Low cost housing

There have been quite a few articles recently (all behind subscription walls, alas) about low cost housing in Australia. The Sydney Morning Herald (in the Good Weekend last week) had an article about the fabulous Department of Housing apartments that still exist in Sydney’s Rocks area. Some with magnificent Harbour Bridge and Opera House views, and all right in the centre of the city. They are a relict of the days when the Maritime Authority bought up low cost housing near the city’s wharves, and nobody in their right mind wanted to live in such a working class area populated with wharfies anyway.

And then the AFR had a series of opinion pieces about how the entire blame for the high cost of housing in Australian cities was down to the State Labour government’s refusal to release land on city fringes.

We do have a housing crisis for low income workers. In my local council area, pretty much all the un- and low-skilled council workers come from Sydney’s Central Coast – a 90 minute  to two hour train ride away (on a good day). The turnover of staff is enormous, because as soon as they get a job where they live, they sensibly take it. The council can’t pay them more (to enable them to afford to live where they work), because pay is controlled by state wide local government awards, and rates are controlled that way too, so the council can’t charge local residents more either.

There are a few pockets of Department of Housing apartments and houses in the local area, but the waiting periods are enormous, and the extend of need is such that people with steady (but low paying) jobs rarely make it to the top of the waiting list.

But I don’t believe that the problem is only with supply. Releasing extra land on the city fringes wouldn’t solve my local problem. On the other hand, as eloquently explained by Flutey a while back, if you make housing the best investment since sliced bread (by giving it special capital gains tax, negative gearing and tax free (the family home) breaks) then the demand for housing will go up, and the person who hasn’t managed to get their foot on the housing ladder will be forced to pay an extortionate amount to live in a shoebox.

Prices are about supply and demand. In this case, the government policy decisions have increased demand far more than they have restricted supply. But the vast majority of people who are making or commenting on housing policy own houses. They are not part of the 25% of renters. So they assume that the best interests of the population are fairly coincident with the best interests of home owners.