Out of reach? The Australian housing affordability challenge PDF
Preview Out of reach? The Australian housing affordability challenge
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: 02 6277 5719 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
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