Ever-increasing housing “unaffordability” in Australia is eroding the property industry’s social license to operate, writes Robert Pradolin, philanthropist and former general manager for Fraser’s Property Australia.
The Property Council of Australia did something unusual last week. It asked Sir Bob Geldof to provide the closing address at its annual conference.
Why was it unusual? Because Geldof told us “movers and shakers” that we are on the nose with the general public.
“They f …. ing” hate you,” he said. And you can understand why.
Like having enough to eat, secure shelter is a fundamental human need. Yet it is a need we frequently fail to meet. As rising prices push the great Australian dream of home ownership out of reach, more and more Australians are relying on the private rental market that often fails to provide stable and affordable accommodation, especially for those on low incomes.
Yet housing for all, rich or poor, is fundamental to our long-term economic prosperity. How can anyone be productive if they do not have a safe place to live and sleep? How can parents give their children a good education if they are constantly forced to move suburb and change school? How can anyone manage the emotional, physiological or traumatic events that happen in life if their primal need of stable shelter is not met? If they don’t know where they can sleep safely tonight, next week or next month? How can society function efficiently if people must travel hours to their place of work?
Over decades, governments (Labor and Liberal) have created and maintained a financial system that does not allow institutional funds to achieve a reasonable after tax return on building and holding rental housing in Australia.
We need to close this viability gap. We need a new rental affordability scheme specifically targeting institutional funds that will create a residential rental investment class to suit people on a diverse range of incomes. To be more specific, the build-to-rent housing sector must be “salt and peppered” with social and affordable housing. Governments have allowed our social and affordable housing to dwindle from 6 per cent (Troy P 2012 Accommodating Australians The Federation Press Sydney Tables 6 and 7.) to 3.5 per cent (AHURI) of our national housing stock. This trend must be significantly reversed.
Key workers, such as firefighters, nurses, teachers and police officers, need affordable housing in areas where society needs their services. Social housing must be located where tenants have ready access to existing infrastructure, services and jobs. This makes rational business sense and will result in billions of dollars in long-term operational savings and productivity benefits. Most importantly, it will enable more Australians to live better, healthier, happier lives.
It will take investment of more than $100 billion to overcome the estimated national shortfall of at least 200,000 dwellings in affordable and social housing. Given the sums involved, our government needs to attract private capital to be part of the solution. To do that, it must accept that private capital will need to achieve market returns (relative to the risks).
Like many other Australians, I feel for people on low incomes who are currently homeless or under housing stress (paying more than 30 per cent of their income on accommodation). But the discussion must move beyond immediate needs to a long-term economic perspective so that federal Treasury understands the implications.