Presentation to Victorian Ministerial Forum

Ian Winter Executive Director, AHURI

Evidence foundation for today’s discussion Sharpen definition of ‘the housing problem(s)’ Identify solutions fit for addressing those problems

Purpose

Structure Backdrop of long-run changes in the structure and

dynamics of Australia’s housing system Focus in on Victoria with a view to clarifying the

differing nature of the housing problems we face Overview the policy interventions that are fit-for-

purpose, given the nature of the problem(s)

Part one Long-run changes in the Australian housing system

Housing system snapshot

No stable housing

~105k people

Renters 30%

Owners 67%

Community housing

~82k dwellings

Public housing ~338k

dwellings

Social housing 5%

Private market 25%

Mortgage holders

35%

Outright owners

32%

Note: 934 470 unoccupied private dwellings in 2011

Percent of 7.76m occupied dwellings from ABS 2011 Census and 2013 admin data (includes Indigenous community housing and state owned and managed Indigenous housing)

Fewer households in the most secure tenures Public housing and outright ownership

Source: ABS 4130

… and rates of ownership and purchase are falling for younger cohorts

40

45

50

55

60

65

70

75

80

85

1981 1991 2001 2011

Rat

e of

hom

e ow

ners

hip

25-34

35-44

45-54

55-64

Source: Burke (2014) Table 4 - ABS Census, unit record files, 1981, 1991, 2001, 2011

Exit from and churn through home ownership

Source: Wood, G, Smith S, Ong R, and Cigdem M. (2013) - calculations from the 2001–10 HILDA Survey, 2001–08 BHPS and UKHLS wave 2

Long term and short term rental increasing…

Source: 1994 ABS Rental Tenants Survey (Wulff 1997; Wulff & Maher 1998); ABS SIH 2007–08 (original), from Stone et al (2013).

(one to 4 years) (5 to 10 years) (over 10 years)

Lack of affordable housing for low income renters

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Lowest 20 per cent Second lowest 20 per cent

Lower income private renterhouseholds

Affordable dwellings forhouseholds

Lower income households inaffordable dwellings

Source: ABS Census of Population and Housing 2011, data Lowest two quintiles (From Hulse et al. 2014)

Shortages have grown over time

Source: Hulse et al. 2015, customised ABS 1996, 2006 and 2011 ABS Census of Population and Housing data

Social housing stock numbers declining

Source: ROGS 2014, Table 17A.3; ABS 3101

Higher homelessness linked to crowding not rough sleeping

0

20,000

40,000

60,000

80,000

100,000

120,000

2001 2006 2011

Num

ber o

f Per

sons

Persons living in 'severely' crowdeddwellingsPersons in other temporary lodging

Persons staying in boarding houses

Persons staying temporariliy with otherhouseholdsPersons in supported accommodationfor the homelessPersons who are in improviseddwellings, tents or sleeping out

Source: ABS 2049, Census of Population and Housing, Estimating homelessness 2011

Conclusion Long run structural change in the Australian Housing system Home ownership falling—entries and fall outs Private rental growing—long term, supply shortages

and high affordability stress Social housing supply falling and three quarters of

allocations to those in highest need, changed tenancy profile Long-term structural trends are negative and these

are the backdrop for housing policy reform

Part two Victoria: defining the problem

General supply and affordability

Sources: Population change: Cat. 3101.0 - Australian Demographic Statistics, Sep 2014 Dwelling completions: Cat. 8752.0 - Building Activity, Australia, Sep 2013 Lot release: Residential Land Bulletin data Department of Transport, Planning and Local Infrastructure House price index: Cat. 6416.0 - Residential Property Price Indexes: Eight Capital Cities, Dec 2014

0

50

100

150

200

250

300

350

400

450

Sep

-199

7M

ay-1

998

Jan-

1999

Sep

-199

9M

ay-2

000

Jan-

2001

Sep

-200

1M

ay-2

002

Jan-

2003

Sep

-200

3M

ay-2

004

Jan-

2005

Sep

-200

5M

ay-2

006

Jan-

2007

Sep

-200

7M

ay-2

008

Jan-

2009

Sep

-200

9M

ay-2

010

Jan-

2011

Sep

-201

1M

ay-2

012

Jan-

2013

Sep

-201

3M

ay-2

014

Population growth, lot release, dwelling completions and house price growth - Victoria (Sept 1997 =100)

Dwelling completions Index

Established House price index (Melbourne)

Population Growth Index

Lot release (Melbourne) 7 month movingaverage

Additions to demand and supply Average annualised per cent changes (Victoria)

Rate of net additions to

demand Rate of additions to supply Rate of price

increase

Population Lot release Dwelling completions

Established house prices (Melbourne)

5 years to March 2013 0.0 5.5 5.5 3.1

16 years to March 2013 6.7 4.4 4.0 8.0

Mortgage affordability

Shortages of affordable and available rental stock for low income households Victoria

Source: 2011 Australian Census of Population and Housing data

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Lowest 20 per cent Second lowest 20 percent

Lower income privaterenter households

Affordable dwellings forhouseholds

Lower incomehouseholds inaffordable dwellings

Housing affordability stress rising in Melbourne

0102030405060708090

100

1996 2006 2011

Percent of low income renter households paying unaffordable rents

Q1 MelbourneQ2 MelbourneQ1 Non-Metro VictoriaQ2 Non-metro Victoria

Source: Hulse et al (2015) Tables 18, 19; customised data 1996, 2006 and 2011 Australian Census of Population and Housing data

State shares of homelessness, CRA recipients, and affordable housing compared to population

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Nat

iona

l Sh

are

Victoria

Population

Homeless population

Affordable housingstock

Income units on privaterental assistance

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Nat

iona

l sha

re

New South Wales

Victorian public housing supply static… but growth in community sector

Source: Productivity Commission Report on Government Services Housing Attachments Table 17A.3 (Latest data to 30 June 2014)

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

Uni

ts o

f hou

sing

Public Housing -Victoria

Mainstream Community Housing

All (mainstream) Social Housing

Average annualised rate of growth 1998 to 2011: Social Housing = 0.7 per cent/yr Population = 1.4 per cent/yr

Public housing waiting list for early housing has increased…

-

10,000

20,000

30,000

40,000

50,000

60,000

Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13

Total waiting list(including transfers)Total waiting list(excluding transfers)Early housing waiting list(incl transfers)Early housing waiting list(excl transfers)

Source: Department of Human Services (DHS).

Conclusion Key housing problem in Victoria is lack of supply of

dedicated affordable stock – public, community, NRAS, shared equity. Increases in general land and housing supply

necessary but not sufficient to address the key problem. Targeted interventions to stimulate new supply of

dedicated affordable housing are required.

Policy interventions for new supply of dedicated affordable housing

a) Inclusionary zoning b) Tax credits (NRAS) c) Equity sharing (retain subsidy) d) Support social purpose entities (real estate agencies,

developers, housing associations, financiers) e) Social housing reform to drive financial viability f) Government borrowing:

to build to lend

References Australian Bureau of Statistics (ABS) Census of Population and Housing (1981, 1991, 2001, 2011), including

Estimating Homelessness 2011 Cat. 4130.0 Housing Occupancy and Costs 2011-12 Cat. 8752.0 Building Activity, Australia, Sep 2013 Cat. 3101.0 Australian Demographic Statistics, Sep 2014 Cat. 6416.0 Residential Property Price Indexes: Eight Capital Cities, Dec

2014 (House price index) Cat 4102.0 Australian Social Trends, Data Cube – Housing Burke, T, Stone W, and Ralston, L. (2014) Generational change in home purchase opportunity in Australia AHURI Final Report No. 232, November Department of Human Services (DHS) Waiting List data Department of Transport, Planning and Local Infrastructure Residential Land Bulletin (Residential lot release) http://www.dtpli.vic.gov.au/data-and-research/population/metropolitan/residential-land-bulletin

References (continued) Fox, R. and Findlay R. (2012) Dwelling Prices and Household Income in Reserve Bank Bulletin, December Quarter, Reserve Bank of Australia Hulse, K, Reynolds, M, Stone, W., and Yates J, (2015) Supply shortages and affordability outcomes in the private rental sector: short and longer term trends AHURI Final Report No. 241, June Productivity Commission (1996 - 2014) Report on Government Services Housing Chapter http://www.pc.gov.au/research/recurring/report-on-government-services/2015/housing-and-homelessness/housing Real Estate Institute of Victoria Rental Vacancy Rates http://reiv.com.au/Property-Research/Rental-Data/Vacancy-Rates Stone, W, Burke, T, Hulse K, and Ralston, L. (2013) Long-term private rental in a changing Australian private rental sector AHURI Final Report No. 209, July Wood, G, Smith S, Ong R, and Cigdem, M. (2013) The edges of home ownership AHURI Final Report No. 216, October.

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