Housing Archives - thegoodwills.com

Where social housing meets the working poor

social-housing-working-poor — Graph supplied by the Grattan Institute

I suppose you have been waiting for me to wax eloquent about the Federal Government’s $10 billion housing plan and why don’t they get on with it?

Don’t blame me. I didn’t vote for The Greens, who seem to think their role in government is to block legislation just because they can. The Greens MPs in Parliament want the Federal Government to freeze rentals for two years. This seems to be predicated on some naïve proposition that the Labor Premiers buddy up with the Feds and persuade the others to fall in line.

What part of States Rights do they not understand? As Prime Minister Anthony Albanese rightly says, the Federal Government could not impose a nation-wide freeze on rentals even if it wanted to. The mechanism for such a move lies with the respective State and Territory governments. I can’t imagine that telling the landlords (and developers) in their constituencies that they can’t raise rents for two years would help State or Territory government re-election chances next time round. Having said that, the Australian Capital Territory has implemented a rent ‘cap’ so anything’s possible.

The Bill, which stalled through lack of support in June, has been tabled again this week although not much has changed. There is talk (at chat show level) of a double dissolution – that is, Mr Albanese will go early to the people and let them decide. Unlikely.

There are a few things to note about the Housing Australia Future Fund. For one thing it’s not a new idea. The $10 billion fund was an election promise, which means its formation goes back well before 2020. We already had a Future Fund (which primarily invests in the share market and in commercial property). The Labor Government’s plan to co-opt this fund into investing in the volatile housing market has made it a target for the Coalition and dissident independents.

One of the issues as I see it is the Bill has been designed as an economic/financial policy instrument. Given the size and severity of the housing problem in this country (affordability, rental housing shortages and homelessness), it should have been designed foremost as social policy, letting the numbers take care of themselves, as numbers do.

The Greens are not alone in their critique of the Albanese government’s housing policy. Numerous housing advocates say that despite the size of the Housing Australia Future Fund, it will scarcely touch the sides of the problem. The legislation promises 30,000 new social and affordable houses in the first five years. Once the fund starts generating returns, more social and affordable projects can be started. And as Housing (and Homelessness) Minister Julie Collins added, this will include 4,000 homes for women and children affected by family and domestic violence, or older women at risk of homelessness.

That’s all very well, but numerous reports concur that the current social housing need is for more than 100,000 dwellings. A report by the National Housing Finance and Investment Corporation (NHFIC) showed that Australia is facing a shortfall of 104,000 houses in the next five years. This is brought about primarily because the construction industry can’t keep up with demand. Then there are mitigating factors like rising interest rates and the ever-increasing cost of raw materials.

This glum forecast came at a time (April) when rental vacancy rates in every capital city in Australia were at or below 1% (Ed: and likewise in regional cities and towns). Bad weather in 2022 added to the woes of builders; some of whom closed their doors, leaving home buyers with half-finished dwellings and cost over-runs.

The NHFIC is forecasting 1.8 million new households over the next decade, with just 148,500 new dwellings added this financial year. The total will drop to 127,500 in 2024-25, with the biggest drop in apartments and multi-density dwellings (40% down on levels experienced in late 2010).

In 2021, the Grattan Institute took a futuristic look at how we could build 100,000 social housing dwellings by 2040. As you can see by the table above, this would depend entirely on State and Territory government assigning matching contributions.

Grattan Institute economic policy director Brendan Coates wrote:

“If matched state funding was forthcoming, the Future Fund could provide 6,000 social homes a year – enough to stabilise the social housing share of the total housing stock. It would double the total social housing build to 48,000 new homes by 2030, and 108,000 by 2040.”

Four Corners should do an investigation on what exactly is meant by the terms ‘social, affordable and community housing’ and who benefits. Once upon a time there was just public housing. It was owned by the government and traditionally leased to people who were on government pensions and unlikely or unable to find paid work. The rental for people in these circumstances was traditionally struck at 25% of income. The Department of Human Services also calculates rent assistance for people in this category. Now, however, we have public/private partnerships which develop ‘affordable’ or ‘community housing’ properties. While the rents charged to these properties still look attractive (to those in the private market), it can represent up to 40% of disability or aged pension income. The properties are typically built new by private developers on land bought or provided by the relevant Government (or Council). These projects are financed by investors, so even though the housing provider may be a ‘not for profit’, the profit motive is inherent, whereas with public housing it is not.

Whatever the Federal Government and its State and Territory counterparts are going to do about social housing, they’d best get on with it. The Australian Housing and Urban Research Institute (AHURI) has estimated that the need for future social housing will be 1.1 million dwellings by 2037.

The 2021 Census recorded there were almost 350,000 social housing dwellings across Australia (just under 4% of the number of all households), at the end of June 2021.

AHURI recently reported there were 165,000 applicants on the waiting lists for public housing, more than 40,000 applicants for community housing and just over 12,000 applicants for State owned and managed Indigenous housing.

“If we add together all the households on the waiting list and those already in social housing, we find that over half a million (close to 565,000, or just over 6%), Australian households were living in, or had requested to live in, a form of social housing.”

All that aside, there is the ever-growing cohort of ‘working poor’ – Australian families where one or both parents have jobs. But their household income can’t keep up with high private market rentals and the cost of living in general. Not to mention the 1.8 million Australian households Roy Morgan Research says are at risk of mortgage stress.

No quick fixes in sight although the CFMEU (one of the country’s last robust unions), wants the government to impose a Super Profits tax on the top echelon of companies.

The Guardian reported that CFMEU says a super profits tax of 40% of excess profits would ‘comfortably’ cover the cost of building more than 750,000 new social and affordable homes.

The CFMEU revealed this bold plan last week at the National Press Club, tabling a commissioned report by Oxford Economics. The report assumed that a permanent 40% tax on excess profits on companies with over $100m annual turnover, would raise an average $29bn a year, enough to fund the construction of 53,000 new homes each year.

Yep, that’ll happen.

Submarines or social housing?

housing-crisis-homelessness — Image by Jon Tyson www.unsplash.,com

One of our readers commented that on the same day the media were banging on about the Federal Government’s $368 billion submarine plan, a lone SBS panel programme focused on the national housing crisis.

It is tempting to compare spending on affordable housing with the capital cost of up to five nuclear-powered submarines. The Federal Government’s (annual) commitment to affordable housing (currently $1.6 billion), equates to about 13% of its annual submarine budget (ie if the $368 billion is spread equally over 30 years). This assumes that successive governments will continue to spend that much on affordable housing (and submarines).

While housing is the responsibility of individual States and Territories, the Federal Government develops national policy and funds it with grants to the States and Territories.

That’s the theory, but in reality the critical shortage of housing, the cost of housing and the rising tally of homelessness is a clear and present danger to Australia’s social stability. Just this week the 2021 Census data on homelessness was released – what kept them, you might ask?

More than 122,000 people in Australia experienced homelessness on Census night, an increase of 5.2% from 2016, according to the Australian Bureau of Statistics (ABS).

The ABS interpreted the numbers as representing 48 people for every 10,000 people, compared with 50 people for every 10,000 in 2016.

While that is a reduction, the historical snapshot would seem to be an unreliable statistic, given that measures to reduce the spread of COVID-19 throughout 2021 contributed to some of the changes in the data.

“During the 2021 Census, we saw fewer people ‘sleeping rough’ in improvised dwellings, tents or sleeping out, and fewer people in living in ‘severely’ crowded dwellings and staying temporarily with other households,” ABS spokesperson Georgia Chapman said.

The affordable housing issue is not just about people sleeping in doorways. A new report produced by the Queensland Council of Social Services (QCOSS) clearly shows that working families are among those falling prey to the acute rental housing market shortage. It’s worse in some States than in others.

The report from QCOSS and The Town of Nowhere campaign is sobering reading. It predicts more than 220,000 households in the State will not have affordable housing within 20 years.

The report was prepared by national housing expert, University of New South Wales Professor Hal Pawson, and UNSW colleagues.

The tough conclusions include that there are around 150,000 households across Queensland with unmet housing needs. This includes 100,000 households who would typically be eligible for social housing. These households are either experiencing homelessness, or are low-income households in private rentals, paying more than 30% of household income in rent.

The figure is more than twice the official indicator of 47,306 households on the Queensland social housing waiting list. The latter has grown by 70% over the past three years.

Un-met housing needs are highest in satellite cities south of Brisbane. Pawson’s study shows that 10% of all households in Logan, Beaudesert and Gold Coast are homeless or living in unaffordable housing.

Professor Pawson said Queensland would need 11,000 affordable and social homes each year for the next 20 years, about 2,700 of which would need to be social housing.

He told the ABC the government had promised to build 13,000 social and affordable homes by 2027. But the QCOSS report found that the number of people with “very high need” for social housing was 37% higher than the system could accommodate.

In the decade leading up to 2017, there was “minimal” investment by State and Federal governments in affordable and social housing, Professor Pawson said.

“Unless they can get a grip on the situation, it’s a problem that over the next generation will continue to become more stressed and more pressurised.”

Much of the blame for the current problem is laid at the feet of private landlords. Private rentals in Queensland have risen as much as 33% since 2020. The sharpest increases, however, have been in regional markets. For example, over the past five years median rents rose by 80% per cent in the industrial town of Gladstone, by 51% in the tourist town of Noosa and 33% in the Gold Coast area. Nearly 60% of low-income households in the private rental market are facing unaffordable housing costs, with 15% in extreme housing affordability stress (rent accounting for more than half of total income).

While rentals have risen steeply, the bigger problem is a lack of rental accommodation. Rental vacancies are close to zero not only in Brisbane and the Gold Coast but also in regional towns.

The report states: “Queensland’s private rental housing has seen several years of declining vacancy levels and rent inflation rates far above the national norm. More generally, the sector remains entirely dominated by small-scale investor landlords whose usual prioritisation of capital growth over rental revenue inherently compromises tenant security.”
The upshot of this is that landlords are selling on the rising market, resulting in fewer houses for rental. Coupled with this is the inadequacy of tenant rights on rents, security and conditions. The Queensland Government enacted significant rental regulation reforms in 2022, but these fell far short of the changes advocated by tenants’ rights campaigners.

The Productivity Commission reported last year on the National Housing and Homelessness Agreement framed by the Albanese Government.

The agreement provides $1.6 billion a year in federal funding to the States and Territories, with the aim of improving access to affordable and secure housing.

However, the Commission judged the programme ineffective and in need of a major shake-up. With rents rising and vacancies falling, low-income private renters are spending more on housing than they used to. One in four households have less than $36 a day left for other essentials, the Commission said.

For those who might argue against more investment in social housing, there are success stories. The Queensland Government has funded a small number of permanent supportive housing (PSH) tenancies for people who have experienced long-term homelessness. PSH combines subsidised long-term housing with access to intensive but voluntary support services. One PSH programme, Brisbane Common Ground (BCG), established in 2012, is a 146-unit apartment block with 24/7 on-site support. Studies reported high tenancy sustainment rates and tenant satisfaction levels. It also produced significant savings via reduced use of emergency services and crisis accommodation. (QCOSS Report).

Despite the success of projects like BCG, there are many examples of State governments backing away from the commitment to social housing. For example, the New South Wales government is reportedly preparing to sell its Waterloo social housing complex in Sydney. The ABC reported that Waterloo Estate, the biggest social housing estate in Australia, houses almost 2,500 people.

The 18ha site will be redeveloped under a NSW government strategy called Communities Plus, where public land is offered to developers on the proviso 30% of what they build is dedicated social housing. This is clearly a retrograde move away from a project that is 100% dedicated to social housing. Meanwhile, more than 51,000 hard-pressed households are waiting for a home in NSW.

In an even more backward step, Darwin’s local Council has reportedly been issuing $162 fines to ‘rough sleepers’. The latter may or may not be indigenous people known as ‘longgrassers.’ (see link below)

Darwin Council issued a statement saying it had been subject to significant pressure from some current Northern Territory government MLAs. The MPs wanted to increase the number of infringements (and the size of fines), issued to vulnerable people who are sleeping rough in public places. (And what happens when these people cannot pay the fines? Imprisonment for non-payment? I guess that’s one way of getting people off the streets..Ed)

In its defence Council said council rangers issued fines as a “last resort”.

“We do not consider the fining of vulnerable people the solution to complex issues such as homelessness.”

More reading

https://www.theguardian.com/australia-news/2022/jul/12/queenslanders-miss-out-on-social-housing-due-to-failures-to-build-homes-and-inaccurate-waiting-lists

https://www.drbilldayanthropologist.com/resources/Longgrass%20people%20of%20Darwin%202012.pdf

Squeezed between inflation and interest rates

inflation-interest-rates — The Australian cash rate since 1998 (Reserve Bank of Australia chart)

I just happened to be reading a novel set in the Edwardian era at the same time as the media was going bonkers (again) about the Reserve Bank raising interest rates by 0.25% to 3.6%. In Louis de Bernieres’s* book, The Dust That Falls from Dreams, one of the characters is holding forth about the sudden rise in the bank rate and subsequent collapse of the share market in 1914.

Hamilton McCosh, a daring entrepreneur and investor, is at first delighted when the bank rate goes to 4% because he has ‘a few bob invested here and there’. Then the rate doubles to 8% and quickly rises to 10%.

“Just as I was gleefully rubbing my hands the blighters closed the Stock Exchange”, he tells his pals at the Atheneum, a gentlemen’s club.

This is late July 1914, you gather, a few weeks before World War I broke out. McCosh didn’t know then that the stock market would stay closed for five months. Rather than cause inflation, this financial crisis functioned like the ultimate credit squeeze. Inflation stayed low, well at least until 1915, when it rose rapidly to 12% then to 25% in 1917.

In the pre-war period, De Bernieres’s McCosh is aghast – you can’t get credit anywhere and there’s a rout on the stock market. “What’s Serbia got to do with us?” he complains.

In 2023 you could insert “Ukraine’“and immediately realise that we have seen cycles like this before. In times of war, the supply of money is tested, oil is expensive and hard to source, there is much unemployment, securities can’t be sold and supplies of necessities are dwindling.

The 1914 financial crisis in the City was a liquidity crisis of massive proportion, the likes of which was not seen again until 2007/2008. Amidst much intervention by the government and the Bank of England, the day was ultimately saved.

In De Bernieres’s novel, McCosh regroups and singles out two stocks he thinks will do well – Malacca Rubber and Shell Oil (as he calculates where money will be spent in the war effort).

Self-interest and venality arises quickly whenever a country’s financial welfare is threatened. Survival of the shiftiest is the order of the day.

At this point in time, many of Australia’s mortgage holders must be in a state of anxiety as yet again the goal posts are moved.

Not that the RBA had any option. Monetary policy is under pressure from forces beyond the Reserve Bank’s control. We are not the only country where inflation and interest rates have risen sharply. You can chart the increases in Australia back to the onset of a pandemic in March 2020, then steeply rising since Russia’s invasion of Ukraine, in February 2022.

The impact of Covid is what initially sent the cost of living index soaring. From March 2020, when it was 2.2%. Inflation rose steadily through the Covid years, driven up by stock shortages, the impact of bushfires and floods on production, disruptions to supply chains and the ever-rising cost of fuel.

Inflation reached 7.3% in the September quarter of 2022, about six months after Russia invaded Ukraine. The RBA now thinks inflation may have peaked (at 7.8% in December 2022). But as ABC business reporter Peter Ryan observed, the March quarter figure will be the one to clarify matters when released on April 23. Wherever it rests, Australia’s inflation rate is a long way north of the 2%-3% range promised in 2019.

When inflation rises, central banks almost always use monetary policy to beat it into submission. This week’s interest rate rise – the 10^th in a row, takes the official cash rate to 3.6%.

As Peter Martin observed in a timely piece for The Conversation, Tuesday’s interest rate hike was the culmination of a process that has added $1,080 to the monthly cost of payments on a $600,000 variable mortgage.

Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University, calculated this increase ($12,960 per year) by comparing payments on the National Australia Bank’s base variable mortgage rate before the Reserve Bank started its series of hikes in May 2022.

Before the Reserve Bank began raising the cash rate, the base variable rate was 2.19%. It’s about to be 5.49%, pushing up the monthly payment on a $600,000 mortgage from $2,600 to $3,680.

The Reserve Bank acknowledges it is a “painful squeeze”, but hints it might not need to squeeze much harder.

There’s more pain across the ditch. NZStats revealed that the annual inflation rate for 2022 reached 7.2%. Housing and household utilities was the largest contributor to the annual inflation rate. This was due to a 14% hike in the cost of building a house and rentals also rose.

As if to demonstrate its independence from the government of the day, New Zealand’s Reserve Bank pretty much ignored the impact of Cyclone Gabrielle. While all around people were shovelling silt out of their houses, the RBNZ increased the cash rate from 4.25% to 4.75% on February 22. This was a more dramatic increase than seen this week in Australia. But New Zealand is anxious to suppress the spiralling cost of housing. You’d think a country which is over-endowed with pine forests would have this covered, eh?

I guess the new UK prime minister will want to take credit for the drop in inflation recorded in January (8.8%) compared with 9.7% in December 2022. The Bank of England Governor has warned that it may need to raise rates again if inflation re-asserts itself. After 10 successive increases since December 2021, the official rate is at 4%. Meanwhile in the US, the Federal Reserve is flagging higher and faster rates rises (4.75% in February), despite inflation dropping below 7%.

Why does all this matter and who does it matter to? If you are young, working and buying your own home, yet another 0.25% increase in the cash rate wrecks your household budget. Those who borrowed their deposit (from the Bank of Mum and Dad) will be desperate for another pay rise, as inflation eats into the recent 4.5% increase in wages.

As The Guardian reported just last month, almost 25% of borrowers were at risk of mortgage stress as of December 2022. Another 800,000 borrowers face higher repayments as fixed loans end later this year and revert to the variable rate.

Tim Lawless, research director at CoreLogic, says the clear reason for mortgage stress is that interest rates increased faster and earlier than anyone was thinking. (Whatever happened to the notion of buying a modest first home then upgrading as finances permit?Ed.)

“We are expecting that the rate of mortgage stress will push higher into 2023,” Lawless told The Guardian, “partly because of higher interest rates, but also because of the cost of living.”

Theo Chambers, chief executive of Shore Financial added: “People probably borrowed more than they could have today. With borrowing capacities down almost 35% from 12 months ago, these people wouldn’t get approved today.”

As for De Bernieres’s Hamilton McCosh, how is he supposed to earn a living in Edwardian Britain, he fumes, saddled with four children, a truculent wife and two mistresses current (one retired), all of whom have children to feed?

As the Norwegian playwright Henrik Ibsen once said, “Home life ceases to be free and beautiful as soon as it is founded on borrowing and debt“.

*author of Captain Corellli’s Mandolin

Rental crisis raises risk of homelessness

rental-crisis-homelessness — A roof over your head (eventually). Image by www.pixabay.com,

This topic was sparked by news from a near-neighbour who had received the dreaded ‘landlord requires vacant possession’ letter.

All tenants go into a lease today knowing that the landlord can decide to sell the property, at which point they will be evicted. A lot of landlords have been doing that over the last two years, taking a profit as property prices spiralled.

The rental vacancy figures in this town and just about everywhere else would suggest that once a rental property is sold, it disappears from the rental pool – at least for a while. The national rental vacancy is 1.2% – at a time when analysis of Census housing data suggests that 700,000 private dwellings are locked up and uninhabited. More on that later.

We all know people who are renting and finding it increasingly difficult to feed their families. In recent months, there have been many stories in the media about families struggling to find a place to live. Those who find themselves at the end of a lease with no new home in the pipeline are at risk of becoming homeless.

Even when we are told the reasons for the shortage of housing, solutions are less obvious. Mostly due to self-belief and a strong self-image, some people caught between a lapsing rental and a tight vacancy rate will find their way round it.

It isn’t hard to find caravan parks, farm-stays and outback tourism ventures that need residential caretakers. The successful candidates get to park their vans for free and quite possibly pick up a small stipend as well.

People in these circumstances (a) do not regard themselves as homeless and (b) they can enjoy the luxuries afforded by a 22 ft caravan and an annexe.

June quarter data from CoreLogic shows that Australia’s rental market continues to tighten as low supply levels cause national vacancy rates to dive. Rents continued to rise across all capital cities and property types over the past three months.

Dwelling rents in the June quarter were 9.1% higher across the capital cities and up 10.8% in regional areas, compared to June 2021.

CoreLogic report author Kaytlin Ezzy said the recent upwards trend in rents has occurred mostly in the absence of overseas migration.

“This sustained period of strong rental growth has seen national dwellings record the highest annual growth in rental values since December 2008, when rental demand was supported by record levels of international migration,” Ms Ezzy said.

Vacancy rates across national dwellings fell to a record low of 1.2%, down from 2.2% this time last year.

In March, CoreLogic contributed to a report in The Guardian that found rents in Queensland had risen by as much as $200 a week over the previous two years.

The report found that steep rent rises in parts of Queensland forced people into caravans, sheds and poverty – even before widespread flooding displaced thousands more people.

While the ABS has released 2021 Census housing data, it will be “early to mid-2023” until we see the homelessness data. The most recent official data was collected in 2016 and released a year later. The homeless tally then was 116,427.

The Australian Institute of Health and Welfare (AIHW) estimates that in 2020–21, around 278,300 people received assistance from Specialised Homelessness Services (SHS). Around 111,100 clients were homeless when they first began support.

There are different categories of homelessness, apart from those who literally have nowhere to go and end up sleeping rough or in a charitable shelter. Then there are people living in sheds, garages and other unconventional buildings, couch surfing (staying with friends), hostels and unsuitable temporary accommodation.

Since late 2019, the onset of the Covid pandemic, the escalating price of real estate and an ever-increasing scarcity of rental properties has unquestionably added more individuals and families to the homeless tally. There is an increasing cohort of ‘hidden homeless’, that is people who are either not eligible to apply for support or feel they do not need it.

In Australia, some of these people head for the great outdoors. Accommodation demand driven by ‘Grey Nomads’ has produced hundreds of free camps and low-priced camp-grounds run by local show societies. The free roadside reserves, which may nor may not have a toilet/and or shower, usually have rules about how long you can stay. In Tasmania, many free camps allow you to stay for up to a month.

.Everyone’s circumstances are different, but we have met many people who had sold their house and bought a road rig. Many of the so-called Grey Nomads are retired tradies and public servants who can afford a $200,000 self-contained rig and go on the road for months at a time.

But if you travel the country and stay in free camps, you are just as likely to see a couple living in a 30-year-old caravan towed by an equally ancient car.

The big problem waiting for Australia’s new Prime Minister to tackle (after he has settled down our Pacific neighbours), is the housing crisis.

Believe me – it is a crisis. There are simply not enough houses to go around. This is particularly so in Queensland, where interstate migration has put the housing sector under massive strain.

There are reasons for the dire shortage of housing and they include delays in building new homes amid adverse weather in 2022. Then there are homes destroyed by floods or bushfires.

But as residential property analyst Michael Matusik discovered, the housing shortage is in part due to some 700,000 private dwellings that are “deliberately left vacant”.

Matusik reached this conclusion after analysing 2021 Census housing data, which showed there were one million unoccupied dwellings in Australia (about 10% of the country’s private residential accommodation).

The ABS defines unoccupied dwellings as: holiday homes (for owner’s use or rented out); investment properties without a tenant; newly built but vacant dwellings; habitable dwellings being renovated and/or vacant dwellings for sale or lease.

Matusik wrestled with those categories and calculated that after discounting the latter, 700,000 unoccupied dwellings were investment properties that were locked up rather than tenanted.

“Many of the unoccupied dwellings are in capital cities, especially Sydney and Melbourne where more apartments are in the dwelling mix,” Matusik wrote in his regular subscriber bulletin, Matusik Missive. “In these cities the proportion of overseas buyers, especially from Asia, and particularly from China, is the highest in the country.

“It is somewhat safe to say that something like 70% of the unoccupied dwellings across Australia are deliberately locked up.

“Assuming past immigration levels return, then there is a need to build some 150,000 new dwellings across Australia each year.

“If we could unlock these 700,000 empty homes, we would not need to build a new home for 4.5 years.”

While admitting this is ‘fantasy land’, Matusik says that any move to open up these dwellings would go a long way to improving short-term dwelling supply.

As we approach National Homelessness Week (August 1-7), some agencies will no doubt be calling for an earlier release of Census data on the homeless.

I asked the peak body, Homelessness Australia, for a comment; but remembered it was de-funded by the Federal Government in 2014. When one of their volunteers gets back to me, I’ll include their comment.

For now I’ll say that however bad the news is, it is better that we know sooner than later.

Affordable housing – a key election issue

affordable-housing-election — A roof over your head – image by Capri23 at Pixabay.com

Wherever you go in Australia to visit friends and family, the conversation very soon turns to the scarcity and high cost of rental housing. The topic will then quickly shift to the ever-rising cost of houses and why parents worry about their adult kids taking on seven-figure mortgages. As residential property analyst Michael Matusik recently said, it comes down to the Bank of Mum and Dad.

Few cities or towns have escaped the 20% rise in residential real estate prices (for the year to September) or the inevitable rental hikes that followed. Stories that circulate about landlords taking advantage and tenants deciding they’d be better off sleeping in their cars are not uncommon. Check in with any emergency housing agency and they will tell you things are as tough as they have ever been.

AMP Capital chief economist Shane Oliver says that while housing affordability has always been an issue in Australia, it has moved from a periodic cyclical concern to a chronic problem.

“The 20% rise in prices over the last year has put the spotlight on the issue again. With the surge in house prices since the 1990s has come a surge in debt which brings with it the risk of financial instability should something go wrong in the ability of borrowers to service that debt.”

Oliver said the gains have been driven by record low mortgage rates, buyer incentives, a tight jobs market, a desire for more home space as a result of the pandemic and working from home, numerous government home buyer incentives, the “fear of missing out” and lower than normal listings. This has pushed average prices to record highs and real house prices to 23% above their long-term trend.

Oliver says the average capital city dwelling price rose 200% over the past 20 years, compared to an 82% rise in wages. The disparity has become more telling in the last 10 years with dwelling prices increasing by 58% and wages rising by only 26%.

The popular wisdom, if your parents taught you such things, was to spend no more than a quarter of your gross household income on housing. Over the decades, this figure has risen to 33% and in the major cities has peaked at 50%.

As we are now in pre-election mode, it’s appropriate to mention the Affordable Housing Party, a single-issue party which is on a membership drive to avert the risk of de-registration. Led by Andrew Potts, the party had its first tilt at Federal politics in 2017, fielding a candidate in the Bennelong By-Election.

The party’s policies include phasing out negative gearing, ending the capital gains discount on investment properties, stopping foreign investment in Australian property, taxing investment properties which are left empty and cracking down on full-time AirBnB operators.

Radical? Yes, but the problem needs some radical thinking before we end up with 200,000 people couch surfing and sleeping in their cars.

The AHP’s research on the housing sector focuses on negative gearing, which means the cost of owning an asset exceeds profits, resulting in investors claiming this loss to reduce other taxable income.

As the research suggests, one ought not to expect the Federal Government (or any government), to shut the scheme down. As of April 2017, Federal MPs and Senators owned a total of 289 investment properties.

This could be a good time to bust a few myths about negative gearing, Tax Office statistics from 2017 show that 64% of the 2.2 million people who own investment housing have an annual income of less than $80,000. This seems to scuttle the argument that only the wealthy benefit from investment housing. Less than 10% of Australia’s 2.2 million property investors earn more than $180,000 a year. Likewise, 71% of investors own only one home, with 19% owning two and 10% owning three or more houses.

Labor Leader Anthony Albanese upset some of the affordable housing campaigners in July when he abandoned pledges to impose restrictions on negative gearing. The opposition went to the 2016 and 2019 elections promising to halve the 50% deduction on capital gains and limit negative gearing to new properties only.

National Shelter chief executive Adrian Pisarski said by ditching its commitment to reforming negative gearing, Labor had “abandoned” would-be home-owners and low-income households wanting to buy homes.

“It took 15 years of campaigning by many to get the ALP to find a spine on CGT and negative gearing and commit to helping reduce house price inflation,” Mr Pisarski told the SMH at the time. “This is a sad day for affordable housing.”

In May Mr Albanese launched the Opposition’s $10 billion Housing Australia Future Fund. The fund would build social and affordable housing and create thousands of jobs now and in the long term, he said.

Annual investment returns from the Housing Australia Future Fund will be transferred to the National Housing Finance and Investment Corporation (NHFIC) to pay for social and affordable housing projects.

Over the first five years, the investment returns would allow the building of 20,000 social housing properties, 4,000 of which would be allocated for women and children fleeing domestic and family violence and older women facing homelessness.

Residential property analyst Michael Matusik has a few ideas to fix housing affordability. He says part of the problem is the focus on new builds rather than the existing market.

Matusik-style reforms would include removing negative gearing (a policy set when interest rates were sky high) and charging stamp duties at a flat $2,000 per transaction.

Matusik suggests a 20% tax on all property transactions – including owner stock if sold within, say, three years. This would stop ‘flipping’ (buying a house, renovating it and selling again within a short period of time) which is a major driver of prices. The government should limit foreign buyers to new dwellings and they must also have a 50% Australian business partner who pays 20% tax. These new rules would also include measures to stop developers land-banking.

“If they don’t start building the project within five years, they lose development approval. After 10 years, if there is no action the site is sold underneath them. In short, you cannot buy a home (new or existing) unless you have an Australian passport and pay 20% tax. No Passport no buy.”

As for new housing, Matusik says all housing related incentives should be removed because they distort the housing/building cycle. He also suggests that greenfield developments be required to provide minimum levels of community infrastructure set as targets. No doubt he will extrapolate on these ideas in a future Matusik Missive.

More radical ideas from Gwyn Hooper, writing for a Byron Bay newspaper (the median house price in Byron is $2.8 million (units $1m):

Under Hooper’s affordable development plan, the Federal and State governments would provide finance and free land. Local Government’s role would be to manage the buildings and tenants and waive its usual development fees.

“The tenants would have a secure tenancy, pay an affordable rent (based on income), and would importantly be able to live and bring up their families without financial stress – an issue that can cause family breakdowns that only compound these issues.”

As these examples suggest, this issue needs to be de-politicised and brought out into the sunlight with an ‘open to new ideas’ sign attached.

Written in the comfort of my freehold home, ameliorating some of my baby boomer guilt, I think.

Last week: People who lived in the UK for more than six months between 1980 and 1996 are prohibited from donating blood because of Mad Cow disease.

When Aussie families lived in kerosene tin huts

This week we are leaving president-elect Joe Biden to struggle with his Disunited States, to reflect on a time in Australia’s history when homeless people were forced to build kerosene tin huts. This Depression-era story may also give us pause for contemplation as the year-long corona virus pandemic sends many nations into deep recession. No-one wants to use the D-word but also no-one can predict how long countries will have to deal with Covid lock-down periods.

As you may already know, if you also subscribe to our Goodwills Music page, we wrote a song about it. I had the idea couple of years ago when visiting Morven, in south-west Queensland. The show piece of the historical village there is a Depression-era kerosene tin hut. It was built by the late Bob Johnson, whose widow Ethel runs the village.

A sharp-witted reader wanted to know if I was ‘trumpeting’ the new song in last week’s piece about Nellie the Elephant and the price of democracy. I prefer to think of it as drollery (listing it as one of the news stories you may have missed because of the mass media preoccupation with the US election).

Sometimes I have an idea for a song and it loses momentum because I can’t match the lyric to a tune (or maybe I’d rather watch Grey’s Anatomy). Kerosene Tin Hut sat in the drawer for a year or so until She Who Now Also Writes Songs helped me stitch the lyrics together.

As you may gather, we were brought up by parents who lived through the Great Depression (and WWII). They were frugal, good at recycling before it was a thing and were fond of sayings like “never a borrower or a lender be”. Goods could be bought on lay-by, but never on ‘tick’.

That generation was good at saving to buy a particular item deemed necessary for a family – like a fridge, or a washing machine (once the copper and the mangle went to historical villages). I remember once complaining about not having a wardrobe in my bedroom. Dad brought home three wooden butter boxes from the bakery. He stacked them one on top of the other and Mum made a curtain to hang on the front. This is where I stashed my Famous Five collection (I’d grown out of them), and recently collected Mad magazines.

People who battled through the Great Depression (1929-1939), became adept at “making a muckle out of a mickle” as Mum and Dad would say.

Not much has been written about that period in Australia when shanty towns were developed on common land, usually on the outskirts of towns and cities. This happened as unemployed families were either evicted from rented dwellings or worse, lost the homes they were struggling to buy. Small communities formed on Crown land, where the inhabitants did not have to pay rent or rates. They erected corrugated tin huts or, more commonly, kerosene tin huts.

Maleny reader Mike Foale remembers the kerosene tin era, but for different reasons. He contacted me after I’d sent the new song around to a mailing list.

Like others, he asked the obvious question – where did the kerosene tins come from? Kerosene was widely used in the 1920s for cooking, lighting and refrigeration, but also provided cheap fuel for tractors.

Mike recalled from his days growing up on a farm in the Mallee that the early tractors of the 1920s to the 1950s ran on kerosene, as did other stationary engines used on farms.

“Kero was imported in four gallon (20 litre) square-top tins, with a box around the tin for travel security.

“On our farm, the boxes were converted into shelf units. Dad had to sell the early tractor off (a Caterpillar) for lack of maintenance services in the Mallee. So I grew up in the 1940s with draft horses doing the farm work, but the shed was full of empty kero tins.”

Kerosene tins were popular in Tin Town because they could be cut into square tiles with tin snips then stapled together over a bush timber framework.

Western Plains Cultural Centre local activities officer Simone Taylor has researched the ‘Tin Town’ which existed in Dubbo, NSW. The town formed in the late 1920s during the onset of the Great Depression and disappeared 20 years later. Ms Taylor told the ABC in 2018 there was a a lot of stigma attached to ‘Tin Town’.

“The shanty’s residents were pitied by the people of Dubbo. I think the people in Tin Town were getting on the best they could, but in newspaper reports it’s clear the town was seen as a social issue to solve.”

Tin Town survivors recall the hardships – there was no electricity and only a single community tap to access water. Council collected rubbish and sewage every week for a small fee.

In Dubbo, as in other locations where Tin Towns evolved, kerosene tin huts were erected on Crown land. They did not appear on official maps, so historians rely upon people’s memories and references in old newspaper articles.

Australian National University historian Joan Beaumont told the ABC that Australia was one of the countries worst hit by the 1920s crash. Communities that relied on wool and wheat exports suffered the most as global demand fell away. While the evidence suggests that Tin Towns housed families and pensioners, Professor Beaumont said single men without strong family connections were more likely to live in tin shanties.

Why is this relevant today, you might ask, when our wealthy are uber-wealthy, well-educated professionals are doing well (in two-income households) and the middle classes are, well, in the middle?

The massive disruption to the orthodox economy caused by Covid-19 has forced even conservative governments to use Keynesian economics to manage the crisis. The theory evolved by John Maynard Keynes advocates increased government expenditure and lower taxes to stimulate demand. This, rather than monetary economics (controlling the supply of money), is more likely to help avert a global depression.

There is a domino effect when people who depend on a wage to pay rent or service a mortgage, not to mention car loans, credit cards and ‘60 months nothing to pay’ consumer lures, lose their source of income.

The job goes, the search for work is fruitless, the bailiff comes calling. Suddenly, you are living in your car (the 21^st century version of the tin hut). Those of us with a proper roof over our heads ought to count our blessings – count twice when rain falls.

As this recent Sydney Morning Herald article informs, the early help offered to get homeless people off the street in 2020 is being wound back. While the official homelessness figure is north of 116,000, the Australian Homelessness Monitor found that 290,000 people sought homelessness services in the year before the pandemic.

Homelessness numbers fell between April and June this year as a result of Federal government assistance, a moratorium on evictions and a targeted campaign to get rough sleepers indoors. But the future is looking somewhat bleak as supports come to an end.

Telling people to stay home during a Covid spike is all well and good if you have a home in the first place. The alternative may well be descensus in cuniculi cavum (descent into the cave of the rabbit), or in 2020 vernacular, down the rabbit hole.

Tales of quarantine and homelessness

quarantine-homelessness — Image: Nurses wearing surgical masks during the 1918 Spanish Flu’ pandemic which killed 15,000 Australians and millions worldwide. State Library of Queensland CC

Had it not been for the coronavirus outbreak (the WHO calls it COVID-19), few Australians would have known of Manigurr-ma, a purpose-built accommodation village 30kms from Darwin.

Manigurr-ma, or Howards Springs as it is zoned by Australia Post, was built in 2012 at a cost of $600 million as part of the Ichthys LNG gas project. Developed by infrastructure company Aecom for the multinational INPEX consortium, the village can house up to 3,500 people in 875 accommodation units, each with four rooms. There is a 1,750-place dining hall, a commercial kitchen which can produce 10,000 meals per day, a licensed tavern, a cinema, medical centre and laundry.

For the next fortnight or so, the village will be home to 266 Australians evacuated from the coronavirus epicentre, the Chinese city of Wuhan. Despite assurances that the risk to the general public is minimal, Howard Springs residents are making their opinions known.

After the LNG plant at Howard Springs became fully operational in 2018, the village was closed, after housing 3,500 construction workers at its peak. In May last year, Ichthys LNG Pty Ltd transferred Manigurr-ma to the Northern Territory government at a ‘peppercorn’ rental. A spokesperson for the NT Government told FOMM a ‘have your say’ campaign was carried out last year.

“Proposals were received from a range of parties, including public feedback for the future use of the Village and its assets.

‘‘The various submissions will be considered in the final decision by the Government about how the site and its assets will be used”

FOMM notes that the proposal required submissions to be “commercially viable”.

Given that a shortage of housing is a key issue for Darwin’s homeless population, I hope someone threw that particular hat in the ring.

Quarantine, from the Italian Quarante (meaning ‘forty’), has been around since Old Testament days. The word referred to a rule introduced in Venice that all ships suspected of harbouring people with infectious diseases stood offshore for 40 days.

Several small islands off Venice known as Lazarettos were established in the 1600s when plague was rampant. Some of these off-limits islands were later converted to mental hospitals or convents. But as far as the general populace were concerned, they were, and still are, ghost towns.

Most countries had a place where people with leprosy or plague were banished. China had a well-established policy from 600 AD to detain plague-ridden sailors and foreign visitors, preferably at sea.

North Brother Island in New York’s East River was used for decades as the site of an infectious diseases hospital. A reporter from the New York Post who was recently taken on a guided tour of the now-closed station wrote that the island’s remote location was deemed perfect in the 1880s for a hospital to treat contagious smallpox and typhoid patients.

“Mary Mallon, who earned the name Typhoid Mary by passing the disease to 51 people while working as a cook in Brooklyn and Long Island, was its most infamous tenant. She displayed no symptoms herself, but was quarantined until her death in 1938.”

Sydney’s Quarantine Station at North Head (Manly) took in immigrants who had fallen ill (as well as some residents). As the authors of a book published in 2016 found, some recovered and were released. Some never made it out.

‘Stories from the Sandstone’, published in 2016 by the University of Sydney’s Peter Hobbins, Anne Clarke and Ursula Frederick, chronicled the history of Sydney’s Quarantine Station. The title of the book comes from archaeological discoveries of inscriptions carved into sandstone by some of the 16,000 people kept at North Head between 1830 until its closure in 1984.

In the mid-1880s, infectious illnesses like smallpox, tuberculosis and scarlet fever were common and there was even a recorded case of bubonic plague in 1900. As Dr Hobbins says in the book, as a result of extensive immunisation programmes, effective antibiotics and improvements in the public health system, infectious diseases do not decimate the population as they did in the 1800s or even during the Spanish ‘Flu pandemic of 1918-1919.

The most visible (and possibly the largest), quarantine station in the world in 2020 is the cruise ship Diamond Princess, moored off Japan with its 2,666 guests and 1,045 crew ‘couped (sic) up’ as an ABC report had it, until time dilutes the fear of contagion. Princess Cruises this week confirmed reports of 39 new coronavirus cases aboard the ship, berthed at Yokohama.

“We are following guidance from the Japan Ministry of Health on plans for disembarkation protocols to provide medical care for these new cases,” the website update states.

The Diamond Princess had been due to leave the Japanese port of Yokohama on February 4, but cancelled the cruise on advice from Japanese health authorities.

The cruise ship’s situation fits the definition of ‘quarantine’ – preventing the movement of those who may have been exposed to a communicable disease, but do not have a confirmed medical diagnosis.

The key difference between Coronavirus (now known as COVID-19) and SARS (Severe Acute Respiratory Syndrome) is that people with Coronavirus are infectious before exhibiting symptoms. This may explain the comparatively higher numbers of people contracting the disease and the overly-cautious approach to quarantine here and abroad.

A Medical Journal of Australia report compiled after the SARS epidemic had abated in 2004 demonstrated the effectiveness of Australia’s border screening. Of the 1.84 million arrivals into Australia during the study period, 794 people were referred for screening to the Australian Quarantine and Inspection Service. Of these, four travellers met the World Health Organisation (WHO) definition for SARS. None of these people were confirmed to have SARS.

The media loves contagion stories about as much as it drools over earthquakes, volcanic eruptions, tsunamis and croc and shark attacks. Are they beating it up? Time will tell. Whatever you read on social media, as of February 13, 2020, 15 Australians had been confirmed as being infected with coronavirus. Five have since recovered.

As usual, the trail of research leading into the history of quarantine stations lured me away from the point I wanted to make.

When the Northern Territory has 12 times the national average incidence of homelessness, how is it there are 875 living units sitting vacant near Darwin (for at least 18 months)?

NT Shelter estimates that 16.5% of Territorians under 16 are experiencing homelessness. The system seems unable to cope, with Shelter’s findings that 48% of people get turned away due to a ‘lack of resources’.

As Australia’s Prime Minister Scott Morrison conceded, we are no closer to Closing the Gap. The policy was announced in 2008 with noble intentions to help bridge the gap between health and welfare outcomes for indigenous compared to non-indigenous Australians. There are no simple answers to the fact that 90% of the Territory’s homeless are indigenous. As a Triple J story revealed, a survey of non-indigenous people in Darwin revealed a lot of ignorance about ‘long-grassers’ – indigenous people who sleep rough.

Larrakia Nation Aboriginal Corporation’s random survey of 300 people found the majority romanticised the notion of sleeping under the stars. Only six people identified a lack of housing, failed public policy and the impact of assimilation and integration policies as reasons for homelessness.

When the last person at Manigurr-ma is cleared to leave, it would be an interesting exercise, at the very least, to trial the centre as a homeless shelter. After all, though homelessness is not contagious, it does have far-reaching effects.

Who the Hell Approved That?

“I used to like the city better, thirty forty years ago’ South Brisbane circa 1973, before the Cultural Centre, Expo 88 and proliferating apartments.

The Cheeseparer family from Victoria, fed up with the overpopulated rat race, spent the school holidays cruising the south east Queensland coast, looking for a more ambient place to live than the far-flung commuter suburbs of greater Melbourne.

Margolia and Basil Jnr are sick of Melbourne’s unpredictable weather, the traffic, the pollution, the high cost of living and the four-hour daily commutes (including dropping the kids off at school and picking them up from daycare). They also want to be closer to the Cheeseparer oldies, Basil and Sybil (previously cited in this forum), who have retired to a 77^th floor apartment on the Gold Coast (which has a spacious guest room with four bunks and a sofa bed in the lounge).

So they set off on a road trip, boring the four Cheeseparer kids witless with their obsessive pursuit of a green change.

Somewhere between the Sunshine Coast and Brisbane, Dylan, 11, and a bit of a smartarse, looked out the window at a new estate. He provided the family with a pithy description: “a sea of roofs with nary a tree to be seen, tucked not so discreetly behind an acoustic fence running along the motorway”.

“Who the hell approved that?” he added.

“You can’t say hell – it’s a bad word,” said April, 6.

Margolia said: “Lots of religious people believe there is a place called Hell, so it is a place name, not a curse.

“But I was using it as a curse,” said Dylan.

“I know, let’s play a game”, Dylan continued. “First one to say something clever and cynical about any new housing estates we see gets a point. Winner gets more Face Time”.

“This is dumb,” came the voice of Max Cheeseparer, 15, banished to the Prado’s luggage compartment with Edie the Golden Retriever for saying negative things like “this is dumb”.

“Good tsunami will see that lot out,” muttered Eric, 13, not only bored but observant, as the Cheeseparer’s Prado cruised past a new coastal estate separated from the highway by a levy.

“Paper bag”, Dylan retorted.

“Yep, looks like someone drained a Teatree swamp,” said Basil Jnr.

“Not fair,” said April. “Adults cannot play.”

Well actually, adults should be playing this game when house hunting in the sprawling conurbation between Noosa and Coolangatta which makes up the greater metropolis of Bris Vegas. In the proliferating new estates, so often set next to freeways, generic housing design prevails, each home dominated by a two car garage and sited on allotments as small as 400sqm , depending which local government is setting the rules. The theory behind smaller lots is that it makes housing more affordable.

Who the Hell Approved That allocates points for the inventiveness of commentary, e.g. “Nice green buffer, mate” when clearly the trees have gone to Japan to make paper. A bonus point is awarded to the first to invoke The Castle’s famous quote: “Tell them they’re dreaming”. The latter usually applies upon seeing billboards announcing “house and land packages from $659,000”.

Be assured this is a game you can play anywhere in Australia and not just in the big cities of Melbourne, Sydney and Brisbane. One of the things you notice when following the grey nomad trail is just how few country towns have been left untouched by the cookie cutter form of new housing development built on the outskirts Many of these houses are sold off the plan with rental guarantees; bought by out-of-town investors. In the mania of the moment, no-one looks ahead 24 months and wonders “now what?”

There is a vast difference in vision between those steeped in the concept of sustainability and protecting the environment and the State government’s mantra ‘Jobs and Growth’.

The 2017 SEQ Plan forecasts an additional two million people by 2025 (bringing the region’s population to 5.5 million). Queensland’s target annual population growth (fertility+interstate migration), hoped for 3% per annum.

The State still boasts an average 2.2% over 10 years, although in recent years the population growth numbers have fallen below 2%. Perhaps the interstate migrants, in their desire to flee the rate race, have realised it is just as ratty across the border.

Residential real estate analyst Michael Matusik commented on figures released by the government which estimate that the Gold Coast, Ipswich and Logan are expected to accommodate 73% of the new housing development across south east Queensland. The Sunshine Coast and Brisbane City Council areas are forecast to hold an additional 10% each. The three municipalities are expected to generate an additional 298,000 dwellings.

Matusik noted that 82% of the new housing on the Gold Coast and 57% in Ipswich will be higher density (apartments), which is ‘‘much higher than current market demand’’.

The growth mantra has spoiled the character and amenity of countless suburbs in Brisbane. I lived there for 17 years, leaving for a smaller town in 2005 with no desire to return. I certainly have no capacity to buy there again, with a median price of $680,000.

The rot started with local governments deciding to relax planning rules so people with a house on a quarter acre allotment (once common), could sub-divide the block and put a second house on it (with an easement for access). This approach has degenerated into what is generically called ‘infill’, which in some inner city Brisbane suburbs mean allotments as small as 300sqm. These tiny house allotments are sought after, given that they represent a foothold in an otherwise unaffordable location (anywhere you have ‘city glimpses’).

In the 2017 report, Shaping SEQ, Deputy Premier Jackie Trad enshrines the vision that requires a population growth target.

“It is not difficult to see why the population of South East Queensland is expected to grow by almost 2 million people over the next 25 years. We have an enviable lifestyle, great schools and universities, and a strong, diverse economy expected to create almost one million jobs over the next 25 years. Our future is bright”.

This is not the only reason we moved to a country town two hours’ drive from Brisbane, but it was one of the motivators.

A reader who had been following our downsizing exercise with great interest wrote to relate her own experience in growth-mad Brisbane. Her aim was to sell the big family home in an outlying suburb and move closer to the city. But now she is spooked by falling sales volumes.

My friend also observes that prices are ‘predatory’ for inner Brisbane, with buyers made to feel ashamed if they are not up for the $750k starting point. So this empty nester, realising how little housing is designed for the over-50s downsizer market, has withdrawn from what she suspects is a static market, waiting for something to happen.

Meanwhile, the tree-changers are continuing the elusive search for a small town that has the infrastructure, ambience, affordability and the potential to commute to jobs in the city as needed. In theory, the brave new world of tele-commuting should make this lifestyle viable for people whose work revolves around consulting, writing, giving people advice and preparing documents.

A housing policy designed to facilitate and enhance this increasing desire to escape the rat race could in turn re-populate and rejuvenate small towns which might otherwise die. How about it, Anna?

Apartments, starter housing and the impatience of youth

housing-apartments — Housing: Inspiration for the song ‘Little Boxes’ – tract housing in Daly City, northern California; image by Tim Adams https://en.wikipedia.org/wiki/Little_Boxes

A developer friend from my days as a business journalist sent me his frank appraisal of the housing affordability crisis, which he described as more of a ‘crisis of expectations’. There are many Brisbane suburbs, Dan wrote, where post-war houses sell for less than $450,000. He named a few – Keperra, Ferny Grove, Grovely, all 12 kms from the CBD with good public transport networks and excellent shopping amenity. Most of these homes are ex- housing commission or ex- war service homes built in the 1950s & 1960s. They tend to be on larger blocks of land than is common in the more sought-after inner city. But they are not on the shopping list of generation X or Y.

“Young home buyers don’t want a bar of them,” Dan said. “They want to be in the trendy inner suburbs with cute Queenslanders which have already been renovated.

“These (older) suburbs are ripe for gentrification and renovation, but the young guns want four bedrooms, a plasma screen on every wall and hip cafés on every corner.

“And they don’t want to dedicate their weekends to renovations, mending fences, tidying up yards, gardening and landscaping.”

As we observed last week, in the first part of this commentary on residential development, many of today’s generation think they can bypass the ‘starter home’.

This means buying a sound, but probably tired, older property in an outer suburb and gradually improving it as time and money allows. At some point in the property cycle, there will be an opportunity to take a profit and move up another rung. And at least older suburbs have character.

In 1962, US songwriter Malvina Reynolds wrote the quintessential commentary on middle-class conformism, ‘Little Boxes’. American activist songwriter Pete Seeger made it a big hit in 1963. You are maybe familiar with the song from its revival as the theme song to the TV series ‘Weeds’ or Roz Pappalardo’s cover with the Wayward Gentlemen.

“Little boxes, on the hillside, little boxes made of ticky-tacky

Little boxes, little boxes, little boxes all the same.”

This satire on fast-developing tract housing in the sprawling outer suburbs of San Francisco does not seem out of place in Australia, 2018. The Little Boxes of our generation are stacked one atop the other in apartment blocks where you can step out on to the balcony and listen to the traffic, admiring the view of your neighbour’s balcony.

The little boxes analogy also exists in the fast-developing outer suburbs of Brisbane – the conurbation developing along the transport corridors between the north and south coasts. The typical house and land package in these new suburbs are quite generic, dominated by a two-car garage which typically takes up a quarter of the house. The house often takes up 80% or more of the land on which it sits, so there is little opportunity to adapt the property as your family grows.

There are advantages and disadvantages to buying an older house in an older suburb. The main disadvantage is it will probably have been rented for years and the upkeep let slide. The main advantage is there will be enough land for kids and dogs, a garden and maybe even a pool!

Older housing such as the ones described by our property developer can be bought by anyone who has saved up a deposit of about $90,000, along with sufficient income to service mortgage repayments of about $2,000 a month.

Considering that many young people in Brisbane are paying between $1,600 and $2,400 a month in rent, that seems like an affordable deal.

While the humble starter home in the post-war suburbs is an option, younger people seeking affordable housing are attracted to inner Brisbane’s proliferating apartment blocks. There was a time (the 1970s and 1980s) when the only people who lived in city apartments were the caretakers of city office blocks. Now, the CBD and its close neighbours (South Bank, New Farm, Fortitude Valley, West End, Kangaroo Point, Milton etc.) have a well-documented over-supply of new apartments.

Brisbane inner city is the only Queensland region where a majority of households’ dwellings are flats/apartments (50.1%) and townhouses/semi-detached (7.4%). The Australian Bureau of Statistics 2016 Census showed that 41.7% of inner Brisbane housing stock is detached houses (compared with 76.6% for Queensland overall).

My take on the Census data for inner Brisbane suggests that the majority of people living there can afford the city lifestyle.

Almost 30% of households in this region earn more than $3,000 a week, with 56% earning between $651 and $2,999 per week. The proportion of people renting (49.9%) is higher than the state and national figures, but the income numbers suggest they can easily afford the median rent of $415 per week. This is not to say the inner city is completely populated by the well-to-do. Some 15% of residents earn less than $650 a week and 11.9% share expenses by living in ‘group households’.

The key demographics attracted to inner city apartments are international students, well paid young professionals and my cohort, older people who have downsized from big houses in established suburbs. If you own a big Queenslander in Ascot, it’s not hard imagine the property selling for $1.2m, which means the empty nesters can buy a three bedroom apartment in South Bank and have change left over to furnish it anew and take a cruise or two. They will also have to budget for storage costs, as there will typically be no room in the high-rise apartment for antique furniture, paintings, vintage cars, boats, jet skis and all the knick-knackery collected over a lifetime.

BIS Oxford Economics created a stir in April with a widely quoted report which highlighted the long-term oversupply issues facing Brisbane.

The report said 20% of Brisbane apartments were vacant and 52 projects had been shelved as a result of the over-supply, The withdrawal of 10,000 apartments before they were even built demonstrates the seriousness of the supply issue, which could last until 2025, report author Angie Zigomanis said.

Domain.com.au reported that BIS arrived at this (disputed) forecast by analysing occupier demand instead of sales demand. Despite the withdrawal of planned apartment buildings, there are another 3,500 apartments being added to the inner Brisbane market before Christmas.

So to answer the question posted last week (can tree changers afford to move back to the big smoke), it all comes down to the price cycle and what a long-term over-supply might do to apartment prices in coming years. The trick might be to shop around in the middle ring suburbs. Instead of looking for a starter home, determined downsizers might find there are three-bedroom apartments in the regional hubs (like Chermside), priced between $500k and $600k.

If you are willing to forego the inner city vibe, you’re still only a 20-minute bus ride from the CBD, but you won’t have to worry about what the over-supply will do to property prices. And the dog, if you still have one, will be able to ‘stretch his legs’ on the lawn outside.

Postscript: If you liked my Nauru song, I have made it available as an MP3 download, with 50% of net proceeds going to a local refugee charity. Here’s the link. http://store.cdbaby.com/cd/bobwilsonandthegoodwills2

Residential development – is anything sacred

To begin this two-part series on residential development and how it became not only unaffordable but also distressingly generic, we ask the universal question – is anything sacred? The example here looks at an unpopular proposal to build luxury houses on the doorstep of Scotland’s famous battlefield, Culloden. Regular readers would be familiar with this image on my website, cheekily captioned ‘Bob’s writer’s cottage’. In truth it is a stone crofter’s cottage within Culloden Battlefield, a spooky windswept moor near Inverness.

The proposal to build 16 luxury homes half a mile from Culloden Battlefield, a war grave, was given planning permission by Highland Council in May this year (12-8 vote). The BBC reported that the National Trust for Scotland, which manages the battlefield and opposed the housing project, said the case “Illustrated why Scotland’s planning system has to be reformed”.

Culloden Battlefield is where Jacobite and government forces clashed in April 1746. The housing development is within the battlefield’s conservation area and campaigners have argued that the fighting took place in a much wider area.

A protest movement continues to agitate, with a petition on Change.org attracting more than 100,000 signatures.

Much nearer to home, the story is depressingly familiar. The green hills of former dairy farms near Maleny Township have largely been given over to sprawling housing estates. It’s even worse on the Sunshine Coast, where houses on new estates are packed tightly together, not a tree in sight and often with only one road in and out. Pro-development people, and I know a few, would tell you that this is the free market at work – supply and demand. Affordable maybe, and eagerly sought-after yes, but not on my housing short-list.

Houses are ‘unaffordable’ – blame the baby-boomers?

We read a lot about how (we) baby boomers created the unaffordable housing market, buying, renovating and selling during a period when house prices doubled and in some cases tripled. Guilty as charged, but we just took the opportunities as they arose, as most people do. And in my experience, most ‘boomers’ bought a modest starter house, not always in a capital city, gradually up-grading as time and savings allowed.

So, apart from profit-taking baby boomers, the factors most prominent in the ongoing cost of housing include the rising cost and scarcity of development land, steadily increasing council infrastructure charges (passed on to the buyer) and population growth. Property investors, drawn to the sector by negative gearing (writing off costs on tax), also contribute to the affordability crisis by steadily increasing rents.

Too much house these days?

The flip side to the ‘baby boomers got rich on real estate story’ is what happens to our generation now, when we are all knocking on 70+ and need to downsize to more manageable properties? Downsizing in the same market, we are finding, is a rat race, as other people in the same circumstances move first. It is hard to find a smaller property of equal standard to the one you now have, and, take a profit on the way through.

Many older people take the retirement village option, the strictly legal but egregious models where you don’t own the real estate and pay rent and other costs which inevitably rise as time passes. Another real downside is that the retirement village unit usually ends up as someone else’s problem: the adult children of elders who are either in care or have died. So, Four Corners exposé or not, this arm of development will continue apace. The main reason, as once voiced by Spike Milligan’s Goons’ character, Eccles: “Everybody’s gotta be somewhere”.

Mobility –sometimes a choice, sometimes a necessity

The tendency is for Australians to be always on the move, looking for greener grass in a drought-stricken country. The 2016 Census found that just under half of Australians moved house between 2011 and 2016, with one in six moving in the previous 12 months.

This is a healthy state of affairs for people who earn a living in the businesses of development, property investment, real estate sales, conveyancing, house removal, storage and retail furniture, whitegoods and hardware. But as any psychologist would tell you, moving house is up there on the stress register with divorce and death of a loved one.

Young people are the most mobile, with one third of Australians aged 20-29 and a quarter of those aged 30-39 moved house between 2015 and 2016.

An earlier Australian Bureau of Statistics survey found that people living in young households without children were very mobile: the vast majority (90%) moved at least once and 40% reported having moved three or more times in the previous five years. Young households were most likely to be private renters (58%) or owners with a mortgage 39%). Statistics like these do not change much over the years – as one might expect, the age group 75-79 are the least likely to move. although there is an upward spike in the 80+ age group, reflecting no doubt a move into care of one kind or another.

Young people are often forced to move from rented accommodation because of a range of factors including obtaining employment elsewhere, rising rentals, owners selling the rental property or eviction.

Therein lies the beauty of owning your own home – you don’t usually have to move until you decide. Of course, the housing market may not co-operate when you decide to sell. You may not get the price you want/need or the property might sit on the market for months, if not years.

We moved to the Sunshine Coast hinterland in 2002 and bought half an acre with a two-level brick home. When we think about downsizing to a more manageable property (say 1,000 sqm and a one-level brick house), we find there is little on the market that fits the bill. There are plenty of spacious properties a few kilometres out of town with acreage, sheds, dams and ride-on-mowers. Those people are trying to downsize too. The alternative is to sell the house and buy a unit, with the issues of body corporate fees and the smell of burnt toast from close neighbours.

As we drove around Australia in 2014 and on many forays since, this is a story repeated all over the country. Many retirees, finding they are running short of cash, sell up and move to a more affordable town. They risk becoming isolated and lonely, split from support networks. On the other hand, they are cashed up and can afford to improve the cheaper property they bought in Mungadillabiddy-on-Trent. As for support networks, there’s always Facebook, Skype and travelling to stay with friends you made in your last six or seven moves.

Next week: Can you afford to move back to the big smoke?

Postscript: If you have not heard my song about Nauru, here is the YouTube link. Please share with your friends if you agree with the sentiments.

#bringthemallhere