Social housing helps the economy as well as tenants

Investing in housing not only helps low-income people and those in rental difficulty, but creates jobs to create an asset that appreciates, writes Greg Ogle.

Three housing reports released last week all came to one conclusion: that governments must act to make renting more affordable.

It was a deluge of data, but it was worth browsing to find out what’s going on for those struggling in the rental market.

The widely recognized National Rental Affordability Index shows that for middle-income people, Adelaide is the second least affordable capital in Australia with median rents equivalent to 27% of average income. Hobart was the least affordable.

It’s not that Adelaide’s rents are higher than in Sydney or Melbourne, but the average income is proportionately lower there, leading to greater difficulties in affordability.

However, the story is a little different for those with nationally determined incomes (eg Centrelink payments, minimum wage). For people with this income, rental affordability is better in Adelaide than in most other capitals. But this news is not as good as it sounds, as the rent for these groups is still unaffordable. The median rent of the affected dwellings still represents well over 30% of the incomes of job seekers, retirees and single parents receiving Centrelink payments.

Of course, like everything else, rental affordability has been changed by the COVID pandemic and the response. A report from the UNSW City Futures Research Center (and ACOSS) showed that among Australian capitals, Adelaide saw the second largest percentage increase in rents since the start of the pandemic (behind Perth).

The South Australian government’s initial response to tackling homelessness and affordability of rents had immediate good results, but the report argues that overall, tenants’ protections against rent increases and evictions were lower here than elsewhere – although they were held in place much longer. And oddly enough, the rent relief granted by the government through cash payments or property tax reductions for homeowners has not been used.

In the end, despite protective measures, South Australia recorded 3,000 deportations in the first year of the pandemic. It was about half the rate the year before, which probably also shows rental affordability was an issue long before the pandemic. Pandemics expose existing fault lines.

As the UNSW / ACOSS report concludes, although the COVID measures in the country have had some effect on the provision of emergency protections, they have not moved the country “towards the systemic change needed to address the Deep inequalities in housing increasingly recognized as a serious national problem. problem”.

At the center of these systemic challenges is the decline in the stock of public and community housing. As a Grattan Institute article points out, with fewer people owning their own homes or living in public and community housing, poorer Australians must rent in the private rental market where they will live in poverty or financial hardship. .

Grattan’s report proposes to build more public and community housing using a Social Housing Future Fund model to finance the large investments required. Essentially, they are proposing a one-time national investment of $ 20 billion, with the dividend being used to fund around 3,000 additional social housing units each year. However, this funding would have to be matched by state governments – which could prove to be a challenge.

Whether or not a future fund model is used, there is no doubt that more public and community housing is needed. The above-mentioned UNSW / ACOSS report examines the beginnings and projected losses of social housing construction over the next three years. While Victoria, Queensland, WA and Tasmania have all announced substantial new investments in public housing, South Australia has pledged little to no post-COVID housing stimulus and is primarily focused on replacing the park. aging.

The report calculates that, as a result, SA will experience a net increase of only 36 new social houses over the next three years. Considering population growth, this will cause the percentage of South Australians in public housing to decline further, and that is nowhere near enough when we had 17,000 applicants on the waiting list for public housing. Last year.

But as SACOSS has consistently supported over the past year, social housing is not just a measure of well-being. It is an investment in a public good that creates jobs in its construction, holds or accumulates value over time for the government and the community, and puts downward pressure on rents for everyone by housing those who would otherwise be in the private rental market.

Greg Ogle is Senior Policy and Research Analyst, SACOSS

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