The dream of being able to afford a place to call home is becoming more distant for a sizeable and growing proportion of Australians. In recent times, housing affordability – in particular the rising costs of home ownership – has generated significant community concern and political debate.
The Australian community – housing stressed?
The most commonly used benchmark of housing affordability is the 30/40 indicator: households are said to be in housing stress if they are spending more than 30 per cent of their income on housing, while earning in the bottom 40 per cent of the income range27.
Based on this measure alone, the figures are startling:
- the number of Australian households in moderate housing stress (i.e. paying more than 30% of gross income in housing costs) has increased by 78 per cent, from just over 900,000 in 1994-95 to nearly 1.6 million in 2011-123.
- over the same period, the number of households in severe housing stress (paying over 50% of gross household income in housing costs) increased by 67% from 300,000 to nearly 500,0003.
Housing stress is particularly acute for private renters, single-person households under the age of 65 and low-income home purchasers2. Households with dependent children are at greatest risk of spending prolonged periods of time in housing stress2. A significant minority move in and out of housing stress with 22 per cent of households estimated to be experiencing two or three episodes of housing stress between 2001 and 200626.
The costs to the community of our housing crisis are becoming apparent. Safe, secure housing is essential for good health, employment, education and community wellbeing22. A generation unable to purchase homes leads to widening and unsustainable inequalities27.
“Appropriate housing does not only provide a physical structure to house its occupants, it also enables individuals to make use of their inherent potentials to participate meaningfully in their personal and social lives, including but not limited to getting an education, engaging in the job market, caring for family members and building friendships.”
Housing system failure and the case for change
Whilst both State and Federal Governments have recognised the necessity for action, previous policy and program responses have been largely unsuccessful27.
The private rental market increasingly is the only source of housing for many lower-income households who cannot access public housing or afford home ownership. However, this market has failed to provide adequate housing supply for people earning lower incomes2. The proportion of lower income households that are renting has been increasing over time, from 32 per cent in 2007-08 to 34 per cent in 2011-12, signifying a worsening private rental market for people living on low income if nothing is to be done to reverse the trend24.
Over the last few decades, reduced investment in public housing has contributed to a reduced supply of low-cost rental housing. To take the Victorian public housing system as an example, that state’s Auditor General found that public housing is unsustainable due to:
- the accumulated decline in revenue;
- poor asset management (costs exceeded revenues by 42 per cent in 2011);
- a significant maintenance backlog; and
- a large portfolio of obsolete stock25.
Not only is public housing financially unsustainable, it also fails to respond to the needs of tenants, and continues to suffer from poor reputation and lack of confidence in the system25.
The non-profit housing sector – a new approach?
A different approach is required to meet the growing affordable housing problem23. The not-for-profit sector can be an effective mechanism for increasing the supply and diversity of delivery of housing for low and moderate income groups for whom the market is not effectively catering27.
Integrating social housing delivery within a co-operative housing programme is the best of both worlds – an effective approach to meeting the needs of low and moderate income households in a model of housing delivery that can address not only the physical needs of people experiencing housing stress, but also their economic and social needs6. By ensuring subsidy is well targeted and effectively leveraged, the co-operative housing model can minimise the number of households needing subsidy and maximise the impact of any subsidy that is needed. The co-operative housing model can use an enterprise co-operative structure to maximise the effectiveness of a public service mutual function embedded within it.