The federal election saw both major parties promise to spend billions to help Australians buy a home, but offer zero ideas to tackle the worsening issue of rental affordability.
Skyrocketing tenant demand coupled with low supply has pushed up rent prices significantly, making finding a suitable home an increasingly tough ask.
It’s not a new problem, but one that’s gotten worse over recent years – with little-to-no meaningful help provided.
But it needn’t be that way. There are practical and achievable solutions, tried and tested internationally, which governments could adopt right now.
1. Scotland’s mega building program
The recently announced strategy Housing to 2040 is an ambitious program designed to tackle spiralising costs while also contributing towards Scotland’s carbon reduction policy.
By 2032, the government will invest £18 billion (AU$31.9 billion) in building 110,000 affordable rental dwellings across the country.
They will be developed alongside infrastructure projects to encourage 20-minute neighbourhoods where everything residents need is easily accessible.
And they will be carbon-neutral, built with sustainability in mind.
Scotland has form, having built more than 100,000 affordable homes since 2007, the majority of which are rentals.
Scotland is investing billions of dollars in building 110,000 new affordable rental dwellings in the next decade. Picture: Getty
By comparison, Australia’s focus on affordable social housing has dwindled in recent decades, according to Professor Hal Pawson from the City Futures Research Centre at UNSW.
“A decade of negligible investment in social housing construction has only made [the rental affordability crisis] worse,” Professor Pawson wrote for The Conversation.
“The result has been a continued decline in availability as public and community housing has dwindled from 6% to only 4% of all housing since the 1990s. In fact, proportionate to population, social rental lettings have halved over this period.”
The national stock of social and affordable rental housing sits at just over 400,000, he said, and additions in recent years have added just 2000 to 3000 more dwellings.
It’s barely enough to offset the sale or demolition of existing housing seen in many states.
“A net increase of 15,000 units a year is needed just to keep pace with ‘normal’ population growth – that is, to halt the decline in social rental as a share of all housing.”
Australian housing ranks among the least affordable in the world. Picture: Getty
2. The Nordic model of affordable housing
Thanks to decades of dedicated focus, Nordic nations seem to have figured out the challenges of providing cheap, sustainable, and secure housing, which has had significant flow-on benefits.
One of the main drivers of these successes is co-operative housing.
Andrew Scott, a professor of politics and policy at Deakin University examined the model of co-operative housing in Sweden, Norway, Finland, and Denmark, and with colleagues Heather Holst from UNSW and Sidsel Grimstad from Newcastle University, wrote about it for The Conversation.
Co-operatives provide affordable rental accommodation and a pathway to owning a secure and quality home, with a focus on residents playing an active role in how they live.
The intention isn’t to accrue wealth for landlords, but to provide stable housing, Professor Scott and his colleagues wrote.
“They pool common resources to own and manage affordable rental accommodation. Tenants are generally required to become members and encouraged to be actively involved in decision-making, management, and maintenance.
“Any revenue from rents is reinvested in new housing projects or upgrading older buildings.”
Nordic nations have invested heavily in co-operative housing models. Picture: Getty
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The Nordic model also allows residents to buy their homes for about 20% less than what it would otherwise cost.
“Members own their individual dwellings and co-own and manage shared spaces with other co-op members,” Professor Scott explained.
“The structure is similar to strata title in Australia, with individual ownership of some parts of a property and shared ownership of others. The big difference is strata title is often ‘investor-owned’, while a housing co-operative is ‘user-owned’.
Housing co-operatives are rare in Australia, comprising less than 1% of the total housing sector. It’s a different story in Nordic nations.
“Sweden’s co-operative sector amounts to 22% of total housing stock,” Professor Scott wrote. “Norway’s represent 15% nationwide, and 40% in the capital, Oslo. In Denmark, more than 20% of the population lives in co-operative housing.”
The Nordic model has merit in an Australian context, he said, but the biggest lesson of all could be the benefits of collaboration between all major stakeholders.
“Australia’s superannuation funds, for example, have the means to invest in low returning but very safe, affordable housing assets. Government policies should support them doing this through co-operative structures that help to fill the gap between market and state.”
3. Vancouver’s approach to a serious crisis
The Canadian city of Vancouver has been crippled by a housing affordability crisis, but a dedicated and aggressive focus on the issue over the past seven years is paying dividends.
Professor Carolyn Whitzman, an urban planning expert from the University of Melbourne, visited the city in 2015 and again in mid-2021 to examine the issue and discover what new policies are working.
It implemented several targeted strategies, she found, from a target of 20,000 purpose-built rental homes by 2027, subsidised rent for moderate income households, planning changes to encourage laneway housing development, and rezoning for below market rental dwellings.
“Although Vancouver has huge housing affordability issues, it has been able to scale up housing delivery for very low-income households – about 15 times as much social and affordable housing as Melbourne over the past three years,” Professor Whitzman wrote in a piece with colleagues Katrina Raynore and Matthew Palm for The Conversation.
A housing affordability crisis in Vancouver sparked an overhaul of public policy. Picture: Getty
The private sector has also been emboldened to invest significantly in build-to-rent projects, providing affordable, long-term and secure housing.
As a result of the latter, thousands of new dwellings located near transport hubs have been built in recent years.
Professor Whitzman wrote that the city has been able to lobby federal authorities to step up their game.
“Canada is investing C$40 billion (AU$42.6 billion) over the next 10 years in its National Housing Strategy,” she pointed out.
Another key feature of Vancouver’s model is centralising services in a one-stop shop – the Affordable Housing Agency.
By comparison, the Victorian Government has more than a dozen departments and agencies dealing with aspects of affordable housing delivery.
Australia can learn many lessons from countries that have successful affordability policies. Picture: Getty
4. Singapore straddles renting and owning
The affordable housing model in Singapore is often touted as a world-leading approach that strikes the right balance between government support and individual responsibility.
In an article for The Conversation examining the country’s approach, Youqing Fan from Western Sydney University and UNSW’s Bingqin Li and Chyi Lin Lee deemed it largely a success.
Public housing overseen by the Housing and Development Board (HDB) comprises 73% of Singapore’s housing, comprising public rentals and subsidised ownership, the trio explained.
“HDB flats house over 80% of Singapore’s resident population, with about 90% owning their homes.”
Singapore’s policies straddle renting and owning with a focus on sustainability and affordability. Picture: Getty
Singapore’s approach is also about supporting sustainable demand for homeownership, by encouraging tenants to build their financial capacity.
“Despite its heavy state intervention, Singapore’s public housing stresses the responsibility of individuals,” they wrote.
“The Housing Provident Fund is a form of forced savings for housing, retirement, health and education, among other things. It is integrated with the pension system to enhance the efficiency of savings.”
The common argument against public housing – that it removes an incentive for tenants to save for housing they can sustain on their own – didn’t eventuate in Singapore.
“Singapore’s approach seems to be a midway solution. The government plays a bigger role in providing housing but does not waive individual responsibilities.
“Providing public housing and at the same time demanding individuals and employers contribute can send a strong signal – people are encouraged to join the labour force.”
Australia needs to rethink its approach to affordable housing – and urgently. Picture: Getty
A change of mindset is needed
Successive governments have tried and largely failed to address Australia’s worsening housing affordability crisis.
Experts agree that the focus has largely been on supporting people to buy, particularly first-time buyers, thus driving up demand, while at the same time ignoring the issue of new housing supply.
But Professor Scott and his colleagues wrote that a shift in thinking is also required.
“A key problem is Australia’s housing market is too skewed towards treating housing as a financial asset, rather than a basic human need.
“There is almost a universal consensus among economists, for example, that negative gearing favours the interests of investors to the detriment of others, but both major parties are scared to change the policy.
“One way to break the policy stalemate is to consider policies shown to have worked in other countries.”
