Housing affordability is a ‘major concern’ of 63% of respondents from the Franklin electorate to the Salvation Army’s recent Social Injustice Stocktake, greatly overshadowing all other concerns, including mental health. Housing affordability is a problem nationwide but is greatest in Tasmania.

CoreLogic published a comprehensive property report in March this year, stating: “While wages increased 81.7% in the past 20 years, Australian home values have grown 193.1% … The difference in growth rates is most exacerbated in Tasmania … Property values across Tasmania have risen almost 300% in the past 20 years, compared to an 84% rise in the WPI (wages price index)”.

November 2021’s Rental Affordability Index report stated: “Greater Hobart continues to be the least affordable capital city in Australia … Rents have continued to rise rapidly, pushing affordability to an historic low point … The gap between income and rent has been widening over the past four years, with little sign of abating”.

Anglicare’s Rental Affordability Snapshot, undertaken in March this year, noted: “The decline in the number of rental properties advertised in the South [of Tasmania] has continued … There were 25% less than last year and 75% less than in 2013”. A globally recognised measure of housing stress is any household in the bottom 40% of income earners which is paying over 30% of gross income on their housing. On this measure, there are minimal ‘affordable’ rentals in the south of the state. “A working single parent or single income family will find only a handful of properties in rural areas they can afford … Families on Centrelink payments have no options … but to pay more than 30% of their income on rent … Even at 49% of income, a single parent on Parenting Payment will find only six affordable 2-bedroom properties [in the south of Tasmania].”

The lack of affordability is reflected in the 60-year-long nationwide decline in home ownership, which was discussed by economist Saul Eslake on ABC radio this week. Home ownership in Australia declined from 72.5% to 65.5% in 2019, making Australia 27th worse out of 38 OECD countries. Housing insecurity is particularly prominent in the 25-44 years age group, with housing ownership declining by a staggering 40% in this cohort between 1981 and 2016. The Gratton Institute in its submission to the Federal Government, notes that housing costs and diminishing disposable income in the low and middle-income sectors, is a “key cause of increasing inequality”. They demonstrate that while the disposable income of those in the top 40% of income earners has continued to increase, that of the lowest 40% has declined dramatically between 2004 and 2016.

Secure and affordable housing has tremendous impact on health and economic outcomes. According to Shelter Tas’ submission to the budget process 2021-22, people seeking homelessness services speak of the tremendous ‘overwhelm’ and ‘mental fatigue’ of trying to pay a mortgage or rent, and of burying ‘grief and sadness’ in order to ‘keep going for the kids.’ The Australian Housing and Urban Research Institute undertook a literature review in 2016, of studies into social and economic factors linked to housing insecurity. They noted: “There is a bi-directional and compounding relationship between homelessness and health … Housing payment problems and rent arrears have significant detriment effects on mental wellbeing … Both mental and physical health issues can also adversely impact on employment and financial security …”

Shelter notes affordable housing is vital to the overall economy of the state: “[Sectors] such as tourism, economic productivity, jobs, education, health and justice all affect and are affected by whether people have affordable, appropriate, safe and secure homes”. If prospective workers cannot afford accommodation, how can they apply for and fill much-needed roles in nursing, aged care, tourism and other essential and growth industries? The situation is worsened by an expectation of future interest rate increases, which creates far greater risk for those trying to get onto the property ladder.

How did we get to this position and how do we get out of it? Will how we vote on Saturday affect future housing affordability, not just for ourselves but our sons and daughters, low-income families, those with disabilities and our aged and ageing neighbours?

The ‘how’ of why we are in this position is relevant to the solutions. Multiple studies, including by the Gratton Institute, Deakin University, the Australian Institute, UTAS’ Institute for the Study of Social Change and Housing and Community Research Unit, all cite common factors including:

  • lack of social (community/ public) housing being built over past decades,
  • tax incentives for property investors (as a way of trying to plug the rental gap caused by low numbers of social houses),
  • grants and assistance for first-home buyers,
  • the rise in short-stay accommodation in tourism hotspots (like Tasmania),
  • stagnant wages growth for lower income-earners,
  • tightened planning conditions,
  • declining levels of rental assistance, and
  • historically low interest rates.

Many agencies, academic institutions and charities, have submitted reports to the Tasmanian and federal governments on how we can move forward to improve housing affordability and thus solve other issues including soaring rates of mental health issues, rising rates of homelessness and lack of opportunity to re-locate to accept employment. The solutions are all broadly along the same lines and mean reversing many of the policies that have led us to this position.

The role of investors in the housing market is significant. UTAS research reveals that in 2019, around a quarter of the value of new home loan commitments were made by investors, a figure that increased by 45% in the prior 12 months. 91% of those loans were for existing houses, rather than new builds. The Australia Institute noted that a large proportion of homes bought by investors, were rented at a loss, thus the investment was aimed at future capital gains growth (causing inflationary pressure on the market) and was funded by income tax incentives. UTAS stated that close to 400 whole houses were converted to short-stay accommodation in the greater Hobart area in the years leading up to 2019. Australia could do well to note the property trends in the UK since the Conservative government of the 1980s sold off the country’s substantial stock of council housing. Despite the number of new houses being built significantly outstripping the number of new households needing housing, prices have continued to rise steeply, owing to the rise in second/ third homes and holiday stays.

The solutions to housing affordability put forward include:

  • Remove first-home and other grants which help people buy a home, but simply put greater inflationary pressure on prices. This includes the latest announcement by the federal government to enable people to withdraw up to $50K from their Super to fund a house purchase.
  • Removing or reducing tax incentives for investors, including negative gearing and the 50% discount on capital gains tax after a certain period of ownership. The Nordic model of housing prioritises the supply of homes for those who need them, above the purchase of homes to make profits for investors. Scandinavian countries have a range of policies that enable cooperative builds and purchases and ensure the necessary supply of affordable houses and rentals. Consequently, rates of homelessness and housing insecurity have plummeted in these countries over the past decades – while Australia’s have been increasing at a similar rate. Additionally, demographic analysis of the beneficiaries of negative gearing and other fiscal incentives for housing in Australia, reveals that it is the highest earners who are overwhelmingly benefiting from such policies, to the detriment of those in the lowest earning percentiles.
  • Discourage the ownership of multiple homes and the holding of vacant land, particularly over long periods of time. Fiscal measures including higher land tax or rates on vacant land and second homes, would release a greater supply of houses and land onto the market, and help to plug the current supply gap.
  • Increasing the minimum wage and rental assistance to the lowest earners.
  • Dramatically increasing new builds but ensuring these are ring-fenced as social housing with capped rents and are not later released into the property market to become investor fodder. The government does have plans to build 1,000s of new homes over the coming decade. UTAS notes that Tasmanian currently has a housing deficit of around 14,000. This is a longer-term fix, since as new homes become available, they will still make up on a small percentage of the housing market, thus it can take many years for supply to equalise demand and affect prices. However, an immediate impact can be made on rental supply. It is also vital that new social housing be energy efficient, attractive and does not become ghetto-ised or attract stigmatization.
  • Loosening the hurdles on new home builds on vacant land zones under the State Planning Provisions, due for review later in 2022. Currently, a residence is a discretionary use for some zones, including Rural, Agriculture and Landscape Conservation. Arguably, a residence should be a ‘permitted’ use. Allowing increased density in city centres and opening up space above shops, could also help, as could extending the ‘ancillary dwelling’ rules, to allow family members to build homes on land at a further distance from the main house.
  • Regulation of short-stay accommodation. Research by UTAS shows that greater regulation on Airbnb and other platforms, would make little difference to the income brought into Tasmania by the tourism sector, but could have a significant effect on improving the rental supply and decreasing the price pressure on house prices.

We, as Tasmanians and residents of the Huon Valley, have to decide what type of world we want to live in and vote accordingly this weekend. It might well be in our self-interest to continue voting for policies that enable us to improve our own wealth position, but we should remember that lifting a whole community’s emotional and physical wellbeing by removing the stress and distress of having adults and children living in tents, caravans and cars, or couch-surfing, or making do with unhygienic and cramped conditions, is conducive to a happier and more prosperous environment for all into the future.

Jenny Cambers-Smith worked in senior roles in research and project management, before helping many small Tasmanian and mainland businesses win tenders and gain quality certification as a freelance consultant. Lately, her research, analytical and writing skills have been primarily applied to voluntary projects for the local community, charities and social enterprises.