The unacceptable reasons why affordable housing is unaffordable

Article published 19 August 2020

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SHORTAGES of social and affordable housing continue to increase and those shortages increasingly affect older people. Latest published figures (30 June 2018) show that there were 16,000 people over the age of 55 on the NSW social housing waiting list, representing 28 per cent of all applicants

The social and affordable rental housing gap in NSW in 2019 is estimated to be about 216,500 dwellings. By 2036, this will increase to 316,700 in NSW and to more than one million nationally if nothing is done.

Given these numbers, you would think that federal, state and territory governments are not spending enough on assistance.

But this is not the case.

They’re spending a lot on housing but mainly in a way that entrenches the private rental market, which for many renters is unaffordable. Those of working age are forced to live far away from their places of work. Many people are forced to share a house or an apartment.

Yet, the federal and NSW governments spend more than $7 billion annually on housing in NSW.

The NSW Department of Communities and Justice (DCJ) oversees social housing programs, and there’s no suggestion these are not worthy programs.

However, the Commonwealth Rent Assistance (CRA) scheme’s spending in NSW plus the state’s approximate share of negative gearing and the capital gains discount squarely support the private rental market, not renters or aspiring renters.

A report prepared for the NSW Community Housing Industry Council estimates that the cost of building enough social and affordable housing in NSW to meet the shortfall (316,700 units by 2036) would require about $3.5 billion annually.

So, meeting demand for social housing and significantly reducing homelessness in the process would cost half of what is spent in NSW now.

The difficulty in freeing up current government spending on housing and redirecting it into social and affordable housing initiatives is that so many investors (institutional and mum-and-dad) benefit from the current set-up.

Any government which disrupts this set-up would be courageous indeed.

The only alternative for governments is to spend more.

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