Just consider this for a moment: According to the Reserve Bank, it’s likely “housing supply has for a number of years been running ahead of what would normally be thought of as trends in demand”.
It looks like the laws of supply and demand have been repealed, capitalism has been upended and there are indeed faeries at the bottom of the garden – it simply doesn’t make sense that prices have been skyrocketing across the board if supply has been running ahead of demand.
In a speech this week, the author of the above quote, the RBA’s Assistant Governor (economic) Luci Ellis went to great lengths to explain what has not been normal about demand trends of late, starting with the surge in people moving out of their parents’ homes and share houses in search of space as the pandemic hit.
It is an interesting speech for anyone interested in some of the more intriguing nuts and bolts of the housing market, but it finishes as an uncharacteristically hollow document from Dr Ellis.
Not once in 3500 words did she mention the stampeding herd of elephants in the room – the critical shortage of public housing.
The speech was titled ‘Housing in the Endemic Phase’. Whatever else happened to housing in that phase, it further exacerbated our public and social housing catastrophe.
While ignoring the market’s most obvious failure, Dr Ellis concluded with what sounded like a resounding vote of approval for and confidence in the market’s many ways of adjusting.
Well, she was addressing the Urban Development Institute of Australia – the developers’ peak lobby group. Developers’ core interest is in achieving bigger profits from maximising prices, not helping those who can’t pay market rates.
Yes, changed internal migration flows during the pandemic are interesting – multi-year delays for public housing in Victoria, for simply decent housing, should be a lot more than “interesting”.
On the same day Dr Ellis delivered her speech, a NSW study showed the nationwide scarcity of social housing has meant people waiting as long as 10 years in some areas for a home.
“A study by the UNSW City Futures Research Centre has revealed a 42 per cent drop in the number of households allocated social housing in the past three decades,” the SMH reported.
“Meanwhile, the number of applicants with the greatest need has soared by almost 50 per cent in the three years to 2021.”
The track record of state and federal governments is damning – half-heartedly semi-outsourcing public and social housing, barely maintaining existing numbers of homes while population and demand have soared and real, take-home wages have fallen.
It’s another area where a change of government can change the nation.
Opportunity is knocking for the new federal Labor government, supported by Greens and independents, to form a grand coalition with the states to seriously tackle the crisis for the first time, to agree to jointly add tens of thousands of public and social homes each year, not over several years.
Within Dr Ellis’ speech, there were indications of some of the looming opportunity. Yes, the construction industry is running at capacity right now with supply chain and labour shortages, but that will ease as the present backlog is cleared.
As previously reported here but largely ignored elsewhere, Australia is hoping for a “soft landing” over the next couple of years. There is a strong chance we could have a mild recession instead.
It will take time to get a genuine national public housing taskforce operating. If we rush, governments might be ready to be building as the broader slowdown is felt.
It takes time to secure the land for many years in advance, beating the developers at their long-played game of land banking and perceiving where rezoning will occur.
It will take vision and commitment by like-minded governments along the east coast to agree on how this investment in the nation’s future can be made.
Tweet from @AustralianLabor
The housing policy Labor took to last weekend’s election was only a little better than the Liberals’. Now it is rapidly learning of the extent of the broader economic challenges we’re facing.
A new government makes it possible. A Prime Minister who proudly grew up in public housing could provide the leadership.
The need is there, so is the means – is there the will?
