Expensive housing turning Australia into a nation of renters

4/03/13 5:11 AM

Expensive housing turning Australia into a nation of renters

PUBLISHED: 02 Mar 2013 PRINT EDITION: 02 Mar 2013

Housing tenure has changed significantly in the decade with fewer of the young and middle aged owning a home and altogether fewer people owning outright. Photo: Glenn Hunt Robert Harley Australians are headed to be a nation of renters, living increasingly in apartments, and, for the poor, crammed into more crowded homes. On Friday the federal governments independent adviser on housing, the National Housing Supply Council, released a major report warning of the long term consequences of constricted new supply and low affordability. NHSC chairman Owen Donald said current supply was below the level that would support the traditional style and ownership of Australian housing. The shortage is likely to be felt by the more vulnerable in our population, such as would be buyers with low and insecure incomes, those at the lower end of the rental market and those dependent on government income support payments, he said.

shortage of supply and affordable options

A key reason is cost. Despite the high hopes of Kevin Rudds 2007 election, housing supply has proved an intractable problem, with approvals in 2012 falling to new lows. Dr Donald said it was clear to the council that housing demand and housing production have been diminished by inadequate planning and provision of infrastructure, and restrictive regulation, notably in the development approval arena. All are primarily the responsibility of state, territory and local governments. The federal Minister for Housing and Homelessness, Mark Butler, said his government had made an unprecedented effort to improve supply and affordability, including the $4.5 billion National Rental Affordability Scheme and the $5.6! billion Social Housing Initiative.

http://afr.com/p/national/expensive_housing_turning_australia_WSw4y4QvQDc89p6aAiYKGI

Page 1 of 3

Expensive housing turning Australia into a nation of renters

4/03/13 5:11 AM

But the executive director of the Residential Development Council, Caryn Kakas, said more needed to be done. The industry again urges all levels of government to implement much needed regulatory reforms and remove impediments to the delivery of much needed new affordable housing, she said. The chairman of National Shelter, Adrian Pisarski, said Australians were changing housing choice due to the lack of affordable options. This is a reminder that affordable housing needs to be a priority, he said.

significant change in housing tenure

The report, Housing Supply and Affordability Issues 2012-13, used a decade of census data to analyse the fundamental changes in the way Australians occupy and own their homes. It rejected the view, promulgated by some commentators after the release of the 2011 Census, that the Australian population was growing slower than forecast, as was the demand for housing. Dr Donald said the Census showed clear evidence that the population was adapting to low supply and poor affordability. The long term trend to smaller households has stopped and there is some increase in overcrowding, particularly amongst the disadvantaged, he said. Dr Donald said a significant change had occurred in housing tenure, with fewer of the young and middle aged owning a home and altogether fewer people owning outright.

harder to get onto the housing ladder

In fact the boast of the high percentage of Australian home ownership 68.7 per cent in 2011 is only maintained because of the high (82 per cent) level of ownership amongst those over 65. As time progresses, it now seems certain that the aggregate rate of home ownership will fall and the proportion renting will increase significantly, the NHSC report said. Many of these change are likely to have been at least partly driven by the increase in house prices over the decade, making it harder for people to get onto the housing ladder, and taking out proportionately larger mortgages when they do. Over 50 per cent of homes where the head of the household was aged 25-34 in 2011 were renting. In 2001, it was 45 per cent. The NHSC said the rising proportion of young renters pointed to an emerging change in!housing demand driven by the!lack of affordability, by lifestyle, and by the increased focus on mobility. Short of a dramatic reverse in the next 10 years, the proportion of renters will rise inexorably to European levels, as the high- ownership generations pass on. Amongst the older baby boomers, in homes where the head of the household was aged 55-64, the most dramatic change has been is the increase in the proportion of those still paying off a mortgage, from 15.9 per cent in 2001 to 31.4!per cent in 2011. The NHSC said the extension of mortgage debt for older borrowers was not a matter for alarm for those who could pay it off. But it is evident that some will need to sell their home, move to lower amenity homes in less costly locations and depend on the age pension to provide for all or most of their living expenses. The Residential Development Councils Caryn Kakas said the forecast growth in rental signified!the death of the great Australian dream of home ownership. A place to call home is at the heart of every family, but the dream of buying a home is quickly fading for many which will have dire consequences for our nations economic future, she said. Dr Donald welcomed the signs of an innovative response to the housing shortage by the industry in providing smaller and better designed homes, and by governments in the reconsideration of planning and development controls and the design of new housing programs.
http://afr.com/p/national/expensive_housing_turning_australia_WSw4y4QvQDc89p6aAiYKGI Page 2 of 3

Expensive housing turning Australia into a nation of renters

4/03/13 5:11 AM

READ NEXT:
Falling prices to hit off-the-plan buyers Melbourne property prices pick up Commercial property attracts small investors Hayes | Balis on the buy list The Australian Financial Review

Create an alert
Click on the links below to create an alert and receive the latest news as it happens People Mark Butler , Kevin Rudd Topics Politics/Federal Politics, Property - Residential/Infrastructure & Town Planning

http://afr.com/p/national/expensive_housing_turning_australia_WSw4y4QvQDc89p6aAiYKGI

Page 3 of 3