It’s hard to think of more visceral impact on our sense of wellbeing than the thought of losing our home.
Housing keeps us safe, warm in winter, cool in summer and secure, at least in its ideal form.
Without it, there’s a quick slide down into a nasty cycle of exclusion and dependence. The victims of homelessness are not just the people afflicted with this misery but the rest of society as well. The quality of our citizens’ housing defines us and its quality carves out the most important of our economic infrastructure: before roads, before bridges, before public transport even, your people must have somewhere to live.
- Buy your tickets TFE LIVE: Housing tomorrow
So what state is our housing market in now with Covid turning from killing thousands of people a day to half murdering our global economies?
Right now, we still have a few months to put in place a strategy to save a potentially big mass of people from either losing their homes or living in fear of doing so. Included in this are those who are perennially fearful of not being able to afford their homes or need social housing.
Things don’t look good.
As Sydney real estate agent Peter O’Malley of Harris Partners says, “The real pain to come is being masked.”
O’Malley says rents might look to be down by nominal amounts, but when the government subsidies for jobs runs out, possibly in September, the real plunge could be as much as 30 per cent.
Property values are being maintained for now but that’s a façade, he says. The reality is values are propped up by six-month mortgage holidays from the banks for all who need them (but these are not mortgage forgiveness). What the banks do at the end of that period will be keenly watched. The conflict will be between their prudential obligations and their brand and reputation. Tough call.
Property analyst Louis Christopher of SQM says the plunge in population is the big factor. Last year the population grew by 370,000. This year it will be only the natural rate of growth, which is 90,000.
“So straight away we will have a massive surplus of dwellings.
“Unless the borders are opened sooner than expected.”
(Or someone comes up with a plan to allow migrants to arrive on condition they self isolate for 14 days.)
So how does this plunge in rents and possibly property values reconcile with the ever present concern that we need more affordable and social housing?
Is the problem solved with an oversupply of housing, thanks to the repercussions of Covid?
NSW proposed an answer of sorts. It’s an opportunity, the government’s signalled, to snap up some of the surplus apartments on the market and make them available for social housing.
In fact, some people are so concerned about a collapsing construction industry, which employs 1 million people according to the estimates, that the Australian Labor Party this week called for a major boost to affordable housing development as a way to keep builders in jobs.
Two weeks ago, the building union the CFMEU aligned with (former?) arch enemy the Master Builders Association to call for a $10 billion injection to build 30,000 social housing units. (A sweet irony is that both own the Cbus super fund; which is only logical really, and illustrates the pity of not more co-operation.)
If you’re confused: falling housing values and rents are good/falling housing values and rents are grounds for near panic and strange bedfellows, you’re not alone.
Our TFE Live event on Wednesday at 1pm brings together three experts to unpick the complex threads that befuddle so many people who, because housing is so ubiquitous, think it’s a simple thing.
It’s probably one of the most complex and opaque industries around, controlled by a cabal of builders and developers with unbelievable lines of sight and influence to government ministers, who constantly call for more supply and faster planning approvals no matter what the statistics say.
Then there is planning: technical, political and strategic – and because of this and its impact on communities and individuals, a political hot potato capable of making or breaking governments.
And that’s before we even glance at the quality of construction of the past, and which the revamped National Construction Code will inch up a slight tad to make houses just a little more energy efficient. The MBA has flagged, by the way, that under cover of Covid it will fight any moves to increase regulations around standards or even licensing. So watch that space.
Then there is the issue of taxation. According to Professor Jago Dodson, one of our speakers at TFE Live on Wednesday, support for ridding the nation of stamp duty is widely supported. The potential regressiveness of land tax easily dealt with. He’s more concerned about using this opportunity to get more affordable and social housing on the market.
The crisis might last for a year or two, he says, but he’d be surprised if immigration does not return to a comparable level in five years similar to pre-Covid times.
Kate Colvin, another of our speakers, is spokesperson for a huge coalition of around 200 housing organisations and 27,000 community supporters, who have all gathered under the moniker of “Everybody’s Home”.
Colvin outlined the group’s priorities at a Canberra Press Club function in 2018. Among key concerns is the wisdom of so much rental accommodation in the hands of unsophisticated mum and dad investors.
A more institutionally based ownership of affordable housing is preferable and would produce better overall results with better efficiencies and more opportunities to deliver long term benefits, such as sustainability.
Energy efficiency and other environmental and quality concerns go without saying, she says
Adrian Harrington is the third speaker on our panel. He’ll outline the financial side of the equation. With his range of positions, he’s well placed to both know the opportunities and deliver best thinking right to the heart of policy making in government.
These positions include chair of the Australian Housing and Urban Research Institute (AHURI) and non-executive director of National Housing and Finance Investment Corporation (NHFIC), with a background that includes property and funds management, including senior roles with at Charter Hall, Folkestone, Mirvac, Deutsche Asset Management and the Property Council of Australia.
This is a TFE Live not to miss.