The Parliamentary Committee of Inquiry into Affordable Housing

A state parliamentary committee, appointed to consider the status of housing affordability in Tasmania, has recently released its report. To quote from the report:

The Tasmanian community faces significant housing challenges. Market conditions have changed dramatically in recent years along with the introduction of short stay accommodation, leading to declining housing affordability and increased homelessness and the service system is under strain.

Although the housing market remains strong with regard to home values (particularly in Greater Hobart), private rents have also increased. This tightening in the rental market affects around 1 in 4 households, and a significant proportion of those households have lower incomes than home owners and are more likely to experience housing stress and insecurity.

Hobart is now the least affordable capital city in Australia when it comes to renting. A key concern is that a greater number of lower income Tasmanians will be forced from the private rental sector and into social and community housing, placing more pressure on a system already under strain. There is less accommodation than is required and the provision of social housing and support services is struggling with the increased demand.

The Committee, unsurprisingly, has recognised that there is a lack of suitable affordable housing in the state. A central issue confronting the committee was a simple one – demand exceeds supply. An increased demand for social housing without any substantive increase in supply has exacerbated the current housing crisis.

Increasing demand has come from a number of sources. Chief among them has been an increased student demand and the rise in demand for short stay accommodation. The increase in population has also contributed to demand and as such house prices and housing rentals have increased.

These factors have actually placed added pressure because they have caused a decrease in supply. Houses that otherwise could provide affordable housing have been taken off the market.

The increase in house prices and rentals has led to many who once could have afforded private accommodation to now find they have been priced out of the market, and have turned to the government for help.

However government schemes have not been able to keep up with demand. Band-aid schemes which go to assist potential buyers enter the market have simply led to more people chasing less stock, which simply drives up prices.

The government advised the Committee that it had on its books 12,504 housing stock, and 3,300 applicants seeking housing. All witnesses acknowledged that the level of housing stock was far too low, and was in fact falling behind the demand.

The State Government has in place an Affordable Housing Strategy, which is designed to provide more housing. It is a strategy spread over 10 years, and Action Plan 1 of the strategy covering the first 4 years has just concluded, with 1500 cases being resolved. Of these 351 have been households assisted into home ownership, 291 land lots have been released, 453 new dwellings have been delivered and 294 household have been assisted into private rentals.

The Government advised it has now embarked on Action Plan 2. It is obvious though that the present approach to address the supply side of the equation is nowhere near enough to meet the increasing demand and the Committee expressed concern that this was the case.

As a witness from REIT remarked:

It is the critical shortage of property that has caused prices to increase over the last 4 years.

The Committee found that the government’s long term plans to try and meet the demand have suffered from being too rigid, with a changing demographic requiring different forms of accommodation.

In many cases where there have been attempts to cater to address the supply side, proponents have fallen foul of the planning laws, and the Committee acknowledged that the planning laws need to be far more flexible than they presently are.

The lack of supply has been exacerbated by the lack of skilled tradespersons to carry out the work, and this has led to delays and increasing labour costs. It is simply another aspect of the supply-demand dynamic. Maintenance of existing stock was also falling behind.

One intriguing factor has been the fact that Commonwealth rental assistance is only eligible to those entering the private market, which only goes to increase pressure on the private housing stock.

The report of the Committee makes for sober reading. In all, the Committee made 61 recommendations, addressing the full gamut of issues raised with it. However, in our view, it is obvious that the real solution to the problem of affordable housing is to increase the supply, and to do that the government needs to be far more active at that end of the market.

The alternative is an increasing and unsatisfied demand, and that is not a good outcome at all – for anyone.