Australians are known for their wild, vibrant and outgoing lifestyles—and yeah, you would easily think there are no housing problems or homeless people here.
Shockingly, the other side of Aussie has rough sleepers, in fact thousands of them and even the policymakers were used to crowds of rough sleepers clustering in their doorways or sheltered under plastic sheets in parks. But not anymore.
The coronavirus pandemic has redefined our way of life—shut people at home to stay safe and any homeless person is believed to be posing the risk of passing on the virus.
State governments in Australia are all of a sudden having tens of millions of dollars to build pop-up accommodation for rough sleepers or book them into hotel rooms.
However, these are only short-term fixes that highlight the cracks and short comings in the country’s housing system.
Here are five major weaknesses that the COVID-19 pandemic has exposed in our housing industry.
1. Thousands Of People Sleeping Rough
Before the outbreak of the coronavirus, about 8,000 people were affected by street homelessness on any given night, according to the census data. But this could be an underestimate.
In a recent UK study, the number of people sleeping rough in a year was five times more that captured in the census-type information. Australia is no exception. Many more thousands of people are on the verge of rough sleeping—including couch surfing.
2. More Than A Million Aussies In Rental Distress
This is the second housing system vulnerability—those living in unaffordable and insecure rental housing.
Prior to the crisis, the cost of housing had forced about 1.3 million Aussies into poverty. After paying rent, they were hardly left with enough money to cater for essentials such as food and electricity.
Unfortunately, most of these renters have already lost their jobs or work hours. As such, the JobKeeper and JobSeeker government schemes will temporarily be of help to temporary immigrants with thousands of casual workers being excluded.
Measures like mortgage pauses by banks will go a long way in helping property owners to avoid selling their property in case tenants are unable to pay rent. But, let’s keep in mind that these are simply stop-gap efforts.
3. A Wasted Social Housing Industry
The current state of housing in Australia is shrunken, with rents being fixed at an affordable share of income.
Comparative to population, the total number of properties let by community housing providers and public housing agencies has actually halved since 1991.
In most parts of Australia, waiting lists of those seeking social housing are enormous. In most of the country’s jurisdictions, the industry is not in a position to offer lasting housing solution to all the rough sleepers and those currently staying in hotel rooms.
This can only be possible through head-leasing or emergency unit acquirement.
4. Mounting Debts
This refers to housing-related debts. If the rate of unemployment continues to rise and the covid-19 crisis-induced downturn persists, the increasing level of debt could worsen the recess.
Last year March, the RBA warned that the debt-to-income ratio had jumped to 190 percent. The increase was linked to a surge in borrowing to purchase homes and investment properties.
Apparently, even prior to the pandemic, 1 in five mortgage holders were struggling to pay off their repayments. Hence, if large-scale unemployment was to lead to mass property sales, this could worsen the crunch as the market gets flooded with homes.
5. Imbalanced Housing System
The current housing system is susceptible to shocks due to imbalance. Residential construction projects are almost totally dependent on private developers who build for sale to ready individual buyers.
Most of these buyers are very sensitive to the present property value outlook. The resulting mental perception is overblown booms and slumps, a common problem when properties are highly dominant in the market.
An exaggerated downturn can cause a grinding halt in construction of residential units. And when labour is shed, the sector takes time to re-employ given the high risk and extended project lead times.
A National Strategy Is Long Overdue
Australia’s housing needs a lasting solution. While the COVID-19 pandemic policy jerks is a rare opportunity for the nation to restore the housing industry back to its feet through a long-term, Commonwealth-led bipartisanship national housing strategy.
This should include regular social housing construction on a large scale so as to keep pace with the rate at which the population is growing. That could be a maximum of 15,000 homes each year—approximately five times the present number.
To achieve this, governments may have to take on construction projects in distress from private developers. The NSW state government has initiated reforms to transform its sector.
The government should also provide support to residential construction as a motor of economic revival by pumping more funds into social housing as a core plank of its stimulus package.
In conclusion, an effective national housing strategy must do an overhaul of the federal, state and territory tax requirements. Most of these carry bigger impacts on housing policy than any other spending program.
Tax reforms can also streamline our housing system. It could actually minimise the speculation that drives debt and prices up, while growing the revenue we require to offer decent and more affordable housing for all Aussies.
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