Australia is in the midst of a housing affordability crisis. Rents in Australian cities are either “severely unaffordable” or “extremely unaffordable” for low-income earners across the country, a new report has found, with some renters having to pay up to 85% of their income on accommodation!
The Rental Affordability Index report, released by National Shelter, Community Sector Banking, and SGS Economics and Planning in June, found that “middle-income earners are falling into housing stress as high rents chew up incomes that aren’t keeping pace with rising housing costs”. Over the past decade, rents in capital cities have increased by 52%, forcing many people out of the inner cities and placing huge housing stress on those who stay.
High house prices make home ownership unrealistic for many. The median ratio of house price to income in Sydney is nine-to-one, compared to 6.2-to-one in New York and 7.3-to-one in London. Even Adelaide is more expensive than New York when prices are compared to incomes!
With average house prices reaching $995,804 in Sydney and $726,962 in Melbourne, many households have taken on huge debt to fulfil the “Australian dream” of owning their own home. Mortgage debts are now 120% of Australia’s GDP, the highest ratio in the industrialised world.
It’s not ruled out that over the coming decade Australia experiences a wave of home foreclosures and bankruptcies similar those in the US and Europe during the GFC. Even at the height of the mining boom, Australian capitalism was unable to provide affordable housing to all.
Writing in the Sydney Morning Herald in March, Bill Randolph and Laurence Troy of the City Futures Research Centre blamed a string of government policies – negative gearing and the 50% discount on capital gains tax for property investors – for the affordability crisis.
Randolph and Troy described the worsening situation, which is “both profitable and subsidised by government”, as “taxation lunacy and a national scandal”. There is no doubt that housing policies that prioritise investors before the wellbeing of ordinary people have fuelled the housing crisis. Since the 1980s, both of the major parties have implemented policies that have simultaneously reduced tax revenue while fuelling property speculation.
These policies, however, are not the source of the crisis. The problem is that housing is treated as a commodity to be bought and sold, not as a basic human right.
There is no shortage of housing stock in Australia. According to the Sydney Morning Herald, 90,000 homes are currently lying vacant in Sydney. A similar report published by Prosper Australia revealed that 82,724 properties, 18.9% of investor-owned houses, or 4.8% of the city’s housing stock, are currently unoccupied in Melbourne.
The fact that there are so many houses left empty, largely owned by property speculators, while over 105,000 people are homeless, and a further 173,000 languish on public housing waiting lists around the country, is a disgrace.
None of the major parties have any plans to resolve the housing crisis. When asked how he would solve the housing crisis, Prime Minister Malcolm Turnbull told ABC radio in May that wealthy parents should “shell out” and buy their children houses.
There is scope for community groups and trade unions to fight for real solutions to the housing crisis. To start with we need to fight for a massive increase in high quality public housing. This would not only wipe out the public housing waiting lists but it would create thousands of jobs. It would also act to drive down rents in the private sector.
We also need strict controls on rents and long term leases in the private rental sector. Rents should be linked to wages and the cost of living, and kept below inflation. Australia has had forms of rent control in the past. Cities like New York and Berlin still regulate private rents today.
Enormous amounts of wealth exist in Australia. If that wealth was invested in providing the basics of life for people instead of being wasted away by profiteers, we could transform the situation in Australia rapidly. Standing in the way of that type of approach is capitalism, a system that prioritises profits before all else. Only a socialist society, based on human need rather than private profit, could ensure the right to an affordable home and a decent life is provided to all.
By Conor Flynn