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Calls for Housing as Rental Affordability Crisis Pushes People into Homelessness

24 November 2016 at 11:11 am
Wendy Williams
The Victorian peak body for homelessness has called for the creation of 10,000 homes specifically catering for single people on low incomes, as the latest Rental Affordability Index (RAI) has revealed Australia’s rental affordability crisis is pushing people into homelessness.

Wendy Williams | 24 November 2016 at 11:11 am


Calls for Housing as Rental Affordability Crisis Pushes People into Homelessness
24 November 2016 at 11:11 am

The Victorian peak body for homelessness has called for the creation of 10,000 homes specifically catering for single people on low incomes, as the latest Rental Affordability Index (RAI) has revealed Australia’s rental affordability crisis is pushing people into homelessness.

According to the RAI released on Wednesday by National Shelter, Community Sector Banking and SGS Economics & Planning, housing stress is a “common reality” for people in the rental market.

The data showed Sydney continues to be Australia’s least affordable city for rental accommodation, where the average renting household spends nearly 28 per cent of its total income on rent, while Melbourne has seen the greatest decline in affordability since 2013.

Community Sector Banking CEO Andrew Cairns told Pro Bono Australia News the report showed Australia was not making fast-enough inroads into rectifying the issue of affordability.

“The latest Rental Affordability Index shows housing stress is a common reality for people in the rental market, especially those on low incomes, who have little left to spend on essentials like food, electricity, fuel and education, after paying rent,” Cairns said.

“People in the lowest-income households are being pushed out of the rental market, and into poverty and homelessness – this situation is most dire in Sydney.

“Whilst there have been some improvements we are still presented with a situation where a large group of people haven’t got the opportunity to be able to get access to affordable shelter whether that is through either ownership or rental.

“I think what the report actually indicates is that there are some systemic issues that we really need to think about differently if we are going to get a meaningful solution in the longer term.”

National Shelter executive officer Adrian Pisarski said the index showed low-income households continue to face unaffordable rents and high levels of housing stress despite some improvements in the rental market.

“Additional supply in capitals has not eased rental affordability for low income households,” Pisarski said.

“We are most concerned that there is no national strategy to tackle housing affordability, especially when we see that additional supply is not reaching low-income households, and increases in homelessness are being reported.”

Ellen Witte, an associate at SGS Economics and Planning, said it was also a great concern that “even average households” would struggle if rents become less affordable.

“With home ownership falling further out of reach for many households, rental unaffordability is a key issue to address in Australia’s housing equation,” Witte said.

“The index shows rental affordability is dividing Australia, with service rich areas tending to be very unaffordable, while service poor areas are more affordable, particularly in Sydney, Melbourne and Perth.”

Greater Sydney continued to be at crisis levels in terms of rental affordability, with an RAI of 108 in the June quarter of 2016. Most inner city areas remained “extremely unaffordable” and regional NSW also remained the least affordable regional area, despite having improved slightly over past quarters.

Greater Melbourne was actually Australia’s second most affordable metropolitan area, with a RAI of 126 in the June quarter, despite seeing the most significant fall in affordability since 2013.

The average renting household spent around 24 per cent of total income on rent.

However, affordability varied greatly across income groups and areas. The lowest-income households faced one of the worst rental affordability situations of all metro areas in Australia.

According to the report, it was most dire for non-family, mostly single-person households, paying nearly 110 per cent of total income on rent, even after discounting average rents for this group by 25 per cent for access to social housing.

Witte said this group was pushed beyond the margins of the market.

“Not surprisingly, we have seen a doubling of people sleeping rough in the streets of Melbourne over the last two years,” she said.

“More affordable areas are likely to have poor access to employment and services, while those close to jobs and services are unaffordable for average income households.”

Cairns said if “you dive into the details” the report showed affordability was an economic issue as well as a social one.

“We are getting to the stage where you have got to go further and further away from the centre of the cities to actually have affordability,” he said.

“And if you are further away from the centre of the city then you are more likely to be in areas that don’t have access or the accessibility of inner suburbs. So you have less transport options, fewer jobs options, fewer access to infrastructure, and therefore you are being disadvantaged, so there is a lot of dead time in travel for people as they have to go further and further away from the cities, so we are perpetuating the problem.

“Then you have places like Western Australia, whereby you get an improvement in the affordability, and we’re seeing that from report to report, because there is a decrease in rent as the capex phase of the mining boom diminishes.

“But what you also see in the last quarters is a reduction in the income from households so what we’ll see is probably in a six to 12 month period, more stress on the affordability as household incomes also decrease.”

Cairns said the issue of affordability required a multifaceted solution.

“I think the actual problem of rent affordability and also ownership affordability has been a number of years in the making and you have actually got to look at the whole housing market and not just an individual slice of it,” he said.

“It’s complex because it is a mixture of social, public and private and investment opportunities, so when you actually have a look at the solutions it has to be a multifaceted solution.

“It is how do we actually create business models that turns some short-termism focus into long-term sustainable outcomes.

“It has taken us 30 or 40 years to get into the current status that we have with regards to housing affordability so it is going to take us a longer-term commitment and the discipline to actually get us out.

“It’s not just one solution where we are just asking for the private market to change how they view risk and reward, or the government in how they deliver solutions or what subsidisation they write, or the clients in deciding where they want to live or not want to live, it is really a mixture of everyone participating in a new game.

“And everyone thinking of new models, and everyone thinking of different measures of success and how we actually then build those infrastructure and assets for the longer term.”

He said part of the process was education.

“I think part of the process is realising that we have to change, and getting acceptance that we need to change and that we actually have an obligation as a first world country to address the housing needs of those which are either disenfranchised or not included,” he said.

“So I think that there are more people becoming aware that we can’t just apply yesterday’s solution and expect a difference in the outcome.

“But I don’t think that we can just rely on one part of the ecosystem to be the silver bullet, we all have to participate in the solution and the opportunity.”

Cairns called for the nation to wake up to the rental crisis.

“There is a dire need for innovative financial models to support more affordable housing and we’re calling on governments, companies and philanthropists to collectively use their power to create sustainable solutions now,” he said.

It comes as the Victorian peak body for homelessness has called for the creation of 10,000 dedicated homes specifically catering for single people on low incomes.

The proposal, which would see 10,000 dedicated units for low-income singles over five years and an ongoing pipeline of 1,000 additional properties annually beyond this period, is part of the Council to Homeless Persons (CHP) pre-budget submission, and comes in advance of the Victorian Government’s affordable housing strategy, which is expected by year’s end.

CHP CEO Jenny Smith said there was currently no plan in place to house the thousands of people on public housing waiting lists.

“As we speak, 33,000 Victorians are languishing on public housing waiting lists, and over 1,000 people are sleeping on Victoria’s streets, and there is currently no real plan as to how we’re going to house those people,” Smith said.

“We know that a severe shortage of one-bedroom public housing for single people has led to the rise in rough sleeping, and a boom in rooming houses, and a boost in public housing catering to singles is a key solution.”

To achieve the 10,000 target, CHP called on the state government to make better use of surplus government land, pointing to publicly-owned buildings and vacant land parcels that are currently being prepared for sale on the private market.

“Hundreds of taxpayer owned houses and land parcels are sold off every year which could be used for social benefit,” Smith said.

“We’d like to see public assets being used to get people off the streets and into a home, as well as to help people who are living in poverty just to pay the rent.”

Wendy Williams  |  Editor  |  @WendyAnWilliams

Wendy Williams is a journalist specialising in the not-for-profit sector and broader social economy. She has been the editor of Pro Bono News since 2018.

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