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Politics at heart of housing crisis


Dr Lynne Armitage
Dr Lynne Armitage: "We need governments to release more land and offer it free or at subsidised rates."

by Dr Lynne Armitage

Australia’s housing crisis isn’t the fault of dodgy developers and greedy landlords, it’s a product of politics and poor leadership.

It might be popular to point fingers at developers and landlords, but this crisis, and it is indeed a crisis, is a socio-political issue that it is up to governments to solve.

Developers aren’t the wicked, greedy sorts they are often made out to be - they are creating a product the same as any other sector of manufacturing. And we don’t expect other businesses to make a loss to solve a policy problem.

The same is true of landlords - one of Australia’s problems is that there is no institutionalised housing supply because our residential leasing market has evolved to be one dominated by household or ‘mum and dad’ investors.

Their concern is looking after their family. They will sell to realise a capital gain if the need arises, and if they can make more money out of tenants in a tight rental market to support their investment they will.

This is all perfectly normal economic behaviour.

There are two options here that governments should seriously consider if they want to make a real difference - the release of more land for housing and increased support from government for the development sector.

The huge price of land as a result of the shortage means it simply isn’t economical for the private sector to deliver affordable housing.

Institutional investors and developers simply can’t make a return with land at such high prices unless they service the very top end of the market. And that does nothing to help housing affordability.

We need governments to release more land and offer it free or at subsidised rates in recognition of this pressing and complex social issue.

The whole housing affordability issue needs to be recognised as a huge social problem that is inhibited by political and economic complexities and also lack of political will.

Part of the problem with releasing more land or providing Crown Land at subsidised rates is the perception that it’s essentially handing ‘freebies’ to wealthy developers.

They often don’t do a lot to help themselves in that regard, I know, and that has created a sense of deep mistrust in the industry from the public, but it is a way I see as being a potential solution to this very difficult problem.

Because of the complexity of the development process and the very large capital that has to be committed before there’s any return, developers manage their risk really effectively.

Everybody likes to poke a stick at them but there are huge problems with planning processes that are so slow and uncertain and with the short political cycles we have there’s also no consistency over time.

A failure of leadership across all three levels of government is also a significant factor, with Federal, State and Local Governments happy to pass the buck among each other rather than wear the political risk of making potentially unpopular decisions.

No one can say who is leading the battle against the huge issue of homelessness and the whole gamut of housing issues. It’s all bits and pieces and there’s no joined-up writing.

This is like a war – we need all the resources we can bring and some strong leadership to solve it effectively.

Dr Lynne Armitage is an Associate Professor of Sustainable Development at Bond University’s Faculty of Society and Design.

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