Opinions: Mark O’Brien, Chief Executive Officer, Tenants Union of Victoria

Wrong Directions in Housing Tenure

The housing mix is moving in the wrong direction in Australia and it is time to adjust.

In the social compact that emerged after the Second World War, Australian governments pursued housing related policies that sought to deliver widespread home ownership and long term housing in the public rented sector for those who could not achieve home ownership. As a consequence, there was a narrower role for the private rented sector which was essentially a transitional tenure between the natal home and the adult home. Whilst it may have been naïve it had a rough functional logic, particularly for the public rented sector which was seen as a labour market resource.

This compact has been steadily decaying since the 1970s with government unable to sustain a coherent housing policy narrative over the intervening period. The initial drift in policy was replaced by periodic interventions (some larger than others – for example, the National Housing Strategy of the late 1980s) and a tenure mix produced largely by economic cycles. For a brief period in the mid-1990s, government entertained the fantasy that the public rented sector could be further reduced with adequate demand-side support for private tenants only to be rudely awoken by the excesses of the subsequent long boom and the steep rise in housing costs relative to incomes.

As a result of social and economic change and this policy lacuna, the picture of the housing tenures that is emerging now is broadly as follows:

  1. A decreasing proportion of households with outright ownership of housing. This is somewhat surprising given the demographic wave of baby-boomers and appears in large part to be driven by re-mortgaging for discretionary expenditure or trading up,
  2. An increasing proportion of households purchasing (that is, paying off a mortgage) including increasing numbers of these households entering retirement with outstanding mortgage balances,
  3. A stagnant (if not, decreasing) proportion of households in the social rented sector,
  4. An increasing proportion of households in the private rented sector including households spending longer periods in private rental prior to home purchase and households who have previously been home purchasers re-entering the private rented sector, and
  5. At the very pointy end, increases in homelessness – both visible and hidden – including those people housed in the private rented sector in rooming houses and caravan parks, and those people housed in the social rented sector in crisis or transitional housing.

The increase in the private rented sector is being driven by access barriers to home purchase (or re-purchase) and greater targeting of the social rented sector to households or individuals with complex needs. The greater targeting of the social rented sector is creating its own set of problems including undermining the financial viability of the sector as a whole and busy-work in developing techniques for managing the scarcity of social housing resources.

Meanwhile in the private rented sector, households are also competing for scarce resources. Would-be home buyers are trading down in the rental market to minimise cost without compromising lifestyle, often occupying the lower-cost housing that low-income households actually need. This means that low-income households are often consigned to poorer quality rented housing in locations of lower social and economic amenity.

The shift to a larger role and reliance on the private rented sector has not been accompanied by a commensurate increase in accountability for private landlords through modern tenancy law that improves security, safety and privacy for private renters.

As has been noted by others, the current housing tenure mix is both cause and consequence of the largest benefit being provided to those with the most social and economic capacity and the smallest benefit to those with the least. Those lucky enough to get on the home purchase ladder have increased their wealth at the expense of those unable to find secure housing in the other tenures.

In all of this, what we have also seen is a movement away from considering housing as a valuable social resource towards increased commodification and a view of housing as simply a series of opportunities for wealth creation. This movement is entrenching disadvantage and is simply a movement in the wrong direction.