Billions spent on housing affordability are making it worse: Productivity Commission

Eliminating legal barriers to home building and real estate investment generally is the only way to make adequate housing generally available. The basic problem is a shortage of housing and government regulations are the cause of that shortage

Federal folly is mentioned below but all levels of government are obstructive. Local governments, with their zoning regulations and reluctance to approve land subdivision, prevent new building and State governments do their best to discourage provision of rental accomodation by making life difficult for landlords

Sixteen billion dollars a year in government housing assistance could be better targeted, while nearly $3 billion spent helping first home buyers works against improving affordability, a Productivity Commission review has found.

Governments should commit to targets for new housing supply, improve Commonwealth Rent Assistance and address shortcomings in social housing, the review of the National Housing and Homelessness Agreement, released on Friday, recommended.

Productivity Commissioner Malcolm Roberts said the agreement, set up in 2018 to fund state and territory governments to improve access to housing, was ineffective.

“It does not foster collaboration between governments or hold governments to account,” Roberts said. “It is a funding contract, not a blueprint for reform.”

The report laid bare the housing affordability challenge for renters on low incomes who may not be in a position to buy a home, even with the help of government programs.

About two-thirds of low-income households spent more than 30 per cent of their income on rent in 2022. Another 20 per cent spend over half of their income on rent.

Many are left with little to spend on necessities, as about a fifth of low-income households have less than $250 left after paying their weekly rent.

Rates of rent stress are high for many recipients of Commonwealth Rent Assistance. More than eight in 10 households who receive rent assistance and either Austudy, Youth Allowance for students or JobSeeker are spending at least 30 per cent of their income on rent.

“Over the life of the NHHA, housing affordability has deteriorated for many people, especially people renting in the private market,” Roberts said. “The median low-income renter spends over a third (36 per cent) of their income on rent.”

Economists have long called for increased rent assistance, and the pressure is felt by homelessness services and social housing providers who are fielding more requests for help as rents rise.

The pandemic hit the property market, pushing up rents in regional areas when city dwellers made a tree or sea change, leaving local workers unable to find affordable rentals. New household formation has also increased rental demand in major cities.

Roberts said a new approach was needed to help those most in need into an affordable home.

“A two-track approach is needed to ease the pressure on low-income renters – the capacity for low-income renters to pay for housing needs to be improved and constraints on new housing supply need to be removed,” he said.

The $5.3 billion Commonwealth Rent Assistance program should be reviewed to improve its adequacy and targeting, the report found.

Fellow Productivity Commissioner Romlie Mokak said the safety net of homelessness services and social housing should be improved.

The report also called for a focus on Aboriginal and Torres Strait Islander housing.

“More support is needed for homelessness prevention and early intervention programs. As governments invest more in social housing, they should also test more flexible and timely ways to assist people,” Mokak said.

The report called on state and territory governments to commit to targets for new housing supply and accelerate planning reform.


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