Housing gap is a crisis of culture

Australian historian Frank Bongiorno, in his book Dreamers and Schemers, writes of the importance of property in the nation’s development. In a settler society, he argues, “political systems are fundamentally about establishing and then maintaining control over resources – especially land”. Australians who grew up in the second half of the 20th century do not need to read books about the role of property in the Australian psyche: they lived the dream of the house on the quarter-acre block as government policy positioned the home not just as shelter but as a vehicle for personal wealth creation.

That dream has become something of a nightmare in the 21st century for younger generations as they discover the downside of their parents’ happy embrace of high home values. It has taken time for politicians to see just how dire the situation is for many Australians trying to buy or rent a home, but there is no escaping the reality that a significant number of people face a crisis in putting a roof over their heads. More than 60 per cent of Australians own their own home but home ownership rates for people aged under 40 are declining. Tuesday figures from the Commonwealth Bank on housing affordability, for example, reveal that repayments in Melbourne and Sydney are at record highs for a household entering the market. The generational and economic inequality is now a political threat.

Once, homelessness described those who, through bad luck or bad decisions, were impoverished and living on the street or in crisis accommodation. Now it is applied to those who, unable to find a place to rent or buy, live in restricted situations with others, who are couch surfing or who are camping in their cars even as they continue in paid employment. There is no silver bullet here – a national culture of relying on inflated house values will not be easily turned around, no matter how much parents despair about their children missing out on the dream. But state and federal governments have policy levers that can be applied to developers and investors to address some of the underlying causes of a private housing market that no longer works in the interests of all Australians. It is the private market in both owner-occupied housing and rental housing that ultimately holds the key to what at times can appear insoluble, given the threat that would face any government that forces a reduction in housing prices.

In the end, the issue comes down to supply and the policies needed to ensure that developers build houses rather than holding land as a “land bank”; to ensure that the states take responsibility for some of the associated costs of providing infrastructure and services; to encourage a cultural shift towards higher-density housing.

State governments face calls for rent control as prices escalate in capital cities. But this interference in the market is counter-productive if it frightens off investors, and statements on Tuesday from Deputy Premier Steven Miles that the Queensland government is unlikely to implement rental caps, even as it comes under pressure to do so, are welcome.

So, too, is the Albanese government’s recognition that something needs to give: its plan is to establish the Housing Australia Future Fund and spend $10bn to build 30,000 new affordable homes across the next five years. This is a modest initiative; in the eyes of some, such as the Senate crossbench, too modest. Independent senator David Pocock and others want a doubling of the fund, arguing the current allocation is “not going to cut it”.

It’s a tough call for a government facing major cost blowouts as it prepares the May budget, but one that throws into high relief the crisis facing the nation. Australians once accepted the need for governments to provide a proportion of stock in the rental market. There is a role for public and social housing programs, operating as a safety net at the socio-economic margins. However, the public policy answers for a middle class finding itself shut out of the housing market, lie firmly in more supply and clear policy frameworks from government.