06 May Housing affordability – Danni Addison
Danni Addison is the Victorian CEO for the Urban Development Institute of Australia. She takes a look at housing affordability, if we have a problem, what it takes to get into home ownership and what we should be considering if we’re looking at making housing more affordable.
Kevin: Well, there’s so much talk about housing affordability. Do we really have a problem? Is it affordable or is it unaffordable in Australia? Stability, security, comfort, and control, now these are some of the reasons why Australians value home ownership so highly and why it’s so highly sought after.
Danni Addison is the Victorian CEO for the Urban Development Institute of Australia. She joins me now to look at this from a Victorian perspective, but also looking at it as to what it takes to get into home ownership and what we should be considering if we’re looking at making housing more affordable.
Danni, thank you very much for your time.
Danni: Hi, Kevin, how are you? Good to be with you.
Kevin: Yes. It’s always great talking to you, too.
So, is home ownership in Australia unaffordable in your view?
Danni: I don’t think it’s unaffordable overall. I think there are definitely supply issues in the market, and they’re concentrated mainly in our larger cities. In Melbourne in particular we’re building less new dwellings every year than we need to to keep up with population growth, and we’re also, unfortunately, under-delivering in some of the areas of the city and even regional Victoria where the demand is highest for properties.
So, it’s something that government needs to take seriously, and we hope they do. And it’s something they need to take seriously from the supply side as well as demand incentives like First-Home Owners Grants and other things.
Kevin: You mentioned in an article in Your Investment Property magazine that you felt that home ownership was a little bit restricted to the overly privileged. Do you strongly hold that view?
Danni: I hope that that’s not the case more broadly. My nervousness is that in the future that might be the case, especially as our lifestyle changes play more of a role in whether we buy housing or whether we choose locations to live that we might not be able to afford but can live there through rental agreements or other forms of entry into the market that we might see come in the future.
I think what people more and more are thinking about is not necessarily having the definition of their own wealth being attached to whether or not they own their own home. And that’s a generational shift. We have much more mobile millennials in our housing market who are really happy to rent for a longer period of time.
In Victoria, for example, the government has moved to change the length of leases to be longer, so that people are able to enter agreements with their landlords that are, say, five years’ long or two years’ long or even ten years’ long in some cases, where they can get some security of tenure around their living situation.
But it also offers an alternative to home ownership if that person is looking at different ways to build their own wealth or can’t afford to get into the market in where they want to live.
Kevin: Just on that point about rental properties, of course, investors have come in for a lot of criticism in recent times, and even being blamed for making housing unaffordable. Do you think we’re too afraid of investors? Do we read them the wrong way and look at them in the wrong light?
Danni: I think we absolutely do. Investors play a major role in the affordability of our rental market, in the availability of rental stock. If rental properties become scarce, then they become more expensive, particularly in our most livable suburbs and where they have the best access to transport.
They’re in high demand, these properties, and if we don’t have investors buying properties to put on to the rental market and then receiving appropriate yields from them, then we’d have a serious affordability issue at that entry point of the market.
Kevin: We talk about infrastructure and the importance to build the infrastructure, and of course, it becomes more expensive as we get urban sprawl, as we go out further. Is one of the answers that we should be looking at making our cities more dense, having more infill?
Danni: Where it is appropriate, absolutely. And there’s a lot of suburbs in Melbourne that are not as dense as they should be. Our suburbs are incredibly well serviced by transport, both major roads and rail infrastructure and trams in Melbourne, and a lot of the suburbs of Melbourne are not dense enough along those transport routes. And when I say not dense enough, I mean there is not enough housing taking advantage of the capacity that that transport enables.
So, really, there’s a strong case to be made that certain local government areas are taking a lot of capacity and building a lot of new housing around transport areas and others just aren’t at all, and often that comes down to local politics.
And until we see councils and the state government take more of a leadership role in terms of housing provision, we’re actually going to battle, I think, to get enough housing supply in our urban areas, which will then push up prices of existing housing and also limit the availability of housing for people who might want to live where they’ve always grown up or been to school, because there simply won’t be enough housing in those areas or it will be too expensive.
Kevin: Danni, great talking to you. Thank you very much. Danni is the Victorian CEO for the Urban Development Institute of Australia, and we thank you for your time, Danni.
Danni: My pleasure, thank you.