Chair of the National Housing Supply and Affordability Council – Ms Susan Lloyd-Hurwitz
Firstly, I acknowledge the traditional custodians of the land we’re meeting on today, the Ngunnawal people, pay my respects to elders past and present, and extend that respect to any First Nations people here today.
This land has been nurtured by First Nations communities for over 60,000 years, and in return this land has provided shelter. But today – access to secure shelter, a place to call home – is increasingly challenging for millions of Australians. And in turn, that is profoundly harmful to our society.
Fixing our housing system isn’t a theoretical exercise. This is about homes, not assets.
Putting our collective effort into developing a more healthy housing market really matters.
It matters to the women and children fleeing domestic and family violence who face homelessness with crisis accommodation at capacity.
It matters to those living in insecure rental accommodation, who fear eviction in such a competitive rental market.
It matters to those who commute hours each day from where they can afford to live to where they work.
It matters to the young people who see home ownership as increasingly out of reach.
And while it matters deeply to individuals and households, there is perhaps an even more fundamental reason why having a healthy housing system matters for the entire nation.
Access to safe, affordable and secure housing is a human rights issue, and one that is essential for an inclusive and prosperous society. As the Australian Human Rights Commission says ‘the right to housing is more than simply a right to shelter. It is a right to have somewhere to live that is adequate.’
Failure to provide access to adequate housing is linked to adverse social, health, educational, justice and wellbeing outcomes.
Having that access would mean that governments would need to spend less on services linked to those poor outcomes, enabling greater investment in other critical infrastructure.
Having access to affordable, well‑located housing would improve economic productivity by supporting labour mobility, and boost workforce participation.
And home ownership is a pillar of our retirement system. Housing status is a strong determinant of what your life might be like in retirement. In 2018, more than 60 per cent of single renter retiree households were living in poverty, compared to 12 per cent of single homeowner retirees.
Alan Kohler, writing in the Quarterly Essay, contends that Australia is being divided into those who own a house and those who don’t, and those whose families have housing wealth to pass on to their children and those who don’t. This has profound implications for geographic and generational inequity that is deepening.
There is no denying the housing crisis we are in. It’s a crisis that has been decades in the making through our persistent failure to deliver enough housing of all types – from crisis accommodation to social and affordable homes right through to the private market.
Our housing system is simply not working. Prices and rents are growing significantly faster than wages, 170,000 households are on public housing waiting lists and over 120,000 people are experiencing homelessness.
The pressure on households is considerable. Since January 2020, house prices have risen by over 30 per cent in capital cities and over 50 per cent in regional areas. The median house price has reached 7.7 times median household income, close to historic highs. Since interest rates started to rise, repayments for borrowers have increased by as much as 60 per cent.
Home ownership rates are falling, particularly for younger households. In 2001, the year my daughter was born, 51 per cent of 24 to 35 year olds owned their home. Today, just 43 per cent do. She’s now 24 and we can clearly see the challenges presented to her generation in terms of accessing home ownership where there isn’t housing wealth to pass on.
Renting is no easier. Renters in the private market have experienced a sharp rise in rents of almost 40 per cent since January 2020. Paying the rent now consumes a record 32 per cent of household income on average. Imagine the stress, maybe you’re experiencing it yourself, of coping with the rising cost of living and wondering where the rent is going to come from.
Housing choice is diminishing. Recent analysis of 2021 census data by The Sydney Morning Herald showed that there are 33 suburbs in inner Sydney in which not a single resident works as a police officer, firefighter or paramedic. Not one. Thirty-six per cent of police and 39 per cent of firefighters commute more than 30 kilometres to work in Sydney – only 16 per cent of all workers commute that far. And no local council area in Sydney has a median apartment price which is affordable to an early career registered nurse.
Our housing system is failing many First Nations People.
First Nations households are half as likely to own their own home, 3‑times more likely to live in overcrowded dwellings, 6‑times more likely to live in social housing, and almost 9‑times more likely to be experiencing homelessness than non‑Indigenous Australians.
The fact is, we need to supply more housing, close to jobs, transport and amenity. And of course this takes us straight into the heartland of the debate between the 'Not in My Backyard' and 'Yes in My Backyard' tribes. What should we build, where, and how dense should our cities be?
Actually, I’m not fond of the phrase ‘density done well’, which implies that density is a bad thing which we need to do as well as possible. When in fact, better use of space in our cities can foster amenity, vibrancy and walkability.
This is not a new debate – back in 1929 one newspaper lamented ‘flats rear their heads over some of Sydney’s noblest headlands. They are invading suburbs which for years have been the pride of peaceful home‑lovers, where the happy laughter of children resounded in the streets’.
The National Housing Supply and Affordability Council was established by the Australian Government last year and its members include academics, planners, experts in crisis accommodation, First Nations housing and social and affordable housing, as well as practitioners. Many of them are here today. Each of us cares deeply about finding a pathway to unwinding this crisis and contributing to the national debate. Our role in the housing eco‑system is to provide advice underpinned by evidence.
As for me, I was delighted to accept the invitation to chair this Council though not without some trepidation. As many of you know, for a decade I held the role of CEO of listed property company Mirvac. And during that decade, the team built over 28,000 dwellings, all around the country. I know first hand how challenging that can be, how hard it is to deliver new homes. I also know first hand the joy that comes from creating a quality home that makes a difference in someone’s life. A home that is affordable to our key workers, that is suitable for someone with a disability, that is well designed and sustainable, that allows people to enter the housing market for the first time, and to downsize at the right time.
Housing is important to everyone in this room, to our families and our children. It is clear that the community, including government, now recognises that this is one of the most important issues of our time and that we all have a role to play. Indeed, there is no time to waste.
But we know, as does almost everyone else, that there is no quick fix, no silver bullet. It’s going to take consistent, patient and often confronting actions, year in and year out, with all levels of government, the for‑purpose sector and the private sector engaging in true partnership.
It is puzzling to me why, given the acute situation we are in, that we don’t prioritise the housing system more than we do.
A functioning housing market should be seen as critical infrastructure – and prioritised accordingly.
So for the next 10 minutes or so, let’s unpack some of the causes of this crisis, the outlook for the next 5 years, and explore 5 areas that can take us forward.
The Council recently released our first State of the Housing System Report, and as you would expect, it paints a grim picture, driven by long term structural and cyclical factors.
Beneath the ebbs and flows of cyclical challenges there are numerous entrenched structural constraints that limit housing supply and reduce affordability. I’m going to briefly call out just 7.
First. There is a limited supply of suitable land for housing. Where land is available, sites can be highly fragmented or have limited enabling infrastructure, such as water, sewerage, power, roads and rail connections, or suffer from restrictions that limit the optimal use of land.
Second. Our planning approval systems are too complex and too slow. Arrangements vary across states and territories and across the more than 500 local governments that provide planning consent authority.
The frameworks and processes that dictate what gets built, and where, are hugely biased against change. This is largely because the people who already live in an area where more housing is proposed are the ones who get a voice in supporting or opposing development. The people who may enjoy living there in the future, they get no say.
Third. We have under invested in social housing. Social housing as a proportion of all housing has fallen over recent decades, while demand has soared – wait lists for greatest need households are up 52 per cent since 2018. Given Australia’s remarkable and unparalleled record of 31 years of economic growth with only one short COVID induced recession, how can that be a fair and just outcome for our country?
Fourth. How we finance new homes is a major constraint. We rely on households to provide financing for new homes through off‑the‑plan pre‑sales, or committed construction contracts, and we put plenty of barriers in the way of foreign investment. Both of these serve to reduce the sector’s capacity to respond quickly with supply to meet demand.
Fifth. Various features of our housing system, notably stamp duty, mean that we don’t use the housing stock we already have as efficiently as possible. Almost 4 million dwellings had 2 or more spare bedrooms on the night of the 2021 Census. And the growth of the short term rental market through platforms such as AirBNB and Stayz has removed existing stock from the long term rental market.
Sixth. We’ve had decades of weak or even negative productivity growth in the construction sector, reflecting the fragmented nature of the sector and low levels of innovation. The ABS estimates that Australia’s construction labour productivity rose by just 0.2 per cent per annum in the 30 years to 2023, compared to 1.3 per cent in manufacturing. Since 2014, construction productivity has been on a downwards trend.
And seventh. It’s abundantly clear that even if we solved all the other problems in the system, we don’t actually have enough construction capacity to deliver the homes we need.
Cost increases have led to an elevated level of insolvencies in the sector which are running at almost 90 per cent above the average of the past 10 years.
House construction prices are over 40 per cent higher today than in March 2020 – inflation was just below 18 per cent over the same period.
The construction workforce is aging and of those that do enter apprenticeship training, only half complete their course.
There is significant competition for labour coming from major infrastructure builds in New South Wales and Victoria and from the resources sector in Western Australia and Queensland. For example, if you’re an electrician, you can earn $1,000 more per week working in heavy and civil engineering compared to providing your services to the building sector. That’s a fairly easy choice to make.
Put all those factors together, and the stage is set for housing affordability to deteriorate further over the next few years, and this from already challenging levels.
Our report projected that, under current policy settings, we are likely to fall 260,000 dwellings short of the target of 1.2 million new homes within 5 years.
Both rents and house prices are forecast to continue to outpace inflation over the next several years.
The median income household now needs around 10 years to save the deposit for the median home. More alarmingly, even those median income households who can raise a 20 per cent deposit could only afford 13 per cent of the homes sold in 2022–23 due to mortgage serviceability. Lowest income households could afford only one per cent of homes sold.
Australia deserves a better housing system. It’s an economic and social imperative in so many ways.
Fundamentally, this is about what sort of an Australia we want to be. One where there is a fair go for all, where communities are strong, where young people can see a positive path ahead, where sustainability and climate resilience are embraced, and where we can provide a safe and prosperous place to live for people who come here from all over the world.
Given the significance of the challenges we’ve been discussing today, it would be easy to despair, but I prefer to think of it as a call to action that requires bold measures and innovative solutions.
I think we can all agree that we need a housing system in which adequate shelter is affordable and secure for households no matter what their financial circumstances or where they live.
Let me highlight 5 areas that require immediate focus to move us towards that better housing system.
Firstly, we need to have adequate investment in social housing.
Investing in social and affordable housing, whether that’s by government directly, or by the for purpose and private sectors, makes good economic sense, especially where it offers good access to employment and amenity.
It alleviates the insecurity associated with private rental housing.
It reduces homelessness and the incidence of poverty, which in turn generates savings for all taxpayers. In fact, SGS economics estimates that for every dollar invested to bring about the supply of social and affordable housing, the Australian community saves $2.
Ongoing and predictable investment in social and affordable housing also provides a stable base level of construction activity, which reduces the challenges that arise from an inherently cyclical sector.
And it makes for better cities, towns and suburbs by fostering socially integrated neighbourhoods and diverse and sustainable communities.
The Council believes that a firm target for social and affordable housing as a proportion of total stock should be established. An initial target of 6 per cent would be closer to estimated demand and consistent with the current OECD average of around 7 per cent.
We are encouraged by recent policy measures and programmes such as the Housing Australia Future Fund as well as new public housing commitments by state and territory governments. More social and affordable housing will get built in the coming years. And for those on the wait list, or living in housing stress, this can’t come soon enough.
Secondly, we must commit to best practice zoning and planning systems across the country.
We need to remove politics from the assessment process, digitise our systems, and move towards performance based systems and away from open discretion.
There is already some traction in this space, with states and territories committing to a slew of reforms. But they need to be implemented and embedded, and that’s not always easy when at the same time we need to bring communities along to understand the importance of providing significantly more housing, particularly around transport infrastructure and existing amenity while at the same time honouring the character of places.
Thirdly, we need to build more capacity in the construction sector. The key to this is encouraging more workers into the sector including through support for training, and skilled migration channels. Government can partner with industry to promote trade careers and attract more people from under‑represented demographics, including women and migrant workers.
We need to improve productivity by supporting innovation including finding new construction techniques.
We should focus on upskilling the construction industry in advanced technologies and processes. This could be supported by increased use of advanced manufacturing techniques in social housing projects and other government procurement, and accommodating innovation in building codes and regulations.
Fourthly, we need a better system for renters.
More than 30 per cent of Australians rent their home.
The number of renters is increasing , and those who are renting are doing so for longer.
Renting is the only viable option for an increasing share of the population.
But in many ways our system does not work for renters. Housing quality and maintenance are variable – ranging from excellent to utterly inadequate. Security of tenure can be fragile.
We need regulatory frameworks that better support renters. As agreed by National Cabinet last year, this framework could include things such as having a nationally consistent policy regarding reasonable grounds for eviction, no more than one rent increase per year and requiring minimum standards for rental property. The Council does not support rent freezes. They only serve to inhibit supply – the very thing we are trying to have more of.
More institutional investment in housing – known as build‑to‑rent – would benefit both investors and tenants.
Institutional investors need long‑term assets with stable income streams, particularly if those assets are less well correlated with other large, well established asset classes.
Institutional investment can drive innovation in design and construction, as well as efficiencies in energy consumption and maintenance.
For renters, build‑to‑rent could improve affordability through increased supply, improve security of tenure, the quality of rental housing and the provision of services.
Imagine having a rental home where you could inspect the property when it suits you rather than in the company of 20 other people in the 15 minutes that the real estate agent allows. Imagine – you can live there as long as you like, the concierge knows your name and your pet’s name, you can paint the walls, and repairs are done by the onsite team with no inconvenience to you. And this doesn’t need to just be confined to the medium and high end segments of the market.
Vibrant, mature and at scale build‑to‑rent markets exist in other countries, notably the US, UK and Japan. But in Australia, the vast majority of rental housing is supplied by individual landlords.
In July last year, the Council released a report on Barriers to Institutional Investment in Housing. Why is it that our institutions invest in this asset class internationally, but not here?
It’s largely a nascency problem. Because there is virtually no market, and no track record, institutions, rightly or wrongly, require a significant risk premium which makes the economics challenging. And because there is no market in which to buy and sell, institutions need to create these assets through development, bringing a whole different level of complexity, and an increase in time and capability required.
Our report made 11 recommendations that would serve to accelerate the establishment of institutional investment. I don’t propose to unpack them here, but they include defining build‑to‑rent as a separate development type subject to faster planning and development assessment, and ensuring that superannuation regulations do not inadvertently disincentivise investment in housing.
Fifthly, we need to work towards policy settings that are well co‑ordinated across all levels of government. One of the challenges in our housing system is just how many parts of government are critical to the provision of housing – Commonwealth, states and territories and local governments. And within these levels of government, multiple departments and agencies have responsibility for different parts of the system including Planning, Transport, Social Services, Treasury, Education and Skills, Infrastructure, and Regional Development. A spaghetti web, if you like.
As former RBA Governor Phil Lowe noted in his farewell address ‘the reason that Australia has some of the highest housing prices in the world is the outcome of the choices we have made as a society: choices about where we live , how we design our cities, and zone and regulate urban land, how we invest in and design transport systems and how we tax land and housing investment’.
We are seeing welcome steps towards a more holistic housing policy approach within which these choices can be made. There is once again a federal minister for housing and homelessness. Under the umbrella of National Cabinet, Commonwealth‑state housing forums have been established. The Commonwealth, states and territories have committed to a range of measures under the National Housing Accord.
So, I’ve tried to imagine a world in which we have done all the things we need to do to create a healthy housing market.
That would be an Australia in which adequate housing can be accessed by households on all budgets, where there is frictionless transition to appropriate housing that suits the different stages of life.
Renting would no longer be a stressful and insecure experience.
Generations of families would be able to find appropriate housing near each other, and lifelong community connections could be preserved.
Our health budgets could be spent on preventing poor outcomes rather than remedying the effects of housing insecurity.
That would be an Australia in which our housing system would no longer fail many First Nations people.
That would be an Australia where those of us who work in our stores, educate our children, serve our coffee, protect us and look after us when we are sick could afford to live in the suburbs where they work, and our cities would be devoid of excessive commutes.
That’s an Australia that I would really like to see, and I’d really like to see it in my lifetime.
Thank you