The Chair of the National Housing Supply and Affordability Council, Susan Lloyd-Hurwitz, has called for a range of measures to address Australia’s housing crisis at a recent National Press Club address.
In a speech to the National Press Club, Ms Lloyd-Hurwitz said the housing crisis had been decades in the making through our persistent failure to deliver enough housing of all types.
“There is no quick fix or silver bullet, and that improving affordable access to homes for households no matter what their financial status or geographical location is going to take time, with persistent, consistent and patient actions year in and year out.”
Here are some insights form her address.
Supply and the 7 barriers
Beneath the ebbs and flows of cyclical challenges, Ms Lloyd-Hurwitz said laid out seven entrenched structural constraints that limit housing supply and reduce affordability.
“First. There is a limited supply of suitable land for housing. Where land is available, sites can be highly fragmented or have limited enabling infrastructure, such as water, sewerage, power, roads and rail connections, or suffer from restrictions that limit the optimal use of land.
“Second. Our planning approval systems are too complex and too slow. Arrangements vary across states and territories and across the more than 500 local governments that provide planning consent authority.
“The frameworks and processes that dictate what gets built, and where, are hugely biased against change. This is largely because the people who already live in an area where more housing is proposed are the ones who get a voice in supporting or opposing development. The people who may enjoy living there in the future, they get no say.
“Third. We have under invested in social housing. Social housing as a proportion of all housing has fallen over recent decades, while demand has soared – wait lists for greatest need households are up 52 per cent since 2018. Given Australia’s remarkable and unparalleled record of 31 years of economic growth with only one short COVID induced recession, how can that be a fair and just outcome for our country?
“Fourth. How we finance new homes is a major constraint. We rely on households to provide financing for new homes through off‑the‑plan pre‑sales, or committed construction contracts, and we put plenty of barriers in the way of foreign investment. Both of these serve to reduce the sector’s capacity to respond quickly with supply to meet demand.
‘Fifth. Various features of our housing system, notably stamp duty, mean that we don’t use the housing stock we already have as efficiently as possible. Almost 4 million dwellings had 2 or more spare bedrooms on the night of the 2021 Census. And the growth of the short term rental market through platforms such as AirBNB and Stayz has removed existing stock from the long term rental market.
‘Sixth. We’ve had decades of weak or even negative productivity growth in the construction sector, reflecting the fragmented nature of the sector and low levels of innovation. The ABS estimates that Australia’s construction labour productivity rose by just 0.2 per cent per annum in the 30 years to 2023, compared to 1.3 per cent in manufacturing. Since 2014, construction productivity has been on a downwards trend.
“And seventh. It’s abundantly clear that even if we solved all the other problems in the system, we don’t actually have enough construction capacity to deliver the homes we need.”
Immediate focus needed
Ms Lloyd-Hurwitz highlighted five areas that require immediate focus to move us towards a better housing system.
The first focus is investment in social housing.
“Investing in social and affordable housing, whether that’s by government directly, or by the for purpose and private sectors, makes good economic sense, especially where it offers good access to employment and amenity.
“The Council believes that a firm target for social and affordable housing as a proportion of total stock should be established. An initial target of 6 per cent would be closer to estimated demand and consistent with the current OECD average of around 7 per cent.”
Secondly, Ms Lloyd-Hurwitz said we must commit to best practice zoning and planning systems across the country.
“We need to remove politics from the assessment process, digitise our systems, and move towards performance based systems and away from open discretion.”
Thirdly, she said we need to build more capacity in the construction sector.
“The key to this is encouraging more workers into the sector including through support for training, and skilled migration channels. Government can partner with industry to promote trade careers and attract more people from under‑represented demographics, including women and migrant workers.
“We need to improve productivity by supporting innovation including finding new construction techniques.
“We should focus on upskilling the construction industry in advanced technologies and processes. This could be supported by increased use of advanced manufacturing techniques in social housing projects and other government procurement, and accommodating innovation in building codes and regulations.”
Fourthly, we need a better system for renters, she said in her address.
“We need regulatory frameworks that better support renters. As agreed by National Cabinet last year, this framework could include things such as having a nationally consistent policy regarding reasonable grounds for eviction, no more than one rent increase per year and requiring minimum standards for rental property. The Council does not support rent freezes. They only serve to inhibit supply – the very thing we are trying to have more of.
“More institutional investment in housing – known as build‑to‑rent – would benefit both investors and tenants. For renters, build‑to‑rent could improve affordability through increased supply, improve security of tenure, the quality of rental housing and the provision of services.”
Lastly, she said we need to work towards policy settings that are well co‑ordinated across all levels of government.
“One of the challenges in our housing system is just how many parts of government are critical to the provision of housing – Commonwealth, states and territories and local governments. And within these levels of government, multiple departments and agencies have responsibility for different parts of the system including Planning, Transport, Social Services, Treasury, Education and Skills, Infrastructure, and Regional Development. A spaghetti web, if you like.
“As former RBA Governor Phil Lowe noted in his farewell address ‘the reason that Australia has some of the highest housing prices in the world is the outcome of the choices we have made as a society: choices about where we live , how we design our cities, and zone and regulate urban land, how we invest in and design transport systems and how we tax land and housing investment’.
“We are seeing welcome steps towards a more holistic housing policy approach within which these choices can be made. There is once again a federal minister for housing and homelessness. Under the umbrella of National Cabinet, Commonwealth‑state housing forums have been established. The Commonwealth, states and territories have committed to a range of measures under the National Housing Accord.”