Housing affordability represents a persistent and growing issue in Australia.
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The struggle to find a secure and affordable place to live is becoming more and more difficult for low-, and even moderate-, income households.
Those unable to obtain secure and affordable accommodation are pushed into precarious living arrangements, with many at risk of homelessness.
The private rental market is in crisis.
The severe tightening of the private rental market since late 2021 has led to sharp rent increases and historically low vacancy rates across the country.
Housing stress among renters is rising as are requests for assistance from specialist homelessness services.
The experiences of those in housing stress and homelessness are now affecting a much wider and economically diverse proportion of the population.
For homeowners, households on fixed-term mortgages have so far been insulated against the effects of back-to-back interest rate rises.
The experience over recent decades, and a wealth of research evidence, continues to emphasise the need for serious government investment in public and community housing.
However, this is expected to change as the RBA estimates the fixed-rate mortgages of up to 880,000 Australian households are due to end this year.
Monthly repayments on a $500,000 mortgage will increase by almost $1000 per month for households transitioning from a fixed to a variable rate adding to cost-of-living pressures.
Mortgage defaults may well increase as a result.
The findings from the Housing Affordability in Western Australia 2023: Building for the Future report by the Bankwest Curtin Economics Centre demonstrate the growing challenges for West Australian households, which are typical of those being faced across the nation, while also highlighting where urgent reform is needed.
The report maps affordability across the country and examines data from the Australian Housing Conditions Data Infrastructure survey of 22,500 respondents.
We found that one-in-five, or about 550,000 renters across Australia, live in housing they regard as unaffordable, with one-parent families the most likely to struggle.
While affordability constitutes a major issue for many households, it is actually the condition of the dwelling which has a bigger impact on overall dwelling satisfaction.
Households may have the capacity to make adjustments to meet higher housing costs (up to a limit), but it is very difficult to adjust to poor quality housing conditions.
Our findings suggest that more than 300,000 rental households live in what they regard as poor quality housing.
Issues impacting housing quality include dampness and mould, plumbing or electrical problems, and difficulties keeping the house cool or warm.
Overall, about one in four renters struggle to keep their house warm, and a third struggle to keep it cool.
Renters were almost twice as likely to report poor health outcomes than owners and while affordability and housing conditions are only one factor behind health outcomes, they are a major one.
Wide-reaching reform is long overdue if we are to address the housing affordability and homelessness crisis in this country.
Home ownership rates are falling and renting is become more expensive.
Commonwealth Rent Assistance is woefully inadequate and rental supply relies on mum and dad investors which creates a very volatile sector.
Although policies to encourage private renters into home ownership can help ease pressure on the rental sector, cash handouts are not the answer as they push up prices and bring forward purchasing decisions.
Increasing housing supply is a more effective way to address affordability, as long as demand is kept under control.
The experience over recent decades, and a wealth of research evidence, continues to emphasise the need for serious government investment in public and community housing.
There is a chronic undersupply of social housing Australia wide.
There are 163,508 households currently on the social housing waitlist with many more estimated to be in need.
Many will wait up to 10 years for housing.
Meanwhile, crisis accommodation for people experiencing, or at risk of, homelessness has long exceeded capacity, with what is designed as temporary emergency accommodation functioning as a long-term tenure for many.
The federal government and many state governments have committed short-term funding for social housing.
However, long-term, certain funding is required to increase the social housing stock and provide an adequate housing safety net for Australians.
Other affordable housing products can help bridge the gap between social housing and the private rental market.
These should be delivered in partnership with the private sector to meet the needs of a growing proportion of the population who are not eligible for social housing but cannot afford the private rental market.
- Dr Adam Crowe is an AHURI postdoctoral research fellow at the school of accounting, economics and finance at Curtin University.
- Professor Steven Rowley is the director of the AHURI Curtin Research Centre.