Tuesday, September 27, 2005

Show me the money: financing more affordable housing

Some solid policy suggestions at last...

Show me the money: financing more affordable housing

Here's a link direct to the policy Word document on the web:

Show me the money: financing more affordable housing (Word)

The main barrier to progress appears to be that housing continues to lie off-centre from the main economic, social and political concerns of governments at all levels. In part, this involves an inertial lag effect. For most of the post-War period, the vast majority of Australians have been well housed by historical and international standards. Housing, labour and financial markets worked together to ensure that housing standards were adequate or better for perhaps 85 per cent of the population. A similar proportion of the population became home owners at some time during their lives. The fact that this dominant housing career and expectation has broken down over the past 20 years appears to have eluded many policy makers, who still look to the housing market operating within conventional parameters to meet housing needs for all but a tiny residualised group in the population.

It is this dominant view – along with the tendency to uncritically celebrate house price inflation as a sign of a healthy economy and domestic world – that needs to be taken head on by people concerned with both Australia’s long term economic sustainability and the immediate social problems of declining housing affordability for an increasing number of Australians.

Finally, there appear to be some promising signs on the policy horizon. It is true that the current Federal Government has done little to advance matters here. The First Home Owners Scheme was introduced in mid 2000, not as an explicit housing affordability measure, but to offset the one-off cost impacts of the introduction of the goods and services tax. Nevertheless, given its timing, FHOS almost certainly reinforced the underlying speculative boom conditions in the housing market, without improving affordability for those most in need of assistance (on both points, see Productivity Commission [2004], pp. xix-xx; pp. 215-221). The government’s less than enthusiastic receipt of the recommendations of the Productivity Commission’s final report on First Home Ownership and silence on housing matters to date in the run up to the Federal Election suggest that this situation is not about to change soon.

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