Housing: soaring costs hit home

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There’s a monumental housing crisis in Australia. Rents are skyrocketing and vacancy

rates are the lowest on record, pushing desperate tenants to resort to unofficial rent

auctions. In 1996 the cost of buying a house was four times the average wage. By 2007

it had jumped to seven times. Three hundred thousand households are currently at risk of

losing their home. In the decade 1993 – 2003, funding for public housing declined in real

terms by 28.4% with people waiting up to 10 years to be housed. Every night, 100,000

people are homeless in the so-called lucky country.

Hit hardest. Those worst affected by the housing crisis are women, younger and older

people, people with disabilities, Indigenous Australians, queers and immigrants.

Young homeless people in Canberra.
Photo by Graeme from instantblogsimages.com

Many are exploited and forced into desperate situations. In June, the ABC’s Victorian

Stateline program ran a story about a booming new business: sub-standard rooming

houses. As long as there are less than five residents, the owners are not required to abide

by health and safety regulations. Stateline spoke with four women — all strangers —

who shared a three-bedroom house. Three of the women also had children living with

them in their single room. The house was leased from a real estate agent for $1,257 a

month. The lounge room was turned into a bedroom and then each room was sublet for

$780 a month — $3,120 in total.

One in every five people who used a homeless service last year was a woman escaping

domestic violence. These women frequently have low incomes and face high costs

getting re-established, often having escaped with little more than the clothes on their

back. The number of children using homelessness services also continues to climb each

year. Most are homeless due to their mother fleeing domestic violence. In other instances,

the children have no home because of debt and eviction.

Half of all people who are homeless are under 25. Lesbians and gay men have an even

higher rate of homelessness than their heterosexual peers. High rents force many young

queers to live with family, with a lack of acceptance a significant problem for many. The

suicide attempt rate among same-sex attracted youth is four times that of heterosexuals.

The exploitative treatment of overseas students in the private rental market is a major

scandal. Researchers from Monash and Melbourne University uncovered stories earlier

this year of rogue landlords overcrowding rooms and demanding sexual favours in

return for accommodation. The report also found that the price of living in university

housing increased by 37% between 2002 and 2006; accommodation built through public-
private partnerships is even more costly to students and conditions can often be worse.

Some institutions were taking “kickbacks” in return for encouraging students to stay

in particular accommodation. Many immigrant workers on 457 visas report similar

problems with overcrowded and high-priced employer-provided accommodation.

Indigenous Australians are massively over-represented among the homeless. They make

up 2% of the population but almost 10% of homeless people. Many Aborigines live in

appalling housing conditions. Seventy percent rent, compared to 30% of non-Aboriginal

people and, of these, only a quarter rent through the private sector. The majority of

Aboriginal housing is very poorly maintained and overcrowded. A report published last

February by the Australian and New Zealand Journal of Public Health told a shocking

story: in only one-third of houses could you wash a child reliably every day and in less

than 10% of houses was it possible to store, prepare and cook a meal.

This reality renders even more farcical recent attempts to encourage Aboriginal

communities to give up title to communal land and get behind the “great Australian

dream” of home ownership.

Not a universal dream. Governments for decades have been obsessed with promoting

home ownership. But there is nothing natural about the Australian model, where this

is seen as the norm and social housing — public and community — accommodates

a piddling 5% of households. Even other capitalist countries have quite different


In the Netherlands, more than a third of all households are not part of the private sector.

Half the population of Hong Kong lives in public housing. In France, every town must

guarantee that 20% of housing is public, resulting in this sector making up half of the

rental market. In Britain, councils and housing associations own 20% of housing stock.

Rates of home ownership also vary widely. In Australia, 67% have a mortgage or

own their home outright. The German home ownership rate is 42%: a key reason is the

existence of laws favourable to tenants, including limits on rent increases.

The Australian housing sector, with its weak tenancy laws and reliance on the market,

fuels poverty and insecurity. One-third of all renters now live with housing stress —

when a household spends 30% of its income or more on housing. Tenants can be evicted

without grounds and notice periods are short. Formal limits on rent are rarely enforced.

Fifteen percent of tenants report they’ve been involved in bidding for rental properties

and 40% report being badly treated by estate agents. In Victoria about 95% of tenancy

disputes heard at the Tribunal are initiated by landlords, usually to the detriment of their

unrepresented tenants.

Things are tough in the mortgage belt, too. Government policies, which have tended to

focus on demand rather than supply, have forced up housing prices, creating the belief

that speculating in real estate is the way to get rich quick. Negative gearing — a taxpayer

handout to investors — also directly encourages speculation, as does the low rate of

capital gains tax, which was halved by the Howard government in 1999. An analysis

of the impact of the popular First Home Owner Grants scheme suggests that it, too, has

driven up prices ultimately benefiting the large number of speculators in the market

rather than the first home buyers it was designed to help.

The Commonwealth Rent Assistance scheme is another government program that

benefits landlords and speculators. Rent assistance — a payment to some pensioners and

low-income families to assist with rent — privatises public housing assistance. When

public housing was first established, it housed many workers. But the steady decline

of this sector means that it now houses only the most disadvantaged and often only on

a temporary basis. So other low-income households are forced into the private rental

market with its uncontrolled rents. Nearly a million individuals and families in receipt of

rent assistance in 2001 were spending more than half of their income on rent.

Yet, ever more households have no choice but the market. The ratio of the public housing

dollar going to public housing as opposed to the private sector continues steadily to

decline. In 2006, the federal government spent just $1.3 billion on the Commonwealth

State Housing Agreement that funds public housing. In contrast $2.1 billion was spent

on rent assistance funnelled to the private sector. For 11years, the Howard government

looked to the market. This delivered a housing crisis.

While the Rudd government expresses concern about the chronic lack of housing

affordability, it continues the same failed approach.

Faced with an inadequate stock of affordable housing, it promised to address the supply

side of the housing equation. But, like its predecessors, it did not boost funds for a

massive program to construct public housing. Instead, it has chosen to give money to the

private sector. In February, Housing Minister Tanya Plibersek unveiled a scheme which

will provide tax credits for developers and property investors. These houses must be

rented to those on low incomes at 20% below the market rate. Investors will get a $6,000

tax credit made in yearly instalments over a 10-year period plus an additional $2,000 as a

cash payment or through the provision of cut-price land or stamp duty concessions from

the state government for every property built. After 10 years of taxpayer handouts, the

private investor can do whatever they choose with the house.

Under free market policies, the share of the housing market owned by speculators has

boomed. In 1985, speculators held less than 15% of the market. By 2003, it had jumped

to 45%! Rudd’s plans will entrench this trend unless we stop him.

Housing for all. Enormous as the housing problem may be, the solution is simple. The

money clearly exists. It is a question of priorities. Politicians continue to give tax dollars

to developers and the wealthy minority: it is up to working people to fight for quality

housing for all as a guaranteed right.

One key task is to demand that governments free up funds by taxing big business and the

rich. Capital gains tax for investment property must be increased and negative gearing

must be abolished immediately. If there is one major contributor to the rapid rise in house

prices, it is speculation driven by tax breaks for landlords.

There is an urgent need for a massive program to construct quality public housing.

The immediate priority must be to provide public housing to all currently eligible for

Commonwealth Rent Assistance. The goal is to provide enough stock for all who choose

public housing to be eligible.

Substandard rental properties must be confiscated from greedy landlords. Those who

provide decrepit accommodation forfeit their right to own it. Repair costs should be

added to the former owner’s tax bill. There’s a simple way to provide rental stock, fully

renovated at no cost to the tenant.

The key to solving the housing crisis is this: everyone is entitled to decent, secure

housing with no threat of arbitrary eviction. Rents should be capped at 20% of income

and paid into a central fund aimed at maintaining and increasing housing units. Everyone

wants a home that is secure, affordable and that they can modify and make their own.

This doesn’t mean confiscating every privately-owned house, but simply making it

illegal to own more than one for the purpose of rental exploitation.

Champions of capitalism have had their chance to run the housing market and have

caused disaster. Profiteering has no place in housing. Comfortable shelter — like air and

water — should be guaranteed.

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