The housing affordability debate has taken a strange turn lately. So strange that we need to ask a basic question. Is it about economics or social welfare?

The general answer, of course, is that it’s both, but to widely different degrees. For a clear majority of Australians, housing has always been an economic issue. Their needs are met in the marketplace, by buying and selling properties. For a minority who can’t break into the market, state and commonwealth governments have funded schemes for public or social housing on strict eligibility criteria. At any rate, in Australia social housing has been a marginal sector, a safety net for the disadvantaged. It represents just 5 per cent of the nation’s housing stock.
     
So, what’s the point? There are early signs that the policy distinctions between private and welfare housing are breaking down. If these signs turn into something more tangible, Australia faces a startling new development. Home ownership will slip beyond the reach of low and middle income workers. Only the well-off will dare to dream of owning a home, especially a single-family house.

In the affordability crisis, welfare activists see their best opportunity in decades. A key social movement of the 1970s, welfare advocacy lost ground in the shift to market-oriented solutions over the past 25 years. On the housing front, it was trampled in the stampede to upscale outer-suburban dwellings, part of a generational rise in living standards and disposable incomes related, ultimately, to economic deregulation. Today the lobby has a lower profile, but retains its turf. Advocates for state intervention fight on, scattered throughout government schemes and agencies, charities, churches and university social work faculties. Their disdain for market solutions remains undimmed.

Those with long memories will be familiar with Julian Disney (pictured). As president of the NSW and Australian councils of social service, Disney was once the high-profile face of welfare advocacy. His career mirrored the lobby’s own trajectory. In recent years he has settled into a comfortable academic post, Director of the Social Justice Project at the University of NSW. He’s more visible, these days, as chair of the National Housing Affordability Summit, a coalition of welfare groups and trade unions.

Voices in and around the summit, most prominently Disney’s, have deftly exploited the heightened sense of urgency around housing affordability, not to mention the heated election year climate.

Above all, they have been busy planting a distinct narrative in the public mind. On 14 November, Disney gave it a spin on the Sydney Morning Herald features page. It goes like this. Cities have reached the outer limits of feasible expansion. Their outskirts have stretched too far from where jobs are located. These days, both partners need to enter the workforce, and mothers juggle work and children. For most couples, the time and expense incurred in travelling such distances isn’t bearable. They are forced to live near their jobs. But land is scarce in these areas, so house prices are exorbitant. Couples must resign themselves to renting. Governments should intervene to expand the stock of rental accommodation.

Disney claims ‘many households now have a stronger need to live near a wide range of job options’ and ‘these changes have contributed to the gentrification of inner suburbs and house price inflation’. Many are being forced to ‘live in substandard housing or a long way from job opportunities and community services’. The government must ‘remove excessively generous tax benefits for wealthy landlords and owner-occupiers’. Evidently, Disney is no fan of The Great Australian Dream.

There’s at least one glaring flaw in this analysis. It’s just absurd to suggest that jobs are concentrated in the ‘inner suburbs’. Disney describes the typical city of 30 or 40 years ago. In the modern service-oriented, motorised and communications technology linked economy, jobs follow consumers and gravitate to where costs are lowest. They aren’t tied to fixed transportation nodes like ports, waterways and rail lines, and haven‘t been for some time.

The Herald runs a generally anti-suburban line, but Catharine Munro, the paper’s urban affairs editor, is fine. On 24 September, her article ‘Tale of a city turning inside out’ noted that ‘there was a time when business was done in the city and people went home to the suburbs’. Now, ‘large companies are embracing suburbia while Sydneysiders are taking to inner-city apartments at a faster rate than they are to houses’. Munro refers to the new ‘business park’ phenomenon, amongst other things.

And the NSW Government’s City of Cities plan earmarks zones in outer western Sydney for expected employment growth, such as the Western Sydney Employment Hub near the M4 and M7 motorways.

If there’s a drift to inner-city apartments across all income and occupation groups, and that’s not clear, job location has little to do with it. In this context, it’s interesting to note former Labor leader Mark Latham’s election commentary in the Australian Financial Review of 9 November. Latham denied any housing affordability problem, let alone a crisis. He also thinks home buyers are abandoning the fringe, though not because of jobs - rather, for ‘water views and boutique shopping’. His evidence: ‘In south-west Sydney, for example, home buyers can purchase a three-bedroom brick house in a decent neighbourhood for less than $250,000’.

Looking at it more deeply, the position is rather more complicated. Neither jobs nor lifestyle are turning buyers away from the fringe. Prices are actually holding up across many fringe suburbs.

Latham’s $250,000 price claim needs to be put in context. Just peruse the Herald’s Domain website, which posts median house prices across Sydney’s suburbs. Why is the median price in Rouse Hill on the far north-western fringe, yet to be connected to Sydney’s rail network, as high as $510,000? Why are medians in nearby fringe suburbs of Kellyville and Beaumont Hills as high as $550,000 and $575,000 respectively? Turn to Latham’s case of the south-west. The median in Campbelltown region is $340,000. Inside the region, medians can be as low as $265,000 in Macquarie Fields. But move further out towards the fringe in adjacent Wollondilly Shire, and medians can be as high as $482,500 in Glen Alpine and $415,000 in Blair Athol.

Adverse social factors appear to be depressing prices in places like Macquarie Fields and other Campbelltown suburbs. Sadly, the region struggles with a history of failed public housing projects. Pockets of unemployment, welfare dependency and crime persist. In February 2005, Macquarie Fields erupted in an unprecedented four day riot. Inevitably, buyers will not be drawn to suburbs with poor reputations (however unfair that may be on the locals, most of whom are law-abiding and gainfully employed).

These are special cases, nevertheless. 

Judging by prices in the vicinity of Rouse Hill and Glen Alpine, distance from ‘the centre’ is less critical than welfare flacks like Disney insist. Arguably, prices on much of the fringe are still too high for new buyers, and this is a function of supply as much as anything else. It’s about the system of land releases.

Affordability pressures are still susceptible to market solutions, if policymakers will grasp them. Sure, freeing up land supply will deflate current values, and this entails a political risk. But it comes down to a question of national priorities. Australia is an affluent, land-rich country with a low population density. The notion that our housing arrangements should slide into the clutches of a quasi-welfare apparatus is ludicrous.

Australian families will not relish a future crammed into high-density apartments, nor perpetual obeisance to a landlord. Disney and friends should stop trying to hijack the agenda for their purposes. They occupy a corner of it, and there they should stay.

   
 TNC  21 November 2007                Like to respond?                    Top/Home