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As tens of thousands of people prepare to take a financial hit with the end of COVID-related disaster payments, new research shows that renters on low and modest incomes are already in the grip of a housing pincer, especially in regional Australia. Inflamed by surging private rents, this also reflects an intensifying shortage of social housing after a decade of Commonwealth neglect.

Despite widely-supported calls for the inclusion of social housing investment in Australia’s national economic revival program, this was firmly rejected by the Commonwealth Government in 2020.  But, as revealed in our new research, four state governments (Victoria, Queensland, Tasmania and Western Australia) have announced significant self-funded public housing construction programs as a component of post-pandemic stimulus, pledging nearly $10 billion to this cause.

The prospective net gain in social housing dwellings over this period will be only 400 in NSW, compared with 8300 in Victoria and 4400 in Queensland

As our work reveals, these programs will add over 23,000 badly needed new homes to the stock of public and community housing over the next four years. But although this is more than welcome, there are 155,000 households registered on social housing waiting lists across the country and more than 400,000 households in need of low-cost rental tenancies.

Recently pledged new social housing construction will be also extremely patchy across the country. For example, also factoring in the numbers of existing public housing properties that governments plan to demolish or sell over just the next three years, we estimate the prospective net gain in social housing dwellings over this period will be only 400 in NSW, compared with 8300 in Victoria and 4400 in Queensland.

And even in the states that have recently stepped up their commitment, the scale of action remains fairly modest. In Victoria, the increase in social housing commencements in prospect through the state’s Big Housing Build program, equates to only around 5 per cent of all housebuilding – compared to public housing construction in the period 1945-70 when the comparable Australia-wide figure was 16 per cent.

Moreover, housing stress due to both affordability and availability pressures is rising significantly thanks to a tightening rental squeeze. While rents declined sharply in some inner cities early in the pandemic, from mid-2020 they increased. By August 2021 rents were accelerating at more than 8 per cent, Australia-wide – the fastest pace since 2008, and far ahead of wage growth of under 2 per cent.

The regional markets are overheated and risk homeslessness

And rapid rent acceleration isn’t by any means confined to the cities. Regional rent rises are now outpacing metropolitan areas, particularly in NSW, Victoria and Queensland, up by more than 12 per cent in the year to August 2021, and raising the prospect of growing homelessness in these overheated markets.

The percentage of affordable homes available looks set to deteriorate further with the end of affordable rents for homes developed under the Commonwealth Government’s “National Rental Affordability Scheme” (NRAS). 

For regional Victoria, the proportion of tenancies affordable to low-income tenants declined from 41 per cent to 33 per cent during 2020-21. This percentage looks set to deteriorate further with the end of affordable rents for homes developed under the Commonwealth Government’s “National Rental Affordability Scheme” (NRAS). 

NRAS funded 38,000 newly built rental homes for key workers and other low wage earners to be let at 75-80 per cent of market rates. Government figures show that over the next three years the subsidies and rent restrictions attached to some 22,000 of these affordable homes will expire.

State governments are also shouldering the responsibility for keeping rough sleepers off the streets, after they were moved into emergency accommodation (EA) at the beginning of the COVID-19 pandemic. Once again without Commonwealth financial support, key states have committed hundreds of millions of dollars in new spending on move-on housing programs to provide longer term solutions for the most disadvantaged homeless populations.

As documented by our research, in NSW and Victoria alone, these initiatives will have facilitated safe, secure and supported accommodation pathways for around 3500 former rough sleepers with complex needs by 2022. This will, at least partially, relieve the growing backlog of chronic rough sleepers built up in Sydney, Melbourne and other cities over previous years.

Arguably, though, these COVID-response homelessness actions should have been more extensive, considering the scale of the problem. For example, the limited scale of the NSW EA move-on housing scheme meant that places had to be strictly rationed, so only around a third of former rough sleepers in EA were assessed for possible inclusion.

In a state where social housing is dwindling towards only 4 per cent of all housing, this reflects the extreme shortage of suitable move-on accommodation, as well as emergency program funding limits. It is also yet another example of the very real need for stepped-up Commonwealth support.

Crucially, even in the states that have initiated post-pandemic social housing programs, build rates at expected levels are only a little above those needed simply to keep pace with growing population (and housing need). They will make only a very modest short-term contribution to redressing the huge shortfall in rental housing affordable to low income Australians that has accumulated since the effective end of a routine national social housing construction program in 1996.

Through its tax, borrowing and currency-issuing powers, it is the Commonwealth government, not the states, that holds the real financial firepower in Australia. Shifting prime responsibility for funding social housing growth to the states is untenable. A sustained national construction revival is only possible if the federal government resumes its historic role as the main source of investment for additional affordable homes.

Hal Pawson

Hal Pawson is Professor of Housing Research and Policy at the University of New South Wales More by Hal Pawson

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