A recent report by Essential Research suggested that nearly 60% of all Australians are struggling to afford their housing costs. Shockingly, 42% of the population strongly agreed that they could become homeless if their circumstances changed for the worse.
These figures are a further illustration of the depth of Australia’s housing crisis. While the government tells us that the economy is in good shape, it is only a rich few that are enjoying the benefits of more than 25 years without a recession.
For the vast bulk of ordinary people, living conditions are getting worse and recession-like conditions are already upon us.
A new poll commissioned by the Australian Council of Trade Unions pointed out that only 19% of people received wage increases that covered their cost of living last year. This has put further pressure on those of us struggling to pay our mortgage or rent.
This financial squeeze has led to households draining their savings and taking on more debt to cover their costs. Data from the Bank for International Settlements has confirmed that Australia’s household debt levels are extreme, coming in at the second highest in the world.
Despite the currently low interest rates, many people with a mortgage are struggling to keep up with their loan repayments. In fact, nearly a million households are experiencing mortgage stress.
Even a minor increase in interest rates could push tens of thousands towards mortgage default. A potential social crisis is in the making.
For most young people, even saving up enough for a deposit on a house is a pipe dream. Thanks to government policies that have encouraged property speculation house prices are now out of reach for many.
The vast bulk of young people are looking at renting for life. But even for this new “generation rent”, housing costs are out of control.
Data from Essential Research showed that 71% of people aged between 18-34 are worried about their housing costs. Something needs to be urgently done.
While housing stress is a nightmare for most, not everyone is doing it tough. A small group of profiteers has done very well in the housing market. It has been the big banks and property developers who have made the most.
More than 20% of the richest 200 people in Australia have declared that property is the main source of their wealth.
The profits of the big four banks are also heavily tied to the property sector. Together their mortgage books make up the equivalent of 80% of Australia’s gross domestic product!
Much of the billions in profit they have made has been at the expense of ordinary mortgage holders.
The banking royal commission has uncovered some of the rotten practices they have used to exploit people. For example, they pushed for people to take on bigger home loans knowing that it may lock many into debts they can’t repay.
This crisis of affordable housing is not something that has come about naturally. It is something that has been created by the major parties who have pushed for policies designed to benefit big business.
The drive for profits is at the core of all our problems.
The capitalist market has failed. We need to take the housing sector away from those trying to make profits and bring it into public hands where it can be properly planned on a democratic basis.
A socialist plan for housing would include introducing rent controls in the private sector, alongside greatly improved rights for renters.
In addition, at least 500,000 publicly owned houses need to be either built or acquired across Australia. On this basis we could immediately eliminate homelessness, as well as the public housing waiting lists, as well as begin the process of proving an alternative to the private rental sector.
At the same time, if the banks were brought into public hands you could remove the profit motive and begin to provide cheap home loans to people.
Any small investors that no longer wanted to leave their properties on the rental market would be able to offer for them to be bought as public housing stock.
These are just some of the policies we need to implement to deal with the housing crisis. They all flow from the logic that everyone should have the right to a roof over their head, regardless of their income.
By Triet Tran