Australia is growing and changing - economically, socially and environmentally . Census data highlights aspects of this transition and suggests key challenges to overcome and issues to address. We are at a critical juncture – a time to debate about the nation's growth and future. A time to think smarter and act more decisively.
As a property investor for over 20 years in the low to mid-range residential market I am saddened to see the continuing decline of housing affordability in our "lucky country.” Not only am I beginning to be squeezed out of purchasing houses for investment myself as affordability goes down and competition and prices go up, I am am also seeing an increase in tenant distress and lack of supply and availability of clean, affordable, decent housing at the lower end of the market.
Recently I attended the Hunter Research Foundation Centre's Hunter Economic Breakfast focusing specificially on housing affordability (or un-affordability to be precise) where the picture painted was gloomy and heralded a need for a clear strategy and decisive action by both politicians, businesses and private investors if we are to turn around this downward trend. At the breakfast, Greg Budworth from Compass Housing shared that:
In the decade after the Second World War, state and federal governments combined on the biggest building boom in Australian history.
Over a 10 year period they built more than 670,000 houses, providing affordable homes for generations of Australians.
Research backs this up. The 14th Annual Demographia International Housing Affordability Survey: 2018 Rating Middle-Income Housing Affordability covers 293 metropolitan housing markets in nine countries including Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, the United Kingdom and the United States. Findings from the research include that there are 28 severely unaffordable major housing markets, including 13 in the United States, 5 in Australia and one in New Zealand and China.
Virtually all the severely unaffordable major housing markets covered in the Survey have restrictive land use regulation, usually urban containment policy. Urban containment seeks to severely limit or prohibit new housing development on and beyond the urban fringe. A typical strategy is to impose an "urban growth boundary" which is associated with higher land prices for land on which development is allowed. This leads to higher house prices, a lower standard of living and increased poverty. Housing affordability is likely to worsen even more unless there is regulatory reform that restores competitive land markets on the urban fringe.
In her impressive book, The Life and Death of Great American Cities, Jane Jacobs said "...a metropolitan economy, if it is working well, is constantly transforming many poor people into middle-class people..." Yet, urban containment policy has been associated with more expensive housing, which has lowered the standard of living, increased poverty and stunted economic growth.
Historically, the Median Multiple has been remarkably similar among six surveyed nations, with median house prices from 2.0 to 3.0 times median household incomes (Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States). Housing affordability remained generally within this range until the late 1980s or late 1990s in each of these nations (Figure 2).15 In recent decades, house prices have escalated far above household incomes in many parts of the world. In some metropolitan markets house prices have doubled, tripled or even quadrupled relative to household income.
Sydney is again Australia’s least affordable market, with a Median Multiple of 12.9, and ranks second worst overall, trailing Hong Kong. Melbourne has a Median Multiple of 9.9 and is the fifth least affordable major housing market internationally.
But what does this all mean for us living day to day down under?
It means despite living in the wide brown land that we are experiencing increased mortgage stress, tenant distress and urban containment restricting urban sprawl pushing house and rent prices up and up. Basically demand will continue to exceed supply and if this is not reversed or slowed, worsened housing affordability is likely.
Unless we beat the urban containment restrictions by reversing our increasingly larger and larger homes and instead begin going tiny and mobile.
Imagine a house with no fixed address and the ability to live debt-free, with utility bills as low as $10 a month. It’s not just a dream it’s a reality in many countries around the world and it’s a movement about to become the new alternative to decades of mortgage repayments here in Australia as well.
As a property investor, post-capitalist, minimalist and futurist I thought I would put the trend to the test and build and live in a tiny house myself as a form of an experiment and to get a feel for it’s validity as an option for tackling housing unaffordability here in Oz.
Why go tiny?
freedom from debt
moveable location and travel
minimal environmental impact
the opportunity to live simply and consume less.
For me it’s not about cramming my old life into a smaller space. It’s become a quest for life, expansion and freedom and been more about redesigning my life based around my values and a vision.
My experiment – initially for around a year, is rethinking living and trialling a way for people to see a new way to consume less as well as ponder how we as humans relate to the rest of the planet as many indigenous cultures have done for centuries before us.
I can’t wait to explore this wide brown land on wheels, house in tow. My hope upon returning is that I will have a case for this becoming a business or social enterprise opportunity to help mum and dad home owners buy an investment that will earn an income and in doing so provide affordable housing for someone in need and pay off their own mortgage sooner. A win-win as it should lessen tenant and mortagage distress.