NSW and Victoria Falling Behind on Housing Affordability

New South Wales and Victoria have fallen behind other states in addressing housing affordability, according to new research from the Australian Housing and Urban Research Institute.

On Wednesday, AHURI released its report, Government Led Innovations in Affordable Housing Delivery, which examined the different affordable housing strategies of the state and territory governments across Australia.

The report found that while ACT, South Australia and Western Australia have had effective affordable housing strategies implemented for a number of years, other states such as NSW and Victoria have only announced their approach to delivering greater affordability this year.

The report’s lead author, Associate Professor Steven Rowley from Curtin University, told Pro Bono News that the research showed some states were well equipped to deal with the issue of affordable housing.

“What we found was that some state governments were certainly more innovative and active than others with delivering affordable housing,” Rowley said.

“While all states have benefitted from increased funding from the social housing initiative, and managed to deliver an increase in the number of social houses… certain states have developed their own affordable housing policy and strategies, particularly Western Australia and ACT, which have been able to deliver significant quantities of affordable housing.”

He said WA and SA benefitted from government-backed low deposit home loan schemes, as well as a shared equity scheme (along with Tasmania and ACT) which was helping people to access the homeownership market.

Victoria and NSW do not currently have these schemes in place and Rowley said a lack of housing affordability strategies showed these states were falling behind.

“These governments with organised policies and strategies have been able to deliver opportunities. There are some state governments that are a little bit behind, particularly Victoria and New South Wales,” he said.

But he did concede that Victoria and NSW had to deal with a tough housing market, which made addressing the issue more challenging.

“It’s pretty difficult to implement a scheme in NSW [like in WA] when the median house price in Sydney is double what it is in WA,” Rowley said.

“So certainly the ability for state governments to deliver affordable housing policies and programs is partly down to the market itself, and in NSW they have the most significant affordable housing problems but the government has been a little bit slow in reacting.

“It has now arranged a strategy, but this seems to focus on finding houses for first-home buyers which doesn’t necessarily tackle the problem. And certainly they look to increase supply, which is important but isn’t the solution to the problem.

“It’s difficult for states like NSW and Victoria, because they have very limited tools given the market they are in. But other states have been tackling affordability for years and you could certainly argue that NSW and Victoria are a little bit late to the table.”

States have been forced to be innovative in their approach because of the absence of a national affordable housing supply strategy and Rowley said increased federal funding would be extremely beneficial.

“When there are federal initiatives and federal money, it really proves quite successful… but there really is an absence of a federal government-led national affordable housing supply strategy [and] states can only do so much with their budget,” he said.

“I do think if there was some kind of significant federal program to deliver affordable housing supply, the states would be able to work with that and it could make a significant difference.”

Rowley said other states could learn from WA’s successful approach, and he highlighted the importance of leadership when implementing these strategies.

“WA had very strong leadership, a very innovative approach and flexible organisation that was able to respond to market conditions. So I think you need to have government’s taking a very market-oriented approach and think about how they can work with the private sector,” he said.

“Being innovative and flexible is important but ultimately it comes down to leadership and having that political support, who can take opportunities to innovate. I think the problem we had with a lot of government departments is that they focused on their day-to-day task of delivering public housing and didn’t have a broader view to improve supply.

“You need to work out the key blockages and try and develop strategies that are going to tackle these blockages. Then you can free up housing for those most in need and create opportunities for people to transition out of public social housing, which WA has been quite successful at.”

The Affordable Housing Party’s national convenor, Andrew Potts, told Pro Bono News that the report showed a need for a national, independent housing authority.

He agreed that the NSW and Victorian governments were behind on addressing housing affordability.

“The report also highlights that the housing affordability issue is different from state to state. Providing low cost loans to people in Victoria and NSW may not necessarily be the best thing to do when the property in those states is very overvalued,” Potts said.

“Perhaps in states like WA where prices are more reasonable, it might be a better proposition to get low income people into owning their homes. But in Victoria and NSW there’s probably more of a need for public housing and supporting low-income people into rental accommodation.”

He also agreed that support for providing affordable housing needed to come more from a federal level.

“There needs to be much greater federal funding for affordable housing. That can be easily funded by removing the property investor tax perks, like negative gearing and the capital gains discount on property sales,” he said.