As it stands, the housing market in this country is untenable, but a solution does exist. We just need to look further afield.
All manner of different causes have been put forward to explain Australia’s problem with housing affordability: negative gearing, investors outbidding first home buyers, the Chinese, the baby boomers, Gen Y eating too much smashed avocado, and my personal favourite: man caves. What we haven’t really looked at yet is the Australian obsession with owning houses in the first place. Historically, that need was understandable. If you start a country with a lot of rejects from Europe (convicts, soldiers and settlers) the first thing they’ll want to do is own land. Land means status, status means power and power means calling the shots and not feeling second rate anymore. Land, and the house on it, was a security blanket. I get that. But we are still acting like we are the snotty children that nobody wants to play with in the sand pit. We are grabbing any old broken, dirty and expensive toy just to have one. And when we can’t, we whinge about being left out.
We also pretend that there is no alternative. That if you don’t own a house, you are a lesser human being. You will live a horrible life and die poor. You won’t be able to have children. Or chickens in the backyard. Or a media room. Not owning a home is a fate worse than death. In fact, it is death. Right? And yet, there are millions of people in the Western world who manage to struggle on without ever signing mortgage papers. Who cope with not having a debt that will strangle them once the interest rates go up. Some of them even have children. And chickens and a media room.
Who are these peculiar human beings, I hear you ask, and how do they get away with that kind of behaviour? The answer to that question is to be found in a phenomenon called renting, combined with a government that controls the rental market. Let me explain. In a country like Holland (but many other European countries are the same) the rental market is being dominated by housing associations. The first of those were set up in the 13th century, when some people realised that other people needed a bit of help finding affordable places to live. They had social, philanthropic, moral or religious motives, certainly, but the Dutch have always first of all been driven by good old, practical economy. Kindness is nice, but making money is better. And if you can combine the two, that is better still. The rationale was that poverty and bad living conditions were leading to illness and social upheaval. Both of those are expensive and dangerous (people who have nothing to lose tend to stab rich people and kings in the back a lot; nasty habit, that), so giving people good, cheap houses was seen as a preventative measure.
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After 2014, there are 7,266,295 homes in Holland. Approximately 43% (3.15 million) are rented, and out of those, 2.25 million are owned and run by housing corporations. That means that corporations own 30.8% of all the housing stock in the country. In a big city like Amsterdam, it is even more pronounced. Out of the almost-530,000 homes, 66% (approximately 350,000!) are rented, and 42.8%, or 226,168 houses, are owned and run by corporations. I would love to give you a comparable Australian statistic, but unfortunately I can’t. The Australian system is so different that there simply are no comparable numbers. But I’ll get back to that in a moment. According to Dutch law (made in 1902), all houses in the country need to be built and maintained to a certain standard, if you want to rent them out. To make sure that landlords actually do what the law says, there is a point system that is attached to every property. This system determines the rental price: there are points for the quality of the place, the size of it, the way kitchens and bathrooms are fitted out, whether there is a backyard or not. But – and this is the crux – the maximum price for any house that is being rented (by housing associations or private owners) is €586.68 a month for one or two people, and €628.76 for more than one. This is not the average, though. The average rent in Holland is €470 a month. With a national minimum wage of €1,551.60 a month, this means that it is very rare in Holland to pay more than 30% of your income on housing.
Also part of that same housing law is government protection for renters. There is no time period attached to renting a house. Unless you sign a separate, very unusual contract with your landlord, renters rent for as long as they want. In fact, a renter can only be thrown out of their house if the owner needs to live in the house himself (and this needs to be proven) or if the renter has been seriously misbehaving (and that needs to be proven too). The consequence of this rule is that most renters rent their whole lives and move very rarely. My parents, for instance, only lived in two houses over the whole of their 50-year marriage. Neither of those houses were owned by them. Nevertheless, they felt like they were theirs. So, like most other renters in Holland, they painted them on a regular basis, put nice flooring in and contributed to a new kitchen and bathroom. Of course, they also kept them immaculately clean and did the gardening. It was a win-win: it gave them a great place to live, it maintained the houses and gave their housing association almost nothing to do but collect the rent.
Social housing in Australia is only for people who are at the bottom of society, in all manner of ways. This turns it from something for everybody (in Holland) into charity for the weak (in Australia). And you can see this in the way social housing is treated.
In 2013, there were 375 housing corporations in Holland. Together they employed 26,264 people and owned €142.8 billion worth of property. The wages of their CEOs can be no more than that of the Dutch Prime Minister. So no million dollar pay packets here, because these are organisations that work for the public good. Over the last couple of years, they have built another 20,000 new houses a year, which is a lot in a small, crowded country like Holland. And here comes the kicker: those housing associations are not being subsidised by the government. Sometimes, if a council asks them to build something very special, they can ask for subsidies. But usually they have to, and do, fend for themselves. That is not the case for the very few housing corporations in Australia. Here, the system is very different. First of all, where in Holland 43% of people live in rental houses, in NSW, for example, this is markedly less. In 2011, there were 2,864,569 houses in NSW on Census Day. Out of those, one third were owned outright, one-third were mortgaged, 26% were rented from private landlords and a little under 5% was what is called “social housing”. As we know, there are hardly any rules or laws protecting renters in Australia and rents are anything but government controlled. The consequence of this, Shelter NSW calculated recently, is that only 9.5% of rental stock is affordable for very low income households. 30.6% of it is accessible to low income households, and even people with a moderate income can only rent 68.8% of the housing stock. In June 2016, the median rent in NSW was $450 a week, in Sydney $520 a week. With a national minimum wage of $672.70 a week, this meant that 76% of people in NSW suffer from rental stress, which happens when you pay more than 30% of your income on housing.
In Holland, the whole of the rental system is part of what is called social housing. That term just means that the government feels responsible for the protection of everybody who rents. In Australia, social housing is only “a safety net for vulnerable people”, in order for them “to break the cycle of disadvantage”. According to a 2013 NSW Auditor-General’s report, 94% of public housing tenants received a Centrelink benefit as their main income. They had a lower education than the rest of NSW, high levels of unemployment, poorer health and higher rates of mental illness. Also, the projection was that in 2021, 32% of tenants in social housing would be old and another 23% would have significant disabilities. So it can be safely said that social housing in Australia is only for people who are at the bottom of society, in all manner of ways. That is a problem, because this stigmatises social housing and turns it from something for everybody (in Holland) into charity for the weak (in Australia). And you can see this in the way social housing is treated.
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In NSW, almost all social housing comes under the responsibility of the Land and Housing Corporation (LAHC). It runs about 130,000 properties, with money from the Minister for Family and Community Services and the Minister for Social Housing. LAHC’s 2014/2015 budget was $994 million, for social housing assistance and homelessness services. Other social housing services are the Aboriginal Housing Office, that owns 5,000 houses, the Community Housing Providers, who together own 6,000 and the Aboriginal Community Housing Providers, again in charge of 5,000. In total, this means that in June 2013, there were 140,000 households, with 290,000 people in them, who were in social housing. Another 70,000 were getting rental assistance or temporary accommodation. This, of course, was given on a case-by-case basis, and not, as in Holland, as a right for everybody.
Social housing in NSW is completely broken. Or, as per Family & Community Services’ November 2014 Social Housing in NSW paper, “the status quo is not an option”. Not only is it a scarce resource, there is “limited choice”, hardly any “pathways to independence” and “tenure is increasing”, with half of the tenants living in social housing for ten years or more. Stock is actually decreasing, also as a proportion of NSW housing. The reason for this is that a good part of the houses are old and LAHC has no money for maintenance. As the Auditor-General reports, in the last couple of years the “LAHC has been disposing of more properties than it has added” and will dispose of “more than double the number of properties it builds over the next four years.” This, it has advised, is the only way to keep social housing in NSW going. The waiting list, already at almost 60,000 approved households, will grow by 60%. Not on the waiting list, but still waiting for social housing, are over 130,000 households, who still have to go through the approval process. All in all, this means that the available social housing in NSW meets no more than 45% of the needs. And in about 20% of the cases, the waiting list is longer than ten years.
So, we’ve got a few problems. Whole generations cannot and will not ever be able to afford to buy their own homes. Renting property in Australia is fraught, expensive and without any government protection. Three-quarters of renters pay more than they can reasonably afford. If you are unlucky enough to fall into the category that needs social housing, you are stigmatised and live in old rubbish for way too long. If you get past the waiting lists, that is. As far as I can see, all these issues can be solved by looking at “best practice” elsewhere. Like in Holland. What do you think? Shall we try? Or do we keep striving for the impossible? It is up to you, I’d say.