Vanguard June 2014 p. 6-7
Alex M.
A previous article on housing in Australia
published in the ‘Marxism Today’ section of Vanguard
in November 2010 referred to a report by the Australian Housing and Urban
Research Institute (AHURI).
The report examined the benefits and risks of home
ownership for low to moderate income households.
Fast forward to earlier this year and AHURI have
made a submission to the Senate Economics Reference Committee, which has been
given the task of investigating affordable housing in Australia.
The Senate Committee took submissions from a number
of interested parties, from individuals to organisations, amongst them
AHURI. The Committee is due to report
its findings to the Senate in late June.
What has triggered
the inquiry into housing affordability is the inexorable rise in house prices
and rents and the consequent rise in housing related poverty, people being
priced out of homeownership and increasing numbers of the homeless.
What often gets
overlooked in these sorts of Parliamentary inquiries are the main beneficiaries
of house price inflation; landlords, real estate agents, property developers
and financial corporations.
Inevitably, what is
overlooked are the class aspects of the provision of housing in Australia.
Nonetheless, it is possible to get important insights and information from such
inquiries.
Factors
that have influenced housing affordability in Australia – AHURI’s analysis
The AHURI submission identifies a number of
conditions that are currently influencing housing affordability in Australia
and are worth noting here. These are:
- Insufficient supply of new housing to
meet underlying demand.
- Real house prices rising faster than
incomes – estimates of the ratio of average/median house prices to
average/median incomes vary between 5 and 7 depending upon which measures are
used.
- A preference for larger, higher quality
dwellings, despite relatively small household sizes – from 1994 to 2009, the
average size of a new house in Australia increased by 30% from 189 to 245
square metres, average household size fell throughout [the] 20th century from
4.5 to 2.5 persons in 2006, yet the median price of housing in Australia rose
1994–2009 by 240% cent from $125 000 to $425 000.
- Falling rates of home ownership amongst
25-44 year olds. In 1981 61% of 25-34 year olds and 75% of 35-44 year olds were
home owners. By 2011 these figures had fallen to 47% and 64% respectively.
- A change in the secure ‘tenure for
life’ status of home ownership with 22% of Australian home ownership careers
characterised by either dropping out permanently (9%) or churning in and out
(13%) of home ownership.
- Market failure at the bottom end of the
private rental market with supply unresponsive to demand, despite a context of
growth in the relative size of the private rental market – in 2006 it was
estimated there was an undersupply of 298,000 private rental properties
affordable and available to households in the lowest 40% of the income
distribution. By 2010, this is estimated to be over 500,000 dwellings.
- Continuing high numbers of households
in the private rental market in housing affordability stress – in 2007-08 60%
of low-income private renters were in housing affordability stress.
- A change in the nature of the private
rental market from a predominantly short-term transitional tenure, to one that
has 33% of its occupants (in 2007-08) as long-term private renters who have
rented for 10 years or more continuously, an increase from 25% in 1994. Long
term private renters (597,000) now outnumber households in public housing (365,000).
- The supply of dwellings in affordable
housing programs (National Rental Affordability Scheme, community housing,
public housing) is not keeping pace with population growth or the changing
nature of Australia’s population (e.g. more older households and more
households with people with disabilities). The share of affordable housing
program dwellings in Australia has fallen from 5.5% in 1998 to 4.7% in 2012.
- Growth in the numbers of people living
in boarding and rooming houses and living in severely overcrowded dwellings
from 46,991 in 2006 to 59,111 in 2011.
The AHURI submission to the enquiry is detailed (as
are many other submissions) and does take a critical look at aspects of the
taxation system such as negative gearing; the latter having contributed to the
spike in house prices and rental increases.
However, as the submission is to a Senate
Committee, then it is reasonable to assume that the final recommendations will
be for reform to address the inequalities inherent in the housing market here.
Fundamental change and views that support that change will most likely be
marginalised.
The problem of inequality
Still,
voices that highlight the inequalities inherent in the provision of housing
under capitalist conditions in Australia persist, despite being marginalised.
Frank Stillwell, Professor of Political Economy at the University of Sydney,
made a short submission. His submission gets to the heart of the matter:
“First we
need to challenge the view, commonly conveyed in the media, that rapid housing
price inflation is beneficial. The question should be: good for whom? There are
losers as well as winners in a game such as this. Existing home owners and
those owning rental properties may benefit in terms of capital appreciation. On
the other hand, those who are seeking to become first homeowners must pay ever
higher entry prices, making homeownership an increasingly unattainable goal for
many households. Tenants meanwhile face escalating rents…”
Furthermore
inequality is an inherent part of the problem of housing affordability as well
as being an intrinsic part of capitalism itself:
“The
contrast between wealthy suburbs and areas with poor housing is the physical
expression of a deeply divided society. Of course, people’s capacity to service
a mortgage or to pay market rent varies markedly according to their income. So it is very difficult to achieve the social
goal of decent and affordable housing for all without addressing the economic
forces that generate those inequalities. It is not just that some people
derive income from capital while others only derive income from labour. Nor
that some people benefit from inherited assets while others do not. These
processes are compounded by the way in which housing inequalities interact with labour and capital market inequalities
to create cumulative patterns of social advantage and disadvantage.”
Stilwell’s submission is critical of the role of what he calls the
‘economic forces’ which generate inequalities, in wealth and homeownership for
example.
He avoids using terms such as class and capitalism, due most probably to
the audience he is addressing. We don’t need to be quite so circumspect. The
housing problem in Australia is a product of the profit maximising drive of
capitalism. Particular class interests benefit from the way things are in the
housing sector now.
What is also apparent is the decline of direct government involvement in
the provision of housing at the Federal and State levels.
The November 2010 ‘Marxism Today’ article on housing gave an overview of
housing policy in Australia since the 1950s and the class aspects of housing
and these sections from that article are worth repeating here.
Overview of housing policy in Australia
In the 1950s, in line with post-war reconstruction
in general, home ownership was promoted.
A combination of housing and non-housing policies
encouraged this ideal. These policies included: ‘exemption from capital gains
tax, discounted/controlled interest rates for home mortgages, cash grants to
first home buyers, provision of low interest home loans directly by governments
and via intermediary organisations such as state banks, sales of public housing
to sitting tenants, mortgage deductibility (for a short period only),
development of “affordable” home ownership lots by state land developers, and
planning policies which promoted detached housing, the house type desired by
purchasers’. It was clear that governments at Federal and State levels saw it
as their duty to help people achieve the ‘Australian dream’.
With modifications, the broad policy settings of
Australian governments continued along the lines mapped out in the 1950s. With
the stagnation that accompanied the ending of the long boom of capitalism in
the late 1970s-early 1980s, government policies regarding housing were
re-assessed.
The 1990s ushered in ‘a fundamental change in
policy settings on home ownership with the elimination of some of the more
explicit measures to promote home ownership. In particular, governments no
longer saw it as their role to assist the “marginal would-be home owner” in
purchasing a home’. Emphasis in government housing policies shifted from the
promotion of home ownership for ‘marginal’ people to the provision of rental
housing assistance for those with urgent housing needs.
Such a shift in emphasis was driven by neo-liberal
ideology which saw the market as the most efficient resource allocator, with
governments having the reduced role of safety net providers ‘for some “at risk”
households’.
The class aspect of housing
Clear from what has been outlined above about declining government
involvement in and concern with housing policy is the power of particular class
interests.
Finance capital in the form of banks, home loan brokers and others have
big stakes in the housing market and some rental investors do too, though the
latter do not necessarily have the same clout as the finance capitalists.
As has been pointed out before in the pages of Vanguard, the provision of housing and related government policies
necessarily reflect the values of the dominant class. That is, the provision of
affordable housing to low and middle income families, or working class
families, is not a priority for governments, landlords or finance capitalists.
For the latter two, their priorities are profit maximisation. For
governments, beholden as they are here in Australia to capitalist class
interests, the social reforms of the 1950s and the long boom years are things
of the past. Markets are alleged to be the most efficient mechanisms for
distributing commodities such as houses.
In his work The Housing Question,
Frederick Engels (left) wrote rather presciently about the attitude of capitalist
states to the issue of working class access to affordable housing.
“It is perfectly clear that the existing state is
neither able nor willing to do anything to remedy the housing difficulty. The
state is nothing but the organised collective power of the possessing classes,
the landowners and the individual capitalists (and it is here only a question
of these because in this matter the landowner who is also concerned acts
primarily as a capitalist)… If therefore the individual capitalists deplore the
housing shortage, but can hardly be persuaded even superficially to palliate
its most terrifying consequences, then the collective capitalist, the state,
will not do much more.”
Housing in Australia will continue to be fraught
with problems of affordability for working class families, and finance
capitalists and landlords will continue to rake in the profits.
This is the stuff of capitalist social relations.
The only solution to such inequity and inequality is the creation of a more
just and equitable society, that is, an independent, socialist Australia.
