear the cost of such contributions</a>, not builders or consumers.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/england-expects-40-of-new-housing-developments-will-be-affordable-why-cant-australia-94581">England expects 40% of new housing developments will be affordable, why can't Australia?</a>
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<p>In tackling the complexities of Australia’s housing crisis, governments must recognise that one-off, cherry-picked initiatives are liable to be ineffective or even <a href="https://www.realestate.com.au/news/how-housing-affordability-could-be-fixed/?rsf=syn:news:nca:hs:socref">counter-productive</a>. If they are serious about tackling the problem, they must commit to a coherent package of reforms within a meaningful overarching strategy.</p>
<p>We can only hope the Commonwealth’s <a href="https://www.dss.gov.au/housing-support-programs-services-housing/national-housing-and-homelessness-plan">National Housing and Homelessness Plan</a> – the first of its kind in Australia – opens up a pathway to rebalancing our housing system. Mobilising all of the many tools at its disposal, Queensland must act in concert.</p><img src="https://counter.theconversation.com/content/199514/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hal Pawson receives funding from the Australian Housing and Urban Research Institute (AHURI), the Australian Research Council (ARC), the Queensland Council of Social Service (QCOSS) and Crisis UK. He is a non-executive director of Community Housing Canberra</span></em></p>Brisbane rents are up nearly 50% more than the national average and homelessness in Queensland is increasing at the fastest rate in the country. The state can take several steps to turn things around.Hal Pawson, Professor of Housing Research and Policy, and Associate Director, City Futures Research Centre, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2013932023-03-08T08:33:49Z2023-03-08T08:33:49ZPolitics with Michelle Grattan: Chair of Retirement Income Review, Mike Callaghan, on reforming superannuation<p>Treasurer Jim Chalmers sparked a political row when he announced a tax hike on superannuation concessions for accounts with balances over $3 million, from 15% to 30%, to begin in 2025. Polling indicates the move has broad support from the public, although any change to super is always controversial. Opposition leader Peter Dutton has promised the change would be reversed by a Coalition government. </p>
<p>Mike Callaghan, a former treasury official, chaired the Retirement Income Review that was handed to the Morrison government in 2020.</p>
<p>Callaghan sees the Chalmers’ change to super as “an important step”. </p>
<p>“I think one of the most encouraging things is the fact that this issue regarding equity and sustainability of superannuation, and the measure, has taken place now because it’s a very controversial topic […] The fact that we have seen movement is very encouraging.” </p>
<p>“There’s a lot more that needs to be done in terms of improving the equity and sustainability of the retirement income system and superannuation in particular.</p>
<p>"The unfortunate thing is, given the controversy around it, it might kerb enthusiasm […] towards some more significant changes for some time. That could be the downside of this.”</p>
<p>The superannuation tax concessions are skewed heavily towards higher income earners. Observers have noted that superannuation has become an inheritance vehicle in many cases. Ageing Australians are passing their assets to family rather than using the “nest egg” for their retirement. Callaghan sees this as a “significant issue”. </p>
<p>“It’s fine if people want to leave an inheritance to their children, but what we’re seeing now is that’s not generally a conscious decision of people. We’re seeing across the system now, people not drawing [superannuation savings] down to use them for the intended purpose, which was to support the standard of living in retirement. </p>
<p>"The problem is […] that people don’t know what to do to make the best use of the assets they have in retirement. A lot of it is ignorance, a lot of it is confusion, a lot of it is that having a savings mentality has been drummed into them. Build up your nest egg. Don’t spend your nest egg.”</p>
<p>People need advice to navigate the system “and they’re not getting the advice. The biggest deficiency we’ve seen that’s leading to this outcome, I think, is that people don’t get advice. I think it’s about only 10% of retirees actually get advice entering retirement.</p>
<p>"They need a positive push that they do need advice. When you see the surveys of why people don’t get advice, they say ‘it’s too costly’ and they say, ‘but I don’t have that big financial asset, so I’m not one that has that need for financial advice’. There’s the other one of lack of trust.”</p>
<p>Home ownership is a major factor in what life will be like for retirees. “If you own your own house, you don’t have to pay rent and you have a substantial asset […] that you can draw on to support your retirement.”</p>
<p>But Callaghan doesn’t think younger people should be able to access their super for a house deposit. “While [having a home is] important, solving the problem of helping first home owners get into housing is not going to be solved by tweaks to the superannuation system. It’s not going to achieve its objective at all, as many people say, it’s likely to just add extra pressure to house prices and there is a cost, this very significant cost to the individual of letting them access superannuation.”</p><img src="https://counter.theconversation.com/content/201393/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Michelle Grattan and Mike Callaghan discuss the government's change to super, the complexities regarding it, and whether young people should be able to access it for a house depositMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1955912023-01-13T12:21:33Z2023-01-13T12:21:33ZDecade of progress on making England’s homes safer threatened by austerity and the pandemic<figure><img src="https://images.theconversation.com/files/501353/original/file-20221215-14-f4qc59.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Investing in housing should be just as important in public health messaging as exercise and having your five a day.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/outdoor-basketball-court-housing-rockingham-estate-1762641146">I Wei Huang | Shutterstock</a></span></figcaption></figure><p>In her ruling on <a href="https://theconversation.com/what-awaab-ishaks-death-says-about-the-state-of-social-housing-in-the-uk-expert-qanda-193746">the death</a> of two-year old Awaab Ishak in Rochdale in 2020, senior coroner Joanne Kearsley <a href="https://www.judiciary.uk/wp-content/uploads/2022/11/Awaab-Ishak-Prevention-of-future-deaths-report-2022-0365_Published.pdf">concluded</a> that the child had died as a result of “prolonged exposure to mould in his home environment”. </p>
<p>According to the English Housing Survey, in 2020, 116,000 other social renting households in England faced condensation and mould bad enough to count as a “serious” hazard to health, as defined by the official housing health and safety rating <a href="https://www.gov.uk/government/collections/housing-health-and-safety-rating-system-hhsrs-guidance">system</a>(HHSRS). The survey also found 137,000 homeowners and 191,000 private tenants – for a total of 1.8% of all households in England – are impacted by serious damp and mould. </p>
<p>In total, the survey found that 2.5 million homes in England had serious hazards in 2020. If this sounds awful, nonetheless it marks a huge improvement on the <a href="https://view.officeapps.live.com/op/view.aspx?src=https%3A%2F%2Fassets.publishing.service.gov.uk%2Fgovernment%2Fuploads%2Fsystem%2Fuploads%2Fattachment_data%2Ffile%2F1098575%2F2020_Housing_quality_report_Annex_Tables_Chapter_2.ods&wdOrigin=BROWSELINK">4.8 million</a> found in 2010. <a href="https://www.bre.co.uk/filelibrary/pdf/87741-Cost-of-Poor-Housing-Briefing-Paper-v3.pdf">Going by figures</a> from the Building Research Establishment (BRE), this progress probably saved the NHS about £20 billion over the decade. </p>
<p>However, widespread housing health problems persist because the risks of unsafe housing are overlooked, responsibility is dispersed and funds are tight. Progress on reducing HHSRS hazards at home <a href="https://housingevidence.ac.uk/publications/improving-compliance-with-private-rented-sector-legislation/">slowed</a> over the late 2010s as budget cuts made due to the government’s austerity programme began to hit. With the added impact of the pandemic, progress may now have even started to reverse.</p>
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<img alt="Roofs against a forest background with blue skies and cloud." src="https://images.theconversation.com/files/503987/original/file-20230111-15-dzlag6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/503987/original/file-20230111-15-dzlag6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/503987/original/file-20230111-15-dzlag6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/503987/original/file-20230111-15-dzlag6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/503987/original/file-20230111-15-dzlag6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/503987/original/file-20230111-15-dzlag6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/503987/original/file-20230111-15-dzlag6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The rooftops of a post-war 1950’s suburban housing estate on the fringes of Eastbourne in East Sussex.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/suburban-rooftops-old-town-eastbourne-england-1480271705">pxl.store | Shutterstock</a></span>
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<h2>One in ten at risk</h2>
<p>In 2020, <a href="https://www.gov.uk/government/statistical-data-sets/dwelling-condition-and-safety">9.4% of all households</a> in England lived with some kind of serious health and safety risk. These include risks of fire, electrical faults and building collapse to excessive cold, heat or noise, infections, poisoning, falls, overcrowding, and entry by intruders. </p>
<p>Of all private renters, 13.2% had a serious hazard at home, followed by 10.2% of owners and 5.3% of social renters. Further, 14.2% of black households and 12.5% of low-income households were at risk.</p>
<p><a href="https://www.bre.co.uk/filelibrary/pdf/87741-Cost-of-Poor-Housing-Briefing-Paper-v3.pdf">A landmark report</a> by the BRE in 2011 showed that the effects of serious dampness alone were costing the NHS an estimated £20 million a year (at 2021 prices). Seriously hazardous and poor housing overall was more expensive for the NHS than physical inactivity – and as bad as smoking, drinking and obesity. </p>
<p>In addition to the savings already made over the last decade, <a href="https://www.bre.co.uk/filelibrary/pdf/87741-Cost-of-Poor-Housing-Briefing-Paper-v3.pdf">according to the BRE</a> the NHS could save a further £1.8 billion a year (at 2021 prices), if all outstanding serious housing health hazards in England were been removed. This means the improvements would effectively pay for themselves by 2030. </p>
<h2>Systematic underinvestment</h2>
<p>Part of the problem is who pays for housing improvements. From <a href="https://www.legislation.gov.uk/ukpga/Geo5/9-10/21/enacted">1919 to 1951</a>, it was the UK’s Ministry of Health that was <a href="https://www.sciencedirect.com/science/article/abs/pii/S0033350604001957">responsible</a> for government action on housing. As historian Alan Holmans showed in his 1987 book, <a href="https://www.routledge.com/Housing-Policy-in-Britain-A-History/Holmans/p/book/9780367682200">Housing Policy in Britain</a>, the ministry and local councils both spent vast sums to demolish slum homes and build hundreds of thousands of new ones. </p>
<p>Today, however, the up-front costs of regulation and improvement of housing conditions fall on central government, local authorities, landlords and homeowners. None of these get the financial savings of improvements to health, which, instead, accrue gradually over years to the NHS, and often go unrecognised. All these groups are therefore tempted to delay or cut investment, and end up systematically underinvesting. </p>
<figure class="align-center ">
<img alt="Protestors with banners in front of a court building." src="https://images.theconversation.com/files/503989/original/file-20230111-4890-5dhh3c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/503989/original/file-20230111-4890-5dhh3c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/503989/original/file-20230111-4890-5dhh3c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/503989/original/file-20230111-4890-5dhh3c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/503989/original/file-20230111-4890-5dhh3c.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/503989/original/file-20230111-4890-5dhh3c.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/503989/original/file-20230111-4890-5dhh3c.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In August 2020, people protested the reversal of the brief COVID-related ban on evictions in England.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/manchester-uk-august-24-2020-greater-1801951594">John B Hewitt | Shutterstock</a></span>
</figcaption>
</figure>
<p>There have been numerous attempts to combat this problem. For example, multiple UK health, social care and housing organisations have agreed <a href="https://www.gov.uk/government/publications/improving-health-and-care-through-the-home-mou">a formal plan</a> to improve health through the housing. Clinical commissioning groups have enabled doctors to <a href="https://www.theguardian.com/environment/2014/dec/09/boiler-on-prescription-scheme-transforms-lives-saves-nhs-money">prescribe new boilers</a>. </p>
<p>However, experiments, reforms and improvements rely on investments of time and money, and are less likely to take place when public bodies are hit by austerity measures, or the kind of financial pressures brought on by the pandemic. </p>
<p>In 2020/21, the Department for Levelling Up, Housing and Communities budgeted only only 52%, in real terms, of what it had allocated in 2009/10 for communities activities, including support for new housing. Its budget for local government, including preventing homelessness, was only <a href="https://www.gov.uk/government/statistics/public-expenditure-statistical-analyses-2011">67%</a> of what <a href="https://www.gov.uk/government/statistics/public-expenditure-statistical-analyses-2022">it had been</a>. </p>
<p>In 2012, the regulatory body for social housing in England (then the Homes and Communities Agency) ceased most proactive monitoring of fire safety, repairs, housing quality, neighbourhood quality, tenancies and tenant involvement. The current social housing regulator, meanwhile, <a href="https://www.gov.uk/topic/housing/social-housing-regulation-england">can only respond </a> to individual complaints raised by tenants. </p>
<p>Further, the <a href="https://housingevidence.ac.uk/publications/improving-compliance-with-private-rented-sector-legislation/">local authority budgets</a> for monitoring and enforcement have been drastically reduced. Repairs backlogs have built up in all tenures during the pandemic.</p>
<p>In her ruling, the Rochdale coroner <a href="https://www.judiciary.uk/wp-content/uploads/2022/11/Awaab-Ishak-Prevention-of-future-deaths-report-2022-0365_Published.pdf">said</a> that HHSRS standards are “outdated”, and that the most recent evidence does show even more danger from damp. </p>
<p>Research also reveals harms from housing insecurity, poor neighbourhood quality and unaffordability, which are not taken into account in current housing standards. For example, the financial stress resulting from the 2016 cuts in the local maximum housing benefit for private tenants has been shown to have caused <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5023793/">an estimated 26,000 extra cases</a> of mental ill-health in Great Britain. </p>
<p><a href="https://researchbriefings.files.parliament.uk/documents/CBP-9227/CBP-9227.pdf">Plans to reform</a> social housing regulation, in train since 2017, are going through parliament. Protection of private renters in England from <a href="https://commonslibrary.parliament.uk/research-briefings/cbp-8658/#:%7E:text=The%20Conservative%20Manifesto%202019%20promised,the%202019%2D21%20parliamentary%20session.">no-fault evictions</a>, which was promised in the 2019 manifesto, may yet come to fruition. </p>
<p>However, with current rates of inflation and the cost of living crisis, neither private households, landlords or central government are likely to make enough of the money needed to actually transform housing safety.</p><img src="https://counter.theconversation.com/content/195591/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Becky Tunstall does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The number of homes with serious hazards has been nearly halved, but improvements have slowed and may be in reverse.Becky Tunstall, Professor Emerita of Housing, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1970272023-01-11T19:09:18Z2023-01-11T19:09:18ZThe housing wealth gap between older and younger Australians has widened alarmingly in the past 30 years. Here’s why<figure><img src="https://images.theconversation.com/files/503967/original/file-20230111-21-8wf3yl.png?ixlib=rb-1.1.0&rect=405%2C352%2C2794%2C1450&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The housing wealth gap between younger and older Australians is undeniably growing.</p>
<p>Our newly published <a href="http://dx.doi.org/10.1080/14036096.2022.2161622">study</a> attempts to find out how much it has grown by estimating the gap in the home equity of older people (Australians in their 50s) and younger people (Australians in their 30s) in 1997–98 and 2017–18. </p>
<p>Adjusted for inflation, we find that in 1997-98 the younger group had mean housing equity of A$97,799 compared to the older group’s $255,323 – meaning the older group had 161% more equity home equity than the younger group: <a href="https://images.theconversation.com/files/503932/original/file-20230110-22-749og5.PNG">2.6</a> times as much.</p>
<p>By 2017–18 the younger group had mean equity of $140,080 but the older group’s mean equity had increased more to $467,182 – meaning the older group had 234% more equity than the younger group: 3.3 times as much.</p>
<p>The housing wealth gap between the old and young had grown from 161% to 234% – making it almost half as big again.</p>
<p>The increase in the gap between those we describe as the income-poor young and the income-rich old was even more alarming – a doubling from 532% to 1230%. </p>
<h2>Two things have widened the divide</h2>
<p>Our study draws on the 1997-98 and 2017-18 Bureau of Statistics surveys of income and housing and identifies two forces widening the gap.</p>
<p>The first relates to home ownership. While ownership rates for both groups have fallen, the decline has been steeper among the young (from 52% to 40%) than the old (80% to 69%). </p>
<p>The second relates to the different trajectories in the growth of home equity among those who do own homes. In 1997-98, the average equity in the primary home of owners in the older group was 1.7 times that of owners in the younger group. By 2017-18 it was twice that of the younger owners.</p>
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<p>The increasing ownership gap turns out to have mattered more than the increasing gap in equity among those who do have homes.</p>
<p>We find that if the ownership gap had not widened, the overall intergenerational housing wealth gap would have been smaller at 200%, rather than 234%.</p>
<p>If the gap in home equity among those who owned homes had not widened, the gap would have been smaller at 215% rather than 234%.</p>
<h2>It’s not just age – there are other divides</h2>
<p>Housing inequality exists across other divides. In the table below we identify gaps across gender, location and income divides:</p>
<ul>
<li><p>comparing single women to single men, we find the advantage enjoyed by single women has shrunk from 72% to 42%</p></li>
<li><p>comparing Australians in regional and urban areas we find the advantage enjoyed by those in cities has climbed from 46% to 93%</p></li>
<li><p>comparing Australians in the bottom and top thirds of income (adjusted for family size) we find the housing wealth gap has widened from 94% to 191%.</p></li>
</ul>
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<hr>
<p>The age-based housing wealth gap is much greater than these other divides. But it becomes greater still when it interacts with those divides. </p>
<p>The greatest combined divide is between people who are both younger and income-poor and people who are both older and income-rich. </p>
<p>In 1997-98, the housing wealth gap between these two groups was an outsized 532%. Over the following decades, it more than doubled to 1230%. </p>
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<h2>Action is becoming urgent</h2>
<p>Our findings put beyond doubt that younger people are falling further behind older people in terms of home ownership. </p>
<p>While some of this might reflect a shift in young people’s investment preferences toward non-housing assets, we find young non-owners also have less non-property wealth than owners. </p>
<p>It makes urgent the need to act on both the affordability of housing and the security of tenure for renters.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-rent-crisis-is-set-to-spread-heres-the-case-for-doubling-rent-assistance-196810">The rent crisis is set to spread: here's the case for doubling rent assistance</a>
</strong>
</em>
</p>
<hr>
<p>Our finding that older Australians enjoy higher growth in home values than young Australians provides support for encouraging the use of <a href="https://theconversation.com/ageing-population-calls-for-more-reverse-mortgages-39428">equity-release</a> (“reverse mortgage”) schemes to unlock their housing wealth, relieving younger Australians of some of the tax burden of supporting them.</p>
<p>Although <a href="https://www.cambridge.org/core/journals/journal-of-social-policy/article/housing-equity-withdrawal-perceptions-of-obstacles-among-older-australian-home-owners-and-associated-service-providers/268F54A8EAA1E9ECA118E243505AA9FD">obstacles remain</a>, the benefits to both older Australians and less well-off younger taxpayers would be considerable.</p>
<p>In the past 30 years the housing wealth gap between income-poor young Australians and income-rich older Australians has doubled to more than 1000%. Our society will hold together better if we do what we can to wind it back.</p><img src="https://counter.theconversation.com/content/197027/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rachel Ong ViforJ is the recipient of an Australian Research Council Future Fellowship (project FT200100422). </span></em></p><p class="fine-print"><em><span>Christopher Phelps does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The gap in housing wealth between older and younger Australians has widened from 161% to 234% – making it almost half as big again.Rachel Ong ViforJ, ARC Future Fellow & Professor of Economics, Curtin UniversityChristopher Phelps, Research Fellow, School of Accounting, Economics and Finance, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1957962022-12-18T13:16:49Z2022-12-18T13:16:49ZWhy some people choose to live the nomadic van lifestyle<figure><img src="https://images.theconversation.com/files/500826/original/file-20221213-22773-agowbw.jpg?ixlib=rb-1.1.0&rect=11%2C29%2C3982%2C2634&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">By living a simple life that is fully contained in a vehicle, van dwellers are able to head out on a new adventure whenever they choose.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>As the movie <a href="https://www.youtube.com/watch?v=6sxCFZ8_d84"><em>Nomadland</em></a> revealed to the world, ever since the 2008 financial collapse, people have moved into vehicles as a way of surviving the high cost of living. The pandemic also <a href="https://globalnews.ca/news/7938802/van-life-digital-nomad/">fuelled an increase in the nomadic lifestyle</a>.</p>
<p>In 2020, my co-researcher Scott Rankin and I looked at <a href="https://doi.org/10.1108/CDI-02-2020-0029">how people who live in vehicles balance work and life</a>. In doing so, we discovered that these people were able to <a href="https://theconversation.com/why-some-workers-are-opting-to-live-in-their-vans-148961">achieve harmony between work and non-work</a> by coordinating the movement of their van with their work life.</p>
<p>This year, I continued this research to better understand why people live this way. After living in a van and touring the southern United States to meet with people who live in vehicles, I have just completed the preliminary analysis of surveys answering who and why people live this nomadic lifestyle. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/its-not-all-nomadland-how-vanlife-made-mobile-living-a-middle-class-aspiration-180876">It's not all nomadland: how #vanlife made mobile living a middle-class aspiration</a>
</strong>
</em>
</p>
<hr>
<p>These surveys were voluntarily completed by those living in vehicles — most permanently, some seasonally. The findings provide interesting insights not just into who or why people live in vehicles, but also the adventurous nature of those who choose to live this way.</p>
<h2>Who lives in vehicles?</h2>
<p>Everywhere I went in California and Arizona, I saw <a href="https://www.pacificresearch.org/thousands-of-californians-live-out-of-their-cars-now-what/">people living in their vehicles</a>. Sometimes they were hidden in plain sight, parked beside a park in San Francisco or in a neighbourhood in San Diego. Other times, they congregated in huge convoys, in places like <a href="https://cheaprvliving.com/7-reasons-nomads-should-winter-in-quartzsite-and-3-reasons-you-might-not-want-to/">Quartzsite, Ariz.</a></p>
<p>People of all ages and genders take part in van living. My survey found that women were just as likely as men to live in vans. Of the 85 responses to the question of gender, 53 per cent were women and 47 per cent were men. </p>
<p>The average age of van dwellers was 42. In addition to young people living in vehicles, there was an equal proportion of retirees choosing to live in vehicles. </p>
<figure class="align-center ">
<img alt="An older adult couple sit on the side of their van and clink their coffee mugs together" src="https://images.theconversation.com/files/500827/original/file-20221213-22019-576dx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/500827/original/file-20221213-22019-576dx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/500827/original/file-20221213-22019-576dx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/500827/original/file-20221213-22019-576dx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/500827/original/file-20221213-22019-576dx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/500827/original/file-20221213-22019-576dx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/500827/original/file-20221213-22019-576dx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">People of all ages and genders live the nomadic van lifestyle. For retirees, vehicle living allows them to stretch the value of their limited retirement savings or income.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<h2>Why do people live in vans?</h2>
<p>After asking respondents to rank the reasons why they chose to live in a vehicle, ranked from top to bottom are: 1) freedom, 2) low cost of living, 3) adventure, 4) connection to nature, 5) minimalism, 6) avoiding undesirable weather, 7) starting a new life, 8) pursuing work in different places, 9) working remotely, 10) to be on their own, 11) to join a partner or 12) to leave a partner.</p>
<figure class="align-right ">
<img alt="A yellow van parked on an escarpment road overlooking a large body of water" src="https://images.theconversation.com/files/499369/original/file-20221206-5419-wbh1kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/499369/original/file-20221206-5419-wbh1kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/499369/original/file-20221206-5419-wbh1kq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/499369/original/file-20221206-5419-wbh1kq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/499369/original/file-20221206-5419-wbh1kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/499369/original/file-20221206-5419-wbh1kq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/499369/original/file-20221206-5419-wbh1kq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A van overlooking the coast in Big Sur, Calif.</span>
<span class="attribution"><span class="source">(Angus Duff)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Above all else, vehicle dwellers sought to be free. Whether they were a retiree in a $100,000 Mercedes van, or <a href="https://globalnews.ca/news/8964324/canadians-convert-vans-into-homes-to-overcome-9-to-5-grind/">young Canadians working from a $5,000 van</a>, respondents wanted to be able to move their home to wherever was best for them.</p>
<p>For some, vehicle-living provided a way to survive while minimizing the cost of living was the second reason why respondents chose to live in a vehicle. As one respondent said:</p>
<blockquote>
<p>“As a millennial, the cost of living has significantly increased since previous generations, yet wages have for the most part stayed the same.” </p>
</blockquote>
<p>For others, living in a vehicle minimized their costs, allowed them to work less or allowed them to make the most of their income without paying rent. For retirees, vehicle living provided an opportunity for them to stretch the value of their limited retirement savings or income.</p>
<p>The following three reasons — adventure, connection to nature and minimalism — suggest that people who live in vehicles value an adventurous, outdoor lifestyle. Van living allows them to act on this desire and be in nature whenever they want. </p>
<p>By living a simple life that is fully contained in a vehicle — the essence of minimalism — van dwellers are able to head out on a new adventure whenever they choose. Being able to pack up and move somewhere new also connects back to the number one reason many live in vans: freedom.</p>
<figure class="align-center ">
<img alt="A parking lot full of vans with palm trees visible in the background" src="https://images.theconversation.com/files/499370/original/file-20221206-21-s7pg7r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/499370/original/file-20221206-21-s7pg7r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=270&fit=crop&dpr=1 600w, https://images.theconversation.com/files/499370/original/file-20221206-21-s7pg7r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=270&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/499370/original/file-20221206-21-s7pg7r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=270&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/499370/original/file-20221206-21-s7pg7r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=339&fit=crop&dpr=1 754w, https://images.theconversation.com/files/499370/original/file-20221206-21-s7pg7r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=339&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/499370/original/file-20221206-21-s7pg7r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=339&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A parking lot full of vans in San Diego, Calif.</span>
<span class="attribution"><span class="source">(Angus Duff)</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>The sixth reason for living in a vehicle was to avoid undesirable weather. Many of the people I spoke to lived a truly nomadic life, living in northern states or Canada for half the year, working off the land in tourism or agriculture, and then moving south in the winter to avoid the cold by living and working in Arizona or Southern California.</p>
<p>Living in a vehicle allowed workers to move with the weather as a way of taking advantage of work opportunities, without the need for winter clothing or shelter. As long as the temperature stayed comfortably above freezing, they were able to sleep comfortably without needing a furnace — just a little extra bedding on cold nights.</p>
<h2>Is this just a fad?</h2>
<p>These preliminary results confirm that, for many, the decision to live in a vehicle is a choice with the goal of being free, self-sufficient and having the ability to live how and where they want. The results also suggest that van living is a lifestyle that is not limited by gender or age, but instead is a viable alternative for <a href="https://www.theguardian.com/lifeandstyle/2021/sep/13/what-i-learned-from-living-five-years-in-a-van">those who seek a more affordable and less constrained</a> living option. </p>
<p>And as it turns out, <a href="https://www.vancouverisawesome.com/housing/being-a-bc-vanlifer-is-more-than-a-tiktok-trend-its-a-lifestyle-4758478">van living is not a fad</a>. While many respondents were new to van living, on average, respondents indicated they had been living in a vehicle, full or part-time, for an average of 2.5 years. </p>
<p>Seventy-eight per cent of respondents permanently lived in a vehicle, while 22 per cent owned or rented a home and periodically travelled in a van or motorhome. From my conversations with van dwellers, most of this latter category were retirees who lived in their residence up north for most of the year, then travelled south to live in their vehicle for the winter months.</p>
<p>As <a href="https://theconversation.com/long-term-renters-evicted-during-housing-boom-face-homelessness-191316">the housing crisis deepens</a>, we may see more people embrace van living as a means of surviving the high cost of living. It will be up to cities and government to accept this alternative living arrangement, and consider having parking and facilities to support those who choose to live this way.</p><img src="https://counter.theconversation.com/content/195796/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Angus Duff receives funding from the Bob Gaglardi School of Business and Economics, Thompson Rivers University.</span></em></p>For some people, the decision to live in a vehicle is a choice with the goal of being free and self-sufficient to live how and where they want.Angus J Duff, Associate Professor, Human Resources, Thompson Rivers UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1957792022-12-13T19:04:59Z2022-12-13T19:04:59ZFederal Reserve just hiked interest rates for the 7th time this year – so why are mortgage rates coming down?<figure><img src="https://images.theconversation.com/files/500207/original/file-20221211-90059-cv8u59.jpg?ixlib=rb-1.1.0&rect=19%2C25%2C4237%2C2814&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Homebuyers are receiving something of a holiday gift in falling mortgage costs.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/miniature-wooden-houses-and-a-red-arrow-down-the-royalty-free-image/1192866996?phrase=interest%20rates%20homes&adppopup=true">Andrii Yalanskyi/Getty Images</a></span></figcaption></figure><p><em>The Federal Reserve <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20221214a.htm">raised interest rates</a> by half a percentage point on Dec. 14, 2022, to a range of 4.25 to 4.5%, the <a href="https://www.federalreserve.gov/monetarypolicy/openmarket.htm">seventh increase this year</a>. So far in 2022, the Fed has lifted its benchmark short-term rate, which influences most other borrowing costs in the economy, by 4.25 percentage points from a low of near zero as recently as March.</em></p>
<p><em>But even as the U.S. central bank lifts rates – and plans to keep doing so in 2023 – homebuyers are beginning to notice a pleasant surprise: <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">Mortgage rates have been falling</a>.</em></p>
<p><em>What’s going on?</em></p>
<p><em>We asked <a href="https://scholar.google.ch/citations?hl=en&view_op=list_works&gmla=AJsN-F4fuP-jZCTY0dss1jyFm2bODATjgGmtalW1ZCYWx6Sw-w7-2gMSs_-5u0HsxzA0_0AxX69RwCOCKv-y6oSwPfRDnRwa5C62z81iNnOd7OLu7HZKegI&user=VxWst50AAAAJ">Brian Blank</a>, a finance professor who has <a href="https://doi.org//10.1080/10527001.2021.2008094">researched mortgage rates and bank loans</a>, to explain the paradox of falling mortgage costs at a time of rising base interest rates.</em></p>
<h2>What’s happening with mortgage rates?</h2>
<p>After soaring for much of 2022, mortgage rates and other long-term rates are starting to come down.</p>
<p>The average rate on a 30-year mortgage <a href="https://fred.stlouisfed.org/series/MORTGAGE30US">has fallen 0.75 percentage points</a> in the past month or so, after hitting a 20-year high of 7.08% in early November. Rates reached 6.33% on Dec. 8, the lowest level since September. This occurred over the same period as the Fed lifted its benchmark interest rate 2 percentage points. </p>
<p>Another key rate that fell is the yield on 10-year Treasury bonds, which <a href="https://www.cnbc.com/quotes/US10Y">has declined by a similar amount</a>, to 3.5%.</p>
<h2>Why are mortgage rates falling if the Fed is still hiking?</h2>
<p>The short and rather boring technical answer is that bond markets anticipated this rate hike many months ago. And as market factors largely dictate the costs of borrowing, the increase was already absorbed into home loan rates.</p>
<p>Mortgage rates, while rising due to the Federal Reserve’s rapid hiking pace, are actually more closely linked to the <a href="https://fred.stlouisfed.org/graph/?graph_id=281291">interest rate on Treasury securities</a>, specifically the yield on the 10-year Treasury bond. That security began to anticipate the Fed’s interest rate increases a year ago and <a href="https://www.wsj.com/market-data/quotes/bond/BX/TMUBMUSD10Y">rose from less than 1.5% in December 2021</a> to more than 3.25% by June. </p>
<p>And now, with signs that inflation has already peaked and amid growing concerns of a slowing economy, these longer-term rates are coming down in anticipation of fewer future Fed rate hikes than expected only a short time ago. In fact, mortgage and other long-term rates may keep falling over the coming months – assuming the Fed manages to get inflation under control so it is able to lower its benchmark rate again.</p>
<h2>Why do mortgage rates follow the yield on the 10-year Treasury bond?</h2>
<p>Even though 30-year mortgages can be held for three decades, <a href="https://www.rocketmortgage.com/learn/average-mortgage-length">most people sell their house or refinance within a decade</a>, which means the investor who is receiving the mortgage payments is effectively investing in a 10-year bond. </p>
<p>As a result, the average 30-year fixed rate mortgage interest rate is normally <a href="https://www.blackknightinc.com/wp-content/uploads/2020/04/BKI_MM_Feb2020_Chart11.pdf">1 to 2 percentage points higher</a> than the yield on the 10-year Treasury bond.</p>
<p>However, when the economy has more uncertainty than usual, like earlier this year, <a href="https://seekingalpha.com/article/4545035-mortgage-demand-plunges-spread-between-mortgage-rate-and-10-year-treasury-yield-blows-out">this spread can get as large as 3 percentage points</a>. This uncertainty can be the result of a potential economic <a href="https://www.chicagofed.org/publications/chicago-fed-letter/2018/404">downturn</a>, the possibility of the Fed raising rates more than expected, inflation, <a href="https://www.bloomberg.com/news/articles/2022-09-22/mortgage-investors-jump-in-after-fed-says-mbs-sales-aren-t-near#xj4y7vzkg">Fed balance sheet changes</a> or all of the above – as happened in 2022.</p>
<figure class="align-center ">
<img alt="a for sale sign hangs on a white post in front of a home pictured in the distance" src="https://images.theconversation.com/files/500485/original/file-20221212-113662-ctxrb1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/500485/original/file-20221212-113662-ctxrb1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/500485/original/file-20221212-113662-ctxrb1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/500485/original/file-20221212-113662-ctxrb1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/500485/original/file-20221212-113662-ctxrb1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/500485/original/file-20221212-113662-ctxrb1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/500485/original/file-20221212-113662-ctxrb1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Mortgage rates have fallen over the past month but remain above 2021 levels, leaving homes sitting on the market longer than during the pandemic boom.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/MortgageRates/ff69019f4c3841448fee98750f5c707a/photo?Query=home%20for%20sale&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=2207&currentItemNo=0">AP Photo/Julio Cortez</a></span>
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<h2>Why are mortgage rates higher than Treasury yields?</h2>
<p>Since the United States Treasury is more likely to pay investors back than almost any individual homeowner, <a href="https://www.investright.org/understand-investing/high-risk-investments/#nvkForm6529d2c3b5fdc05a987634da4327a5eb">investors charge a higher interest rate</a> due to the additional risk they are taking. </p>
<p>Even though individuals go to banks to borrow, <a href="https://www.urban.org/policy-centers/housing-finance-policy-center/projects/mortgage-servicing-collaborative/help-me-understand-mortgage-servicing/how-does-securitization-affect-mortgage-servicing">banks often sell</a> <a href="https://www.imf.org/external/pubs/ft/fandd/2008/09/pdf/basics.pdf">those loans to investors</a>, who then receive the money individuals pay back on the loan. </p>
<p>Since individuals default on mortgages more often than the U.S. government defaults on Treasury bonds, investors <a href="https://corporatefinanceinstitute.com/resources/equities/required-rate-of-return/">require</a> a <a href="https://www.morganstanley.com/im/en-us/individual-investor/insights/articles/market-expected-return-on-investment.html">higher return</a> to purchase the rights to receive the payments from those mortgages.</p>
<h2>If mortgage rates fall, will the Fed have to raise rates even higher to control inflation?</h2>
<p>Falling mortgage rates preceded an increase in the home purchase index, which is a measure of current market <a href="https://www.mortgagenewsdaily.com/news/11302022-mortgage-application-volume">conditions</a> to purchase homes. This suggests the <a href="https://www.calculatedriskblog.com/2022/11/mba-mortgage-applications-decrease-in_0650395375.html">housing market may finally start to pick up steam</a> after slowing down all year. </p>
<p>Since the Fed is trying to slow economic <a href="https://www.bls.gov/news.release/pdf/empsit.pdf">activity</a> to bring down inflation, this <a href="https://www.khanacademy.org/economics-finance-domain/macroeconomics/income-and-expenditure-topic/macroeconomics-is-lm/v/investment-and-real-interest-rates">could cause housing prices</a> to increase again, thus forcing the Fed to raise its target rate more than planned. </p>
<p>However, I believe the effective federal funds rate, which is the market rate directly influenced by the Fed’s target range, is already <a href="https://www.federalreserve.gov/newsevents/speech/powell20221130a.htm">sufficiently restrictive</a> to slow the housing market and restore more normal economic conditions in 2023. Moreover, the decline in mortgage rates is still quite small – they remain over double what they were a year ago – so the drop isn’t likely to have much of an impact alone.</p>
<p>What the Fed itself thinks about this challenge – and where it <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220921.pdf">projects</a> to take interest <a href="https://www.bloomberg.com/news/articles/2022-11-26/the-treasury-market-s-big-recession-trade-is-gathering-momentum">rates</a> next year – is what I and many other <a href="https://www.wsj.com/articles/fed-could-pencil-in-higher-interest-rates-next-year-while-slowing-hikes-in-december-11670208857">economists</a> and <a href="https://www.bloomberg.com/news/articles/2022-12-05/study-of-5-trillion-funds-show-pros-positioned-for-soft-economic-landing">investors</a> will be monitoring closely after it met for the last time of 2022. It should tell us what to expect in 2023 – so stay tuned.</p>
<p><em>Article updated to include Fed raising rates.</em></p><img src="https://counter.theconversation.com/content/195779/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>D. Brian Blank does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The cost of borrowing for a home has fallen in recent months, despite repeated increases of the benchmark interest rate. An economist explains the seeming paradox.D. Brian Blank, Assistant Professor of Finance, Mississippi State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1940352022-11-08T23:06:22Z2022-11-08T23:06:22ZNegative equity is looming for some home owners – but you only need to worry if you need to sell<figure><img src="https://images.theconversation.com/files/494287/original/file-20221108-12-r7t3am.jpg?ixlib=rb-1.1.0&rect=17%2C49%2C2968%2C2110&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Getty Images</span></span></figcaption></figure><p>It feels like a perfect storm is building. The rising cost of living and higher interest rates are putting household budgets under stress, and falling house prices could push some home owners into negative equity. </p>
<p>On the one hand, the drop in house prices is a good thing as it makes housing more affordable, particularly for young people – and we want that. </p>
<p>But every transaction has two sides. Dropping house prices are bad for those who need or want to sell their house, or who hold most of their wealth in their home. These people are now markedly poorer. </p>
<p>In September 2017, the <a href="https://www.qv.co.nz/price-index/">average house in New Zealand cost NZ$666,518</a>. By January 2022, prices had peaked at $1,063,765. But by September 2022, the average house price had slipped to $956,592. The downward trend may continue for a while yet. </p>
<p>Some 32% of New Zealand households have a <a href="https://www.stats.govt.nz/news/mortgages-and-other-real-estate-loans-drive-household-debt-up/">mortgage on the primary residence</a>, with the median property debt increasing to $260,000 in the year ended June 2021, up $56,000 over the past three years.</p>
<h2>A looming threat</h2>
<p>For most home owners, a small or even moderate fall in the value of their home won’t make any practical difference. Their house will still probably be worth more now than it was two years ago and it will still be worth more than their mortgage.</p>
<p>However, for those whose mortgage is a high fraction of the value of their home – those who bought property in 2021 when rates were low and house prices high, for example – the risk is that they will fall into negative equity. </p>
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Read more:
<a href="https://theconversation.com/what-happens-if-i-cant-pay-my-mortgage-and-what-are-my-options-188891">What happens if I can't pay my mortgage and what are my options?</a>
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<p>A borrower enters negative equity if the value of their home drops below the value of their mortgage. </p>
<p>For around 2% of New Zealand mortgage holders, this threat <a href="https://www.theguardian.com/world/2022/nov/05/new-zealand-the-kiwi-in-the-coalmine-as-house-prices-slump-and-repayments-rise">has become a reality</a>.</p>
<p>But is it time to panic? Well, probably not. As long as you don’t need to sell your house and you can sustain your mortgage payments, then negative equity doesn’t matter all that much. You can just wait it out. </p>
<p>That said, negative equity can become more of an issue when other economic issues – rising inflation, unemployment or interest rates – rear their heads.</p>
<h2>Contributing risk factors</h2>
<p>Lets start with interest rates. Rising interest rates are making debt more expensive. Local media are already publishing stories of <a href="https://www.stuff.co.nz/business/130353910/no-money-in-negative-equity-and-facing-double-interest-costs-a-year-after-buying-first-home">white collar workers struggling to pay their mortgages</a>. </p>
<p>Yes, interest rates are rising but they are still relatively low. The floating rate for a first mortgage is currently 6.8%. Prior to the 2008 global financial crisis (GFC), this interest rate tier <a href="https://www.rbnz.govt.nz/statistics/series/exchange-and-interest-rates/retail-interest-rates-on-lending-and-deposits">hit a peak of 10.9%</a>. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1589712636924825600"}"></div></p>
<p>That said, interest rates fell over the course of the GFC, while rates are currently rising. Furthermore, the level of debt held by many households is now higher since people had to take on bigger mortgages as house prices rose. Bigger debt levels makes higher interest rates harder to cope with.</p>
<p>Unemployment will make negative equity a bigger issue. Currently, New Zealand’s <a href="https://www.stats.govt.nz/indicators/unemployment-rate/">unemployment rate is historically low</a>, meaning most people with a mortgage can feel relatively secure in their job or job prospects. </p>
<p>But it won’t stay there. </p>
<p>The low unemployment makes it harder for the Reserve Bank of New Zealand (RBNZ) to rein in inflation, particularly if wages continue to rise. The RBNZ has been clear that New Zealand needs to get ready for a rise in unemployment, with some economists saying 50,000 New Zealanders would need to <a href="https://www.stuff.co.nz/business/129960960/50000-people-may-need-to-lose-their-jobs-to-bring-inflation-under-control">lose their jobs to bring inflation under control</a>.</p>
<p>Rises in both unemployment and interest rates at the same time will increase the chance that some highly-leveraged mortgage holders get into problems.</p>
<figure class="align-center ">
<img alt="Adrian Orr in front of microphones and Reserve Bank sign" src="https://images.theconversation.com/files/494285/original/file-20221108-11358-acv2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/494285/original/file-20221108-11358-acv2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/494285/original/file-20221108-11358-acv2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/494285/original/file-20221108-11358-acv2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/494285/original/file-20221108-11358-acv2x.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/494285/original/file-20221108-11358-acv2x.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/494285/original/file-20221108-11358-acv2x.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Reserve Bank Governor Adrian Orr has warned that inflation must come down – and this could mean difficulty for some borrowers.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com.au/detail/news-photo/reserve-bank-governor-adrian-orr-speaks-during-a-press-news-photo/1212617885?phrase=Adrian%20Orr&adppopup=true">Getty Images</a></span>
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<h2>Did we learn from the GFC?</h2>
<p>Negative equity was a big problem during the 2008 GFC as house prices fell and banks accumulated bad loans. This issue hit the United States and parts of Europe particularly hard. </p>
<p>But that doesn’t mean we are heading to the same place now.</p>
<p>Following the 2008 crisis, New Zealand’s lending rules changed, requiring banks to be more cautious when lending. In 2021, these rules were <a href="https://www.consumerprotection.govt.nz/general-help/consumer-laws/credit-contracts-and-consumer-finance-act/">refined even further</a>. The number of low-equity loans that banks could make was reduced and banks had to look more closely at a borrower’s ability to repay debt. </p>
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Read more:
<a href="https://theconversation.com/fighting-inflation-doesnt-directly-cause-unemployment-but-thats-still-the-most-likely-outcome-193617">Fighting inflation doesn’t directly cause unemployment – but that's still the most likely outcome</a>
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<p>Some of these requirements have certainly made it harder for first home buyers, perhaps overly so, but it has reduced the risk in our financial system. </p>
<p>This time around there will be fewer borrowers with mortgages that are a high fraction of the value of their house and fewer who can’t manage higher mortgage repayments.</p>
<p>Banks also have no incentive to push people into a default on their mortgage. This is especially true when there is negative equity. The bank doesn’t win if they force the sale of a home and get back less than they were owed. And the headline “Bank evicts mum with two toddlers” never plays well. </p>
<p>So expect banks to work hard with any struggling mortgage holders to help them keep paying the mortgage. </p>
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<p>The immediate future is not going to be pleasant for many borrowers. The RBNZ must get inflation down. Doing that will not be easy and homeowners should prepare for higher interest rates.</p>
<p>But negative equity is not a problem providing you don’t need to sell your house and you can afford to pay your mortgage. </p>
<p>Even if unemployment rises to 7%, which is just above the post GFC peak, that would still mean a 93% employment rate. Most people will be in work, living in their house and paying their mortgage – even those with negative equity.</p><img src="https://counter.theconversation.com/content/194035/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Hickson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>What happens when you owe more on your mortgage than your house is worth? Negative equity is a growing concern for some homeowners, but how real are the risks?Stephen Hickson, Economics Lecturer and Director Business Taught Masters Programme, University of CanterburyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1888172022-08-31T01:54:14Z2022-08-31T01:54:14ZI’m considering an interest-only home loan. What do I need to know?<figure><img src="https://images.theconversation.com/files/480308/original/file-20220822-54947-qmv2tv.jpg?ixlib=rb-1.1.0&rect=0%2C29%2C3992%2C2958&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Chuttersnap/Unsplash</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>An <a href="https://moneysmart.gov.au/home-loans/interest-only-home-loans">interest-only home loan</a>, as the name suggests, is where you only pay the interest on a loan and not the principal (the original amount you borrowed).</p>
<p>While authorities such as the Reserve Bank often <a href="https://www.rba.gov.au/speeches/2018/sp-ag-2018-04-24.html">see</a> them as risky, interest-only loans can be helpful in some circumstances.</p>
<p>If you’re considering an interest-only loan, here’s what you need to know.</p>
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Read more:
<a href="https://theconversation.com/more-rented-more-mortgaged-less-owned-what-the-census-tells-us-about-housing-185893">More rented, more mortgaged, less owned: what the census tells us about housing</a>
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<h2>How long do they go for?</h2>
<p>These loans are typically last for five years at most, before reverting back to principal and interest (where you have to pay back, through regular payments, both interest and the initial sum you borrowed).</p>
<p>You could potentially apply for another interest-only loan after your first one winds up, perhaps by refinancing (where you take a new mortgage to repay an existing loan). But you might not get it – and you’d still have to pay off the principal eventually.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/480309/original/file-20220822-18038-nyikjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/480309/original/file-20220822-18038-nyikjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/480309/original/file-20220822-18038-nyikjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/480309/original/file-20220822-18038-nyikjs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/480309/original/file-20220822-18038-nyikjs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/480309/original/file-20220822-18038-nyikjs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/480309/original/file-20220822-18038-nyikjs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/480309/original/file-20220822-18038-nyikjs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Interest-only loans can cost you a lot more in interest over time than a regular principal and interest loan.</span>
<span class="attribution"><span class="source">Photo by Andrew Mead on Unsplash</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>What are the upsides of an interest-only loan?</h2>
<p>An interest-only loan means you’ll have more cash available to cover other costs, or invest elsewhere.</p>
<p>You can use a <a href="https://moneysmart.gov.au/home-loans/mortgage-calculator">mortgage calculator</a> to work out how much extra cash you’d have if you switched from a principal and interest loan to an interest-only loan. It’s typically hundreds of dollars per week. </p>
<p>This may get you a bit more wriggle room for daily expenses. Or, some people use the extra cash to invest in other things – such as shares – in the hope they can make more money overall and pick up some tax benefits along the way. That’s why interest-only loans are often popular among <a href="https://moneysmart.gov.au/home-loans/interest-only-home-loans">investors</a>. Of course, this strategy comes with risk. </p>
<p>An interest-only loan may also have a redraw facility, allowing you to add extra payments into the loan (above and beyond the interest) if you want, and withdraw money later when you need cash. This can allow people to avoid a personal loan, which usually has a much higher interest rate.</p>
<p>Regular principal and interest loans may also have a redraw facility but the regular payments of principal are unavailable for redraw. That means less flexibility for the borrower. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/480311/original/file-20220822-64666-y67vz3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/480311/original/file-20220822-64666-y67vz3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/480311/original/file-20220822-64666-y67vz3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/480311/original/file-20220822-64666-y67vz3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/480311/original/file-20220822-64666-y67vz3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/480311/original/file-20220822-64666-y67vz3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/480311/original/file-20220822-64666-y67vz3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/480311/original/file-20220822-64666-y67vz3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">What’s right for one borrower won’t be for the next.</span>
<span class="attribution"><span class="source">Image by Pfüderi from Pixabay</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>What are the downsides?</h2>
<p>The interest rates on interest-only loans are generally higher than principal and interest loans.</p>
<p>For example, the RBA July 2022 <a href="https://www.rba.gov.au/statistics/tables/xls/f05hist.xls">indicator rate</a> for owner-occupier interest-only rates is 6.31%.</p>
<p>But the equivalent variable rate for principal and interest loans is 5.77% (the indicator rate is just a guide; the actual difference varies from bank to bank).</p>
<p>Interest-only loans can cost you a lot more over time than a regular principal and interest loan.</p>
<p>This means a borrower needs to manage their finances well to ensure they can cover the interest payments now and still have enough to pay down the principal eventually. So you’ll need a plan for how you’re going to do that when the interest-only loan ends.</p>
<p>There is also a risk of a shock – such as job loss, personal crisis or housing crash – causing the borrower to default on the loan altogether. </p>
<p>If the borrower defaults on an interest-only loan, they may lose the house and the bank is left with a debt that was not substantially repaid (because the borrower had not yet made a dent in the principal). It’s a lose-lose situation.</p>
<h2>Are interest-only loans common?</h2>
<p>Interest-only loans represent <a href="https://www.apra.gov.au/news-and-publications/apra-releases-quarterly-authorised-deposit-taking-institution-statistics-11">11.3% of all home loans</a> in Australia.</p>
<p>This figure has been <a href="https://www.rba.gov.au/publications/fsr/2017/apr/box-b.html">trending down</a> over the past five years, due in part to tighter <a href="https://www.apra.gov.au/news-and-publications/apra-to-remove-interest-only-benchmark-for-residential-mortgage-lending">lending restrictions</a> and the fact low interest rates have made principal and interest loans relatively cheap recently.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/480312/original/file-20220822-65738-za6ht2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/480312/original/file-20220822-65738-za6ht2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/480312/original/file-20220822-65738-za6ht2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/480312/original/file-20220822-65738-za6ht2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/480312/original/file-20220822-65738-za6ht2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/480312/original/file-20220822-65738-za6ht2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/480312/original/file-20220822-65738-za6ht2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/480312/original/file-20220822-65738-za6ht2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Interest-only loans represent 11.3% of all home loans in Australia.</span>
<span class="attribution"><span class="source">Image by sandid from Pixabay</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>What does the research say?</h2>
<p>One Dutch <a href="https://link.springer.com/article/10.1007/s11146-013-9453-9">study</a> found “households that are more risk-averse and less literate are significantly less likely to choose an interest-only mortgage”. This partly due to lower initial repayments and wealthy households preferring the financial flexibility.</p>
<p>Interest-only borrowing has also been found to <a href="https://www.sciencedirect.com/journal/journal-of-housing-economics">fuel</a> <a href="https://doi.org/10.1016/j.regsciurbeco.2018.06.004">housing</a> <a href="https://www.sciencedirect.com/science/article/pii/S1094202520300776?via%3Dihub">speculation</a> and reduce housing affordability. </p>
<p>A US study found borrowers also tend to <a href="https://doi.org/10.1093/rof/rfy016">default</a> more.</p>
<p>A Danish <a href="https://doi.org/10.1162/rest_a_01146">study</a> found that once the interest-only lower repayment period is over and the loan reverts to principal and interest, those who didn’t make principal repayments suffered a large drop in disposable income.</p>
<h2>Financial flexibility comes with a catch</h2>
<p>With rates rising, interest-only loans may sound like an appealing way to have more cash available to cover other costs in life.</p>
<p>But just remember financial flexibility comes with a catch. An interest-only loan could be more expensive in the long run. </p>
<p>For some people, that cost will be worth it if it allows them to hold onto the house during a brief tough period or make more money investing elsewhere. But it’s a risk.</p>
<p>And when the interest-only loan ends, you’re still stuck with the task of paying off the money you borrowed from the bank in the first place (with interest).</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/should-i-pay-off-the-mortgage-asap-or-top-up-my-superannuation-4-questions-to-ask-yourself-170470">Should I pay off the mortgage ASAP or top up my superannuation? 4 questions to ask yourself</a>
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<img src="https://counter.theconversation.com/content/188817/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Adrian Lee does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While authorities such as the Reserve Bank often see them as risky, interest-only loans can be helpful in some circumstances.Adrian Lee, Associate Professor in Property and Real Estate, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1858932022-07-06T01:56:44Z2022-07-06T01:56:44ZMore rented, more mortgaged, less owned: what the census tells us about housing<p>On the surface, the latest census tells us home ownership has changed little over the past five years. Between the 2016 census and this census in 2021, the share of Australians owning their homes remained steady at about <a href="https://abs.gov.au/census/find-census-data/quickstats/2021/AUS">66%</a>.</p>
<p>The proportion renting also changed little, climbing from 30% to 30.6%.</p>
<p>But a closer look reveals bigger long-term changes.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/more-of-us-are-retiring-with-mortgage-debts-the-implications-are-huge-115134">More of us are retiring with mortgage debts. The implications are huge</a>
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<p>While the proportion owning has slipped only two percentage points from 68% to 66% between 1996 and 2021, the proportion owning outright (without a mortgage) has plummeted from 42% to 31%.</p>
<p>The proportion mortgaged is nine percentage points higher. The proportion renting is four percentage points higher.</p>
<p>Most of the shift occurred between 2001 and 2006, which were the early years of the sustained home price boom.</p>
<p>As prices climbed, more Australians rented, and owner occupiers took on larger mortgages that took longer to pay off. </p>
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<h2>It’s the under 40s for whom things have changed the most</h2>
<p>In younger age groups, the proportion owning a home has dived.</p>
<p>Between 1996 and 2021, the share of owners in households headed by 25-34 year olds sank from 50% to 43%. </p>
<p>This is part of a long-term decline that began in 1981.</p>
<p>Home ownership rates have also dived among Australians aged 35-44 and 45-54 too, but at a slower pace than for Australians aged 25-34. </p>
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<p>A <a href="https://cdn.theconversation.com/static_files/files/2157/The_Conversation_Australia_-_Peter_Martin_-_Customised_2021_CENSUS_Media__data_%281%29.xlsx?1656983212">customised data report</a> prepared by the Australian Bureau of Statistics shows home ownership rates among Australians aged 65+ ticked up from 78.4% to 79.4% between 2016 and 2021 after sliding in the previous two censuses.</p>
<p>The downward trend in home ownership among the young and the upward trend in mortgaged rather than outright ownership show no signs of reversing, despite significant spending on first homebuyer subsidies and guarantees. </p>
<h2>It depends on where you live</h2>
<p>The changes have not been uniform throughout the country.</p>
<p>In South Australia, Western Australia and Tasmania the proportion of households renting has barely changed since 1996. In the Northern Territory and Australian Capital Territory it has slipped. </p>
<p>But in Victoria the proportion of households renting has jumped 3%, in NSW it has jumped 4%, and in Queensland 3%.</p>
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<p>The proportion of households owning outright unmortgaged has fallen 10-12% in Queensland, Victoria and NSW, 8% in South Australia and Western Australia, 6% in Tasmania, 3% in the ACT, and is unchanged in the Northern Territory.</p>
<p>Back in 1996, Victoria had the highest share of outright ownership at 44%. It is now below 32%, less than Tasmania (37%) and South Australia (33%).</p>
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<h2>A shift towards apartments</h2>
<p>The proportion of households occupying freestanding houses fell from 82% to 72% between 1996 and 2021.</p>
<p>The proportion housed in apartments climbed from 8% to 14%</p>
<p>The shift has been more evident among owners than renters, suggesting buyers have to make greater sacrifices to obtain a home than they used to.</p>
<h2>A shift towards agents</h2>
<p>Not only are more of us renting (up from 28% in 2006 to 31% in 2021) but more of us are doing it through real estate agents. </p>
<p>Whereas in 2006 half of all rental properties were rented through agents, by 2021 it was two-thirds. Over the same 15 years, the share of rental homes rented from a state or territory housing authority slid from 15% to 10%. </p>
<p>The share of rental housing provided by the community sector changed little.</p>
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<h2>Much unknown</h2>
<p>The census mainly provides population-wide snapshots, rather than tracing people through time.</p>
<p>This makes it hard to tell the extent to which people are moving out of home ownership and then back into it (and sometimes out of it again), along the lines suggested by <a href="https://theconversation.com/the-edges-of-home-ownership-are-becoming-porous-its-no-longer-a-one-way-street-119995">my own research</a> using data from the Household, Income and Labour Dynamics in Australia (HILDA) survey.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/no-longer-a-one-way-street-home-ownership-is-becoming-porous-119995">No longer a one-way street, home ownership is becoming porous</a>
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<p>Nor does it provide much insight into whether the growing numbers of Australians having to rent will eventually own (mortgaged) homes.</p>
<p>Research by myself and colleagues in Britain and United States points to a “<a href="https://www.tandfonline.com/doi/full/10.1080/03085147.2021.2003086">catch-up</a>” in which Americans and Australians denied home ownership when young attain it later in life.</p>
<p>One thing the census puts beyond doubt is that more of us are renting and more of us are mortgaged rather than owning outright compared with 20 years ago.</p><img src="https://counter.theconversation.com/content/185893/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rachel Ong ViforJ is the recipient of an Australian Research Council Future Fellowship (project FT200100422). She also receives funding from the Australian Housing and Urban Research Institute.</span></em></p>The share of homes owner-occupied has slipped only two percentage points since 1996, but the proportion owned outright has slid from 42% to 31%.Rachel Ong ViforJ, ARC Future Fellow & Professor of Economics, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1824252022-05-05T19:58:29Z2022-05-05T19:58:29ZWho really wins and loses from first homebuyer schemes? What you need to know as a buyer, owner or renter<p>The Coalition and Labor parties have each produced election policies designed to help low and middle income earners buy homes.</p>
<p>Who is likely to benefit from them and who is likely to suffer is far from obvious, and depends in part on the price of the homes on offer.</p>
<p>But broadly speaking, both parties’ schemes will hurt buyers of low-priced homes and renters – and here’s why.</p>
<h2>What’s on offer?</h2>
<p>The Coalition and Labor policies have common themes, among them lower deposits for first homebuyers on low to middle incomes buying below-average priced homes.</p>
<p>The Coalition would extend its <a href="https://www.liberal.org.au/our-plan-housing-and-home-ownership">Home Guarantee Scheme</a> scheme. It enables buyers with deposits as small as 5% (2% for single parents) to avoid paying mortgage insurance. </p>
<p>Labor’s <a href="https://www.alp.org.au/policies/helping-more-australians-into-home-ownership">Help to Buy Scheme</a> would see the government partnering with buyers for up to 30% of the value of an existing home and 40% of the value of a new home, also with a low (2%) deposit.</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/for-first-homebuyers-its-labors-help-to-buy-versus-the-coalitions-new-home-guarantee-which-is-better-182276">For first homebuyers, it's Labor's Help to Buy versus the Coalition's New Home Guarantee. Which is better?</a>
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<p>Labor’s income caps are A$120,000 for couples and $90,000 for singles. The Coalition’s are $200,000 per annum for couples and $125,000 for singles.</p>
<p>Each scheme has price caps for the homes that can be bought with it. Roughly similar, they range from $400,000 in regional Tasmania to $900,000 in Sydney.</p>
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<h2>What’s likely to happen</h2>
<p>For properties with values above the thresholds, the policies should have next to no effects on demand or supply, and as a result, close to no effect on prices.</p>
<p>For properties with values below the thresholds, the resulting increase in demand should push up prices (as well as getting more people into homes).</p>
<p>How much will depend on how responsive the supply of housing is to prices. The more responsive (“<a href="https://www.investopedia.com/ask/answers/021115/if-particular-goods-price-elasticity-high-does-mean-supplier-should-increase-supply-decrease-it-or.asp">elastic</a>” is the term used), the less prices will need to climb to get the extra people into homes.</p>
<p>There’s reason to believe housing supply is fairly inelastic. The bulk of the supply of housing is fixed. It was built some time ago.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/building-more-houses-quickly-is-harder-than-it-looks-australia-hasnt-done-it-in-decades-170223">Building more houses quickly is harder than it looks. Australia hasn't done it in decades</a>
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<p>Also, it takes time to build new homes, and supply of labour is fairly fixed, being hard to ramp up quickly. Uncertainty about whether the policy will continue might make builders cautious about hiring more staff, even if they can get them. </p>
<p>This is likely to push up the prices of lower (but not higher) value properties.</p>
<p>The Australians the schemes help into lower value properties will still come out ahead, but not others trying to get into lower value properties. </p>
<h2>Low-priced homes will cost more</h2>
<p>Some who would have been only just able to get into a lower-priced home will miss out as a result of the scheme, seeing prices climb just beyond their reach.</p>
<p>Repeat buyers of lower-priced homes face no such problem. People moving from one lower-priced home to another will find both the home they buy and sell have climbed in price, leaving them broadly no worse off.</p>
<p>All they will face will be a small net loss associated with higher (percentage based) agent fees and higher stamp duty.</p>
<h2>Low-priced rents will cost more</h2>
<p>Renters of and owners of lower-priced investment properties will be worse off.</p>
<p>More than one quarter of households rent, normally in lower-priced homes. New landlords who have to pay more for these homes will charge more in rent, in what will be an undesirable second-round consequence of the policies on offer. </p>
<p>Some households who would have rented will be able to get into home ownership as a result of the schemes. Others, who still have to rent, will pay more.</p>
<h2>We ought to build more homes</h2>
<p>While the size of these effects is uncertain, it’s easy to determine their direction. </p>
<p>The best way to get more renters into homes is to build more homes for them, enough to push down prices. </p>
<p>Stopgap proposals aimed at giving a fortunate few a leg-up can have unintended consequences.</p><img src="https://counter.theconversation.com/content/182425/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Freebairn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Both major parties have policies aimed at helping low and middle income earners buy homes. But they’re both stopgap solutions – and too many buyers, renters and even investors will pay the price.John Freebairn, Professor, Department of Economics, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1820492022-04-28T20:01:13Z2022-04-28T20:01:13ZMore affordable housing with less homelessness is possible – if only Australia would learn from Nordic nations<figure><img src="https://images.theconversation.com/files/460189/original/file-20220428-16-c4pif4.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5445%2C2759&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Housing is expensive in Australia. But it doesn’t have to be this way. Higher quality, more affordable housing is a matter of policy choice.</p>
<p>A key problem is Australia’s housing market is too skewed towards treating housing as a financial asset, rather than a basic human need. </p>
<p>There is almost a universal consensus among economists, for example, that negative gearing <a href="https://theconversation.com/vital-signs-why-now-is-the-right-time-to-clamp-down-on-negative-gearing-107370">favours the interests of investors</a> to the detriment of others, but both major parties are scared to change the policy.</p>
<p>One way to break the policy stalemate is to consider policies shown to have worked in other countries. To facilitate this, the Nordic Policy Centre – a collaboration between The Australia Institute and Deakin University – has <a href="https://australiainstitute.org.au/report/homes-for-people/">published an overview</a> of housing and homelessness policies in Sweden, Norway, Denmark and Finland.</p>
<p>Of particular note among the wide range of housing policies in these nations is the prominence of housing co-operatives, which assist both renters and those wanting to own a secure, high-quality home.</p>
<h2>Why Nordic countries?</h2>
<p>Why look at the Nordic countries?</p>
<p>One reason is their relative success in tackling homelessness. </p>
<p>Finland is the world leader in this. There, the number of people experiencing homelessness has fallen from more than 16,000 people in the late 1980s to about 4,500 people in 2020. This represents a homelessness rate of less than one per 1,000 (Finland’s population is about 5.5 million) compared with nearly five per 1,000 in Australia.</p>
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<p>Homelessness, granted, is more complicated than just the cost of housing. It involves family and relationship trauma, physical and mental health issues, and substance use. </p>
<p>The Finns’ achievement is due to a range of policy responses including strong outreach services. </p>
<p>But underpinnning these responses is the Finnish government’s “<a href="https://housingfirsteurope.eu/countries/finland/">Housing First</a>” principle, adopted in 2007, which says people have a right to decent housing and to useful social services. It’s a seemingly simple concept, but radically inclusive compared with how other countries deal with the homeless. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/we-identified-whos-most-at-risk-of-homelessness-and-where-they-are-now-we-must-act-before-its-too-late-172501">We identified who's most at risk of homelessness and where they are. Now we must act, before it's too late</a>
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</em>
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<h2>Vibrant co-operative sectors</h2>
<p>In Australia, housing co-operatives might conjure up images of small hippie communes. This is an unfair characterisation, borne of the fact the sector is so tiny and unknown. </p>
<p>All up, co-operative housing comprises less than 1% of the Australian housing sector, with about <a href="https://researchdirect.westernsydney.edu.au/islandora/object/uws:53637/">200 housing co-operatives</a> mostly focused on providing affordable rental housing. </p>
<p>In Nordic countries, however, housing co-operatives are a mainstream option for both renters and owners. </p>
<p>Sweden’s co-operative sector amounts to 22% of total housing stock. Norway’s represent 15% nationwide, and 40% in the capital, Oslo. In Denmark, more than 20% of the population lives in co-operative housing. </p>
<figure class="align-center ">
<img alt="Housing in Denmark" src="https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=309&fit=crop&dpr=1 600w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=309&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=309&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=389&fit=crop&dpr=1 754w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=389&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/460211/original/file-20220428-24-ctf36i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=389&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Denmark has more than 120 housing co-operatives, providing about 230,000 rental units.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
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<h2>How co-operative housing works</h2>
<p>Co-operatives take a variety of forms. But the key features are that they are democratically organised and exist to serve a real economic or social need of their members.</p>
<p>Rental housing co-operatives exist to provide housing, not accrue wealth. They pool common resources to own and manage affordable rental accommodation. Tenants are generally required to become members and encouraged to be actively involved in decision-making, management and maintenance. Any revenue from rents is reinvested in new housing projects or upgrading older buildings. </p>
<p>In Denmark, rental co-operative housing – known as <em>Almenboliger</em> – plays a critical role in providing affordable housing for a range of people, including the elderly and those with disabilities. Its non-profit orientation as well as supportive government policies – such as lower-interest loans – enable co-operatives to reduce construction costs and offer lower rents. </p>
<p>In Norway, national law allows 10% of units in a housing co-operative complex to be bought or used by local government authorities to house people who can’t afford alternatives. Housing co-operatives in Oslo have been vital for securing decent housing for immigrants and for older people. </p>
<h2>A path to home ownership</h2>
<p>Just as important in terms of lessons for Australia is that Nordic housing co-operatives also play a big role in helping people buy a home.</p>
<p>So-called “equity-based” housing co-operatives in Sweden, Norway and Denmark help reduce the cost of home ownership. This generally involves the co-operative building or buying an apartment or unit block, then allowing members to buy individual homes, while the co-operative retains ownership of common areas. </p>
<p>Members own their individual dwellings and co-own and manage shared spaces with other co-op members. The structure is similar to strata title in Australia, with individual ownership of some parts of a property and shared ownership of others. The big difference is strata title is often “investor-owned”, while a housing co-operative is “user-owned”. </p>
<p>The result is that members can buy a home for about 20% less than what it would cost them otherwise.</p>
<h2>More collaboration needed</h2>
<p>Not everything the Nordic countries do can be replicated in Australian conditions. But one thing we can certainly learn is the importance of collaboration between different tiers of government and civil society organisations. </p>
<p>Australia’s superannuation funds, for example, have the means to invest in low-returning, but very safe, affordable housing assets. Government policies should support them doing this through co-operative structures that help to fill the gap between market and state.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/as-home-prices-soar-we-have-an-inquiry-almost-designed-not-to-tell-us-why-168959">As home prices soar, we have an inquiry almost designed not to tell us why</a>
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<p>There’s no quick fix. Emulating any Nordic housing policy achievements will take decades. Finland’s <a href="https://ysaatio.fi/en/hom">critical organisation</a> for tackling homelessness, for example, was established in 1985. </p>
<p>But better housing options are there in plain sight, waiting for policy makers and other stakeholders to take them. If they want to.</p>
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<p><em>Correction: This article has been amended to correct the statistics on the homelessness rates in Finland and Australia. The correct rates are one per 1,000 in Finland and nearly five per 1,000 in Australia. The original article stated one per 100,000 and neaerly five per 100,000.</em></p><img src="https://counter.theconversation.com/content/182049/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors acknowledge and thank Rod Campbell for his assistance in preparing this article.
</span></em></p><p class="fine-print"><em><span>Heather Hoist is Victoria's Commissioner for Residential Tenancies. She writes here in a personal capacity.</span></em></p><p class="fine-print"><em><span>Sidsel Grimstad is chief investigator on an Australian Research Council and housing co-operative sector funded project, Articulating Value in Housing Co-operatives (2021-2023).</span></em></p>In Norway, Sweden, Finland and Denmark, housing co-operatives help both renters and those wanting to own a secure, high-quality home. Better housing options for Australia are waiting in plain sight.Andrew Scott, Professor of Politics and Policy, Deakin UniversityHeather Holst, Adjunct lecturer, UNSW SydneySidsel Grimstad, Senior lecturer, University of NewcastleLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1803442022-04-19T16:49:20Z2022-04-19T16:49:20ZWhat a £350,000 average house price means for first-time buyers in Great Britain<figure><img src="https://images.theconversation.com/files/458616/original/file-20220419-26-i8zr18.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Aspiring home owners in Great Britain are facing increasingly unaffordable house prices.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/london-england-uk-july-19-2013-595875326">Alex Segre/Shutterstock</a></span></figcaption></figure><p>The average house price in Great Britain has <a href="https://www.rightmove.co.uk/news/house-price-index/">risen above £350,000</a> for the first time, according to property website Rightmove. From 2021 to 2022, house prices in all regions and countries except London and Scotland rose by 10% and are now approaching a level (house price to income ratio) last seen at the height of the economic and housing boom of the 2000s. </p>
<p>As a result, middle-income households are priced out of the market. This is an ongoing phenomenon. The <a href="https://www.gov.uk/government/statistical-data-sets/live-tables-on-dwelling-stock-including-vacants">UK government’s statistics show</a> that the proportion of people who owned and lived in their own home peaked at just under 71% in 2003 in England. By 2020, it had fallen to 64%. </p>
<p>In the 2000s, the private-rented sector grew massively, with the rise of <a href="https://www.tandfonline.com/doi/full/10.1080/09599916.2021.1962951">buy-to-let landlords</a>. At the same time, there was a <a href="https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/articles/whyaremoreyoungpeoplelivingwiththeirparents/2016-02-22">large increase</a> in the number of young adults living with their parents. This phenomenon has also continued because both buying and renting have become <a href="https://www.jrf.org.uk/report/renters-low-incomes-face-policy-black-hole-homes-social-rent-are-answer">increasingly unaffordable</a>. Nevertheless, people largely still <a href="https://theconversation.com/rent-or-buy-does-the-british-obsession-with-home-ownership-pay-off-113229">aspire</a> to <a href="https://committees.parliament.uk/publications/8354/documents/85292/default/">own their own homes</a>.</p>
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<img alt="Quarter life, a series by The Conversation" src="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/451343/original/file-20220310-13-1bj6csd.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em><strong><a href="https://theconversation.com/uk/topics/quarter-life-117947?utm_source=TCUK&utm_medium=linkback&utm_campaign=UK+YP2022&utm_content=InArticleTop">This article is part of Quarter Life</a></strong>, a series about issues affecting those of us in our twenties and thirties. From the challenges of beginning a career and taking care of our mental health, to the excitement of starting a family, adopting a pet or just making friends as an adult. The articles in this series explore the questions and bring answers as we navigate this turbulent period of life.</em></p>
<p><em>You may be interested in:</em></p>
<p><em><a href="https://theconversation.com/prioritising-home-ownership-hurts-everyone-owners-as-well-as-renters-149347">Prioritising home ownership hurts everyone – owners as well as renters</a></em></p>
<p><em><a href="https://theconversation.com/affordable-housing-is-a-myth-that-worsens-the-housing-crisis-but-there-is-a-fix-168771">Affordable housing is a myth that worsens the housing crisis – but there is a fix</a></em></p>
<p><em><a href="https://theconversation.com/entire-home-airbnb-listings-in-london-have-increased-by-571-in-5-years-new-research-172436">Entire home Airbnb listings in London have increased by 571% in 5 years: new research</a></em></p>
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<figure class="align-center ">
<img alt="A young black woman embraces her mother while seated on a grey couch." src="https://images.theconversation.com/files/458618/original/file-20220419-12-fgffal.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/458618/original/file-20220419-12-fgffal.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/458618/original/file-20220419-12-fgffal.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/458618/original/file-20220419-12-fgffal.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/458618/original/file-20220419-12-fgffal.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/458618/original/file-20220419-12-fgffal.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/458618/original/file-20220419-12-fgffal.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">More young adults are living for longer with their parents due to high rent and house prices.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/african-teen-support-elderly-mature-mother-1948581196">Andrey_Popov | Shutterstock</a></span>
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<h2>The 2020 stamp-duty holiday</h2>
<p>Between the 2008 financial crisis and 2020, there were only modest rises in house prices. With <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/february2022#:%7E:text=still%20be%20present.-,In%20real%20terms%20(adjusted%20for%20inflation)%2C%20in%20October%20to,July%202020%20for%20regular%20pay.">real incomes falling</a> and both home ownership and rentals reaching unaffordable levels, the average age of a successful <a href="https://www.lloydsbankinggroup.com/media/press-releases/2022/halifax/halifax-first-time-buyer-review-2021.html">first-time buyer</a> rose from 29 in 2011 to 32 in 2021. </p>
<p>These modest house price increases also meant that existing homeowners took longer to be able to afford to move to a larger house. With little or no rise in the value of property to fund an upgrade and <a href="https://www.financialreporter.co.uk/finance-news/cost-of-moving-home-rises-by-71-to-record-11777.html#:%7E:text=The%20cost%20of%20moving%20home,according%20to%20data%20from%20Reallymoving.">rising costs of moving</a>, sales stayed at a low ebb.</p>
<p>This all changed when the UK government introduced a stamp-duty holiday in July 2020 (stamp duty being the tax that has to be paid on property purchases in the UK). The exemption applied to transactions up to a ceiling of £500,000 and it lasted until July 2021, before being reduced and abolished on September 30 2021. </p>
<p>The stamp-duty holiday provided buyers with a brief window of opportunity. House sales rose dramatically, to above the level of the 2000s boom. It effectively unlocked the housing market, but at the cost of the spike in house prices noted above. </p>
<h2>The cost of living crisis</h2>
<p>On the one hand, this was beneficial, in that it meant more people could afford to buy. That is to say, the number of first-time buyers <a href="https://www.moneyage.co.uk/first-time-buyer-numbers-jump-35-in-2021.php?utm_source=jsrecent">jumped by 35%</a>, with an average house price, according to Halifax, of £264,140 in 2021. This figure represented only a 3% annual increase in the price paid by first-time buyers, compared with 2020. </p>
<figure class="align-center ">
<img alt="A young couple stands outside a brick house holding up a set of keys." src="https://images.theconversation.com/files/458620/original/file-20220419-15-tpc44e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/458620/original/file-20220419-15-tpc44e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/458620/original/file-20220419-15-tpc44e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/458620/original/file-20220419-15-tpc44e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/458620/original/file-20220419-15-tpc44e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/458620/original/file-20220419-15-tpc44e.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/458620/original/file-20220419-15-tpc44e.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The 2020 stamp duty holiday caused prices to shoot up.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/portrait-couple-holding-keys-standing-outside-1470584330">Monkey Business Images | Shutterstock</a></span>
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<p>On the other hand, more than half of those first-time buyers needed financial support from their families and a joint salary for a couple of £70,000. There was no noticeable increase in private housebuilding, compared with pre-pandemic times. And the rise in house prices went mainly into the pockets of existing homeowners, more than half of whom had paid off their mortgages. </p>
<p>With the end of the tax holiday, it is now back to reality. As the remnants of this state-engineered, artificial mini-boom drift away, the cost of living crisis is gripping the nation. The housing market is bound to be <a href="https://theconversation.com/house-prices-the-risks-of-a-fall-are-higher-than-most-people-think-163377">affected</a>. Home ownership is likely to be out of reach for more and more people. </p>
<p>The obvious solution – to substantially build more houses – remains elusive. The government has stated that we need to build 300,000 homes a year in the UK, but the highest figure since the millennium has been only 216,00, in 2007-08. It is now an unlikely aspiration for the middle of this decade.</p>
<p>Of course, it is not just about the absolute number of houses built but whether people can afford to buy them. The UK government has broken its promise to build more affordable housing. Private housebuilders need to rediscover what it means to build for low- and middle-income households.</p><img src="https://counter.theconversation.com/content/180344/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Colin Jones does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Middle- and low-income households are being priced out of owning their homes as average house prices reach levels last seen in the 2000s.Colin Jones, Professor of Real Estate, Heriot-Watt UniversityLicensed as Creative Commons – attribution, no derivatives.