The Australian housing affordability challenge

496 Pages·2016·3.05 MB·English

The Senate

Economics
References Committee
Out of reach?
The Australian housing affordability challenge

May 2015
© Commonwealth of Australia 2015

ISBN 978-1-76010-208-1

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs
3.0 Australia License.

The details of this licence are available on the Creative Commons website:
http://creativecommons.org/licenses/by-nc-nd/3.0/au/

Printed by the Senate Printing Unit, Parliament House, Canberra.
Senate Economics References Committee

Members
Senator Sam Dastyari (Chair from 2 July 2014) New South Wales, ALP
Senator Mark Bishop (Chair until 30 June 2014) Western Australia, ALP
Senator Sean Edwards (Deputy Chair from 2 July 2014) South Australia, LP
Senator David Bushby (Deputy Chair until 1 July 2014) Tasmania, LP
Senator Matthew Canavan (from 1 July 2014) Queensland, NATS
Senator the Hon. Kim Carr Victoria, ALP
(from 1 July 2014; substituted by Senator McLucas from 15 July 2014)
Senator Chris Ketter (from 1 July 2014) Queensland, ALP
Senator the Hon. Jan McLucas Queensland, ALP
(substituted Senator Carr from 15 July 2014)
Senator Louise Pratt (until 30 June 2014) Western Australia, ALP
Senator John Williams (until 1 July 2014) New South Wales, NATS
Senator Nick Xenophon South Australia, IND

Senators participating in this inquiry
Senator Chris Back Western Australia, LP
Senator Jacqui Lambie Tasmania, IND
Senator Sue Lines Western Australia, ALP
Senator Scott Ludlam Western Australia, AG
Senator Penny Wright South Australia, AG

Secretariat
Dr Kathleen Dermody, Secretary
Dr Sean Turner, Principal Research Officer
Ms Morana Kavgic, Administrative Officer (until 27 February 2015)
Ms Ashlee Hill, Administrative Officer (from 23 February 2015)

PO Box 6100
Parliament House
Canberra ACT 2600
Ph: 02 6277 3540
Fax: [phone]
E-mail: [email protected]
Internet: www.aph.gov.au/senate_economics

iii

TABLE OF CONTENTS

Membership of Committee iii
Abbreviations ................................................................................................... xiii
Executive summary ........................................................................................ xvii
Recommendations .......................................................................................... xxii
Chapter 1: Introduction ..................................................................................... 1
Conduct of inquiry .................................................................................................. 2
Submissions ............................................................................................................ 2
Relevant reports and publications ........................................................................... 3
Background ............................................................................................................. 4
Structure of report ................................................................................................... 5
Acknowledgements ................................................................................................. 7
Part I ..................................................................................................................... 9
Chapter 2: Overview of housing affordability in Australia .......................... 11
Defining and measuring housing affordability ..................................................... 11
Committee view .................................................................................................... 17
Does Australia have a housing affordability problem? ........................................ 18
Committee view .................................................................................................... 24
What are the implications of poor housing affordability? .................................... 24
Housing costs and risks to financial stability ....................................................... 31
Committee view .................................................................................................... 34
Chapter 3: The drivers of housing affordability in Australia ...................... 35
An overview of supply-side and demand-side considerations ............................. 35
Ensuring policy interventions responses are effective ......................................... 43
Committee view .................................................................................................... 45
Chapter 4: A Commonwealth Housing Minister ........................................... 47
A Housing Minister, not a Housing Welfare Minister ......................................... 47
Committee view .................................................................................................... 50
Chapter 5: Housing as intergovernmental policy: roles, responsibilities and
accountability .....................................................................................................5 3
Roles, responsibilities and the need for intergovernmental coordination ............ 53
State and territory spending on housing: accountability and transparency .......... 62
The institutional architecture of housing policy ................................................... 64
The need for a national affordable housing plan .................................................. 69
Committee view .................................................................................................... 72
Chapter 6: The impact of state and local taxes, fees and charges on housing
affordability .......................................................................................................7 5
The burden of state and local taxes, fees and charges on new housing stock ...... 75
Stamp duty ............................................................................................................ 76
State government land taxation ............................................................................ 79
Committee view .................................................................................................... 84
Infrastructure charges on new housing developments .......................................... 85
Committee view .................................................................................................... 92
Chapter 7: Zoning, planning and approval processes ................................... 95
Planning systems and housing affordability ......................................................... 95
Land release and rezoning .................................................................................... 98
Land release and challenges in outer suburban areas ......................................... 100
Commonwealth land supply ............................................................................... 102
Infill development and densification .................................................................. 103
Urban renewal and housing affordability ........................................................... 104
The Commonwealth's role in urban planning and development ........................ 104
'Nimbyism' and the delivery of new housing stock ............................................ 105
Development assessment and approval processes .............................................. 108
vi
Committee view .................................................................................................. 110
Chapter 8: Innovation and the building industry ........................................ 113
Construction costs ............................................................................................... 113
Energy efficiency and housing affordability ...................................................... 117
Housing that is accessible, adaptable and appropriate ....................................... 119
Committee view .................................................................................................. 121
Chapter 9: Commonwealth taxation settings ............................................... 123
The tax treatment of investor housing ................................................................ 123
Committee view .................................................................................................. 141
Tax and the family home .................................................................................... 142
Committee view .................................................................................................. 145
Chapter 10: Housing finance, investor activity and macroprudential
policy .................................................................................................................1 47
Access to finance and the mortgage industry ..................................................... 147
Committee view .................................................................................................. 148
Owner-occupier mortgages and mortgage stress ................................................ 148
Borrowing by housing investors and potential macroprudential tools ............... 151
Committee view .................................................................................................. 160
Limited recourse borrowing for property by SMSFs ......................................... 161
Committee view .................................................................................................. 161
Chapter 11: Home ownership ........................................................................ 163
The benefits of home ownership......................................................................... 163
Home ownership trends in Australia .................................................................. 167
First Home Owner Grants (FHOGs) .................................................................. 169
First Home Saver Accounts ................................................................................ 173
Access to superannuation for a home deposit .................................................... 174
Shared equity schemes ........................................................................................ 176
vii
Financing support, including HomeStart Finance .............................................. 180
Indigenous home ownership ............................................................................... 183
Committee view .................................................................................................. 185
Chapter 12: Older people and home ownership .......................................... 189
Home ownership as a form of wealth in retirement ........................................... 189
Pension eligibility and home ownership ............................................................. 192
Downsizing, resizing, 'rightsizing' ...................................................................... 194
Committee view .................................................................................................. 198
Part II ...............................................................................................................1 99
Chapter 13: Affordable rental market .......................................................... 201
Supply of rental properties .................................................................................. 201
Changing profile ................................................................................................. 206
Rental stress ........................................................................................................ 209
Affordable and appropriate housing ................................................................... 213
Benefits of affordable, appropriate and secure housing ..................................... 219
Security of tenure—solutions ............................................................................. 223
Conclusion .......................................................................................................... 227
Chapter 14: Social Housing ............................................................................ 231
Definitions .......................................................................................................... 231
Statistics—social housing ................................................................................... 232
Public housing .................................................................................................... 233
Incentives to remain in public housing ............................................................... 237
Conclusion .......................................................................................................... 246
Chapter 15: Community housing .................................................................. 249
Role of community housing sector ..................................................................... 249
Growth of community housing sector ................................................................ 250
Transfer of public housing to community housing sector .................................. 252
viii
Attributes of the community housing sector ....................................................... 254
Title transfer ........................................................................................................ 258
Need for public housing ...................................................................................... 263
Conclusion .......................................................................................................... 267
Chapter 16: Particular housing needs ........................................................... 269
People with particular needs and the rental market ............................................ 269
Older Australians in private rental ...................................................................... 270
Older Australians and social housing ................................................................. 276
Alternate accommodation ................................................................................... 279
Older single women ............................................................................................ 280
Women on low incomes and affordable housing ............................................... 280
Domestic violence .............................................................................................. 281
Disability ............................................................................................................. 285
Refugees and migrants ........................................................................................ 287
Essential service workers and long term residents of regions undergoing rapid
development ........................................................................................................ 288
Conclusion .......................................................................................................... 291
Chapter 17: Indigenous Australians ............................................................. 295
Indigenous households ........................................................................................ 295
Trends of indigenous Australians in social housing ........................................... 297
National Partnership Agreement on Remote Indigenous Housing ..................... 299
Culturally appropriate housing ........................................................................... 303
Conclusion .......................................................................................................... 304
Chapter 18: Homelessness .............................................................................. 307
Definition of homelessness ................................................................................. 307
Statistics on homelessness .................................................................................. 308
Social housing—supply side............................................................................... 310
Lived experiences of homeless people ............................................................... 312
ix
Homelessness among Australians—the young and the old ................................ 314
Older Australians and homelessness .................................................................. 316
Keeping people housed ....................................................................................... 318
National Partnership Agreement on Homelessness (NPAH) ............................. 320
Future of NPAH .................................................................................................. 323
Withdrawal of funding from Housing and Homelessness Program ................... 325
Williams decision—implications for funding housing and homelessness ......... 328
Chapter 19: National Affordable Housing Agreement ............................... 331
Background ......................................................................................................... 331
Criticism of NAHA ............................................................................................. 332
Areas for improvement ....................................................................................... 336
Government's response ....................................................................................... 337
Conclusion .......................................................................................................... 338
Chapter 20: National Rental Affordability Scheme (NRAS) ...................... 341
NRAS objectives ................................................................................................ 341
Incentives ............................................................................................................ 342
Support for NRAS .............................................................................................. 343
NRAS and the states ........................................................................................... 348
Specific concerns—international students and trading incentives ..................... 353
Conclusion .......................................................................................................... 359
Chapter 21: NRAS, review of housing and homelessness and the Federation
White Paper .....................................................................................................3 61
Government's view of NRAS ............................................................................. 361
Proposed review .................................................................................................. 363
White Paper on Federation ................................................................................. 364
Response to government announcements ........................................................... 365
Scope for improvement ....................................................................................... 370
Suggested improvements .................................................................................... 372
x