Tuesday, February 19, 2013

A new housing discourse for NSW Labor?

Last week NSW Labor leader John Robertson convened a Housing Summit, to hear from representatives of business, academia, local government, developers, unions and the community sector about problems in housing supply and affordability (the Tenants' Union was there, and gave a presentation on what we call the real housing supply problem: the lack of affordable rental housing for lower income households).

One of the questions of the summit was: do we need a new housing discourse?


According to many of the summit participants, the main theme of the new discourse has got to be 'density'. They say denser development – particularly in already built-up areas – will produce more housing, and make housing more affordable.

At the Brown Couch we're ambivalent about density. It's true that there are lots of nice flats and terrace houses out there, and that there's some very nice parts of town where flats and terrace houses predominate. But we've also taken too many phone calls from tenants of flats – some of them newly built – where they can hear their neighbour's every movement, and presumably can be heard by their neighbours too. It seems to us that this may not be so much of a problem for higher-income residents who have the cash and the cachet to access all the public spaces of the city and their increasingly commercialised entertainments – but it looms large for those who must look for their recreation at home.

But density is good for affordability – or is it? At first glance, getting more of something (housing) out of a given resource (land) seems consistent with getting it cheaper... but it also means you get less in each unit of housing, and that's a bit of a cheat on affordability. And let's face it, density has been a 'new' discourse for at least 20 years, and over that period our affordability problems have gotten worse. If greater density is to be achieved by restricting development on greenfield sites, and allowing some sites that already have single units of housing to be redeveloped with a multiple of units, you can see how that could push up the price of established land and housing.

And that's the thing: the decisions that push up the price of land and housing. At the risk of never again being invited to a Labor summit, consider the current inquiry of the ICAC into the allegedly corrupt decisions of a former Minister to allow certain land to be used for coal mining – land owned by another Member of Parliament, who stood to reap a windfall of many millions of dollars from the increase in its value.

Naturally, attention has been focused on the allegation of corruption in the decision about what the land could be used for. But really, even if the decision was squeaky clean, the delivery of a windfall to an individual property owner – who has done nothing to earn the increase in value – stinks.

And these windfalls are delivered not just by the decisions of governments, but by 'decisions' of the community. Where a community grows and develops and changes the way in which it arranges its various activities, such that some locations become more sought after and their values increases, those increases come from the growth and development of the community, not the work, effort or skill of the property owner.

Increases in established house prices are unearned wealth. But so many property owners seem to think that they are justified in keeping – or that they have even earned – all the gains. The most that can be said for them is that they were smart to choose to be born at an earlier point in time when they could better afford to buy the land in question.

Here's where we really need a new discourse: a discourse against individual accumulation of unearned wealth from housing; a discourse for returning a larger portion of unearned wealth, via tax, to the community.

4 comments:

  1. 'Increases in established house prices are unearned wealth'

    Absolutely. And Andrew Charlton made the point very well in his speech at the beginning by describing increases in housing prices as 'a transfer, not a creation' of wealth.

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  2. Empower tenants and turn public housing from being seen as a liability into an asset in any neighbourhood. http://bit.ly/YD3L01

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  3. Hi Liam

    Yes, a point well-made: a transfer of wealth from younger property purchasers to older property-owners.

    It casts a different light on another theme of some summit participants: make super accounts available for use in home purchase. In other words: let's transfer even the retirement savings of the young to the old.

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  4. This was an excellent article and I am heartened to read the comments posted.

    The writings of Henry George such as Progress & Poverty & The Science of Political Economy both published 1932 are more valid today as we enter a global depression that will be worse than the depression of the 30's. 80 years later and same problems....but potentially more catastrophic given the integration of the "Military Industrial Complex" as an economic driving force......

    I think the quote by the seemingly itinerant Jesus that "the poor will always be among you" had the "whilst the predators, speculators,bankers & lawyers are above you" bit edited from the full quote !

    Re housing "density" - when the majority of share housing ads refer to 2-3 & up to 4 people sharing a single room in a 2 bedroom unit as opposed to 3 or 4 people (formerly called a family )sharing a house it becomes apparent the demographics have changed dramatically for the worse for the tenant and gratuitously better for the neo slum lords !

    Eric

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