Factchecking the fourth estate

Media reporting of housing issues is a mixed bag. It certainly has gotten much better over time, and journalists and readers are becoming more educated. Over the last week there have been three instances we thought it was worth picking up on.

It was incredibly disappointing that in the same week that Choice, National Shelter and National Association of Tenants Organisations launched 'Disrupted' with excellent coverage across the nation, both of Sydney's main papers had a crack at our public housing tenants. And then the ABC dropped a clanger on Sunday.

The Sydney Morning Herald

Nine's Sydney Morning Herald

First on Tuesday, the Sydney Morning Herald ran with a story based on an Audit Office report which amongst many other elements found that the repairs bill in public housing had risen to $413million in the 2017-18 year.

The story opens with the line; "Cleaning up rubbish when tenants move out and maintaining ageing properties are pushing up social housing bills, with new figures showing expenses have soared 50 per cent in four years."

Does the claim stack up?

First the costs. They certainly have increased over the last few years. It is noticeable that since the current maintenance contracts started in April 2016 the costs have ballooned.

The Audit Office are pretty sharp, so they noticed the increase in costs, asked the Land and Housing Corporation for an explanation.From the report

LAHC advise the following main reasons for higher expenses:
• more calls from tenants requesting maintenance as they now have direct access to the contractors’ call centres
• reduced call response time
• regular pop-up events with contractors on hand at social housing sites
• age of residential portfolio and the increasing costs to maintain
• higher costs due to damage and rubbish removal from properties when they become vacant.

So LAHC advised four other reasons for increased expenses before anything related to tenants potentially acting to create repairs costs. All four also have an element which can reasonably be argued to have increased costs since the contracts started. The most interesting is the apparent latent demand from tenants needing repairs done - the claim from LAHC is that they were not previously calling, or perhaps their calls not being picked up. This suggests that the maintenance bill should actually have been much higher in previous years, and what we see now is in part a catch up. This makes a lot of sense given NSW's infamous and ongoing shortfall in maintenance budget.

The higher costs due to damage and rubbish removal on the other hand doesn't necessarily follow the same path - is LAHC claiming tenants are causing more damage and leaving behind more rubbish? It appears that the Audit Office accepted these claims without any evidence, or at least the evidence is not included in the report.

It would have been worth asking for instance, if the damage and rubbish removal costs are before or after seeking the tenants contribution. These are ordinarily costs that the tenants' would be held liable for and money sought to be repaid. It is pretty important to check whether this is the remainder, or if in fact it is the gross amount - before tenants have paid any money back.

The Herald journalist also accepted the claim without question, and in our opinion unacceptably, promoted this last point to be the leading cause of the increase.

This claim does not stack up. It vilifies public housing tenants and the Sydney Morning Herald needs to take responsibility for its role in boosting a spurious claim and taking an unfair and unevidenced swing at public housing tenants instead of scrutinising the claim itself.

The Daily Telegraph
Perhaps vexed by the Herald stealing its traditional patch of giving oxygen to baseless claims about repairs, the Telegraph stole back attention on Friday with this headline.

Murdoch's Daily Telegraph

The article is really talking about a trial in 20  units  which will run over the next three years. Check out what we know about that here.

What we're more interested in is the headline and opening paragraphs. This is entirely misleading. First, applicants will not have to 'get a job'. It's not even a possible outcome of the trial. Even the most feverish anti-tenant commentators acknowledge there are many people for whom that's just not appropriate.

Second, no public housing homes are funded by tax-payers. As we've said before: not one dollar of money raised from taxpayers is paid to public housing tenants or otherwise credited to their rent accounts. Not one dollar. Tenants pay money to FACS, not the other way around.

This claim was not only untrue, but also needlessly mean and irresponsible. It has caused immense distress amongst public housing tenants who are now afraid that though they may be old, living with disabilities or caring full time for dependants or children they will be forced to either find employment or be forced from their home

The ABC does it better

Oh Aunty, why are you in this list? Okay, they didn't engage in tenant-bashing, but they did pen this article on renting reform in Queensland (which sounds like it is going very well indeed - NSW is really starting to look left behind). 

But the article originally included this tidbit.
 "Last year, more Australians bought their seventh home than those who bought their first." Sounds legit - we all know that buying property is easy if you lay off the avocado. But...

The claim really doesn't stack up. Over the last year 115000 bought their first property to live in, according to the ABS (http://www.abs.gov.au/.../Detai.../5609.0September%202018...). And in total the ATO reckons there were 20,000 people who owned 6 or more properties in 2015-16 (the latest data available. Check it here: https://www.ato.gov.au/.../taxation-statistics-2015-16/)

While the property market is changing and we are seeing more landlords consolidating the number of properties they own is changing, it is very unlikely to have changed so dramatically in just two years. The number of Australian residents who are landlord (or more specifically, are disclosing rental income) has grown from 7.3% of the population in 2005-06 to 8.7% in 2015-16. People receiving rental income from 6 or more properties is almost literally still the domain of the 1% - from 0.06% of the population in 2005-06 to 0.08% in 2015-16.

What may have happened is that someone looked at the 20,000 people who owned 6 or more properties and added all their properties up - collectively, they own more than 120,000 properties. This is higher than the number of people who bought their first property - but this is not the claim that was made, and doesn't tell us much anyway since they didn't all buy their properties in just the last year.


To their credit the ABC corrected the line to show the source of their information:
 

The Minister has not yet disclosed where he got his figures from, or whether they might be mistaken. Why would the minister want to draw attention to this? And why are we, with a clear interest in better renting laws calling attention to it?

It is for two reasons. First, because it is an attempt to set up greedy corporate landlords as a bogeyman to avoid dealing with the trickier issue that in Australia we have created millions of people as small-holding landlords who only have one or two properties. In many cases quite unwillingly, these landlords are being used to justify not implementing the necessary reforms for a fair renting system. It is much easier to set up a bogeyman - but in doing so we may end up implementing policy proposals which avoid dealing with the issues. One good example of this is a semi-frequent call to limit negative gearing to one property per person. 

It also furthers the cultural idea that buying property is a good thing to do. Pushing back on that idea may be quite subversive in property-obsessed Australia, but it is necessary to get buying property back to it being at least a neutral endeavour.

By the way, people don't buy homes. They buy property. People make homes by living in them. Fact check that!

Update: The claim that more people bought their 7th property than their first has also been comprehensively factchecked by both The Conversation and The New Daily and found to be lacking by them as well. The ABC has deleted the reference entirely from the original article.

FACS: Alternative waiting list figure

On 20 March 2018 NSW Family and Community Services (FACS) Housing placed on their website updated information about waiting lists, which is now current to 30 June 2017.

They call it the 'Social Housing Expected Waiting Times dashboard' and the link is here.

The dashboard does not show historical figures, but the Productivity Commission's Report on Government Services shows the waiting list at 30 June 2017 across New South Wales has dropped significantly.

Source: Steering Committee for the Review of Government Service Provision, 'Report on government services 2018', Productivity Commission, 23/1/18, Table 18A.5. Figures for 2012 to 2012 from previous reports. (You can view Table 18A.5 here.) This data excludes people who have applied for community housing only. Most applicants in NSW may be offered either community housing or public housing.

This news is too good to be true. As mentioned in our blog here, figures for 30 June 2017 exclude 'suspended applicants'. Suspended applicants won't be offered properties during suspension, but unlike closed applications, if their suspension ends their waiting time will be counted from the original registration of their application.

One way of thinking of the difference is that suspended applicants are assumed to want and be eligible for social housing, but there is currently a reason not to offer them a property. Closed applicants are assumed not to want or be eligible for public housing. For more detail see the 'Managing the NSW Housing Register Policy' page.

FACS Housing's dashboard has separated out 'General' and 'Priority' applications and also has made a notation that their figure for 30 June 2017 excludes 'suspended' applications and, accordingly, 'this data is not strictly comparable to published data in previous years'. Check here.

FACS Housing kindly has supplied the number of suspended applications at 30 June 2017. These stand at 5,499.

So, the total number of applicants on the waiting list at 30 June 2017 arising out of the additional information supplied by FACS Housing = 'General' + 'Priority' + 'Suspended' = 51,453 + 4,496 + 5,499 = 61,448.

The alternative waiting list figure at 30 June 2017 is 61,448.

We now are able to compare waiting list figures from previous years.

Sources: For Productivity Commission data, see foot of previous histogram. For FACS Housing data for 30 June 2017, check here and for 30 June 2016, check here. For figures for 30 June 2012 to 30 June 2015, check similar links to the last one. The 2017 figures shown above for both agencies include the 5,499 suspended applications. We have added these because suspended applications were included in previous years.

There has been a steady increase in waiting list numbers over the last five years. Indeed, FACS Housing's waiting list figures show an increase of just over 10 per cent in this period. This does not bode well for the future. Check out Nigel Gladstone’s recent article in The Sydney Morning Herald here on why more people are joining a decade-long wait for public housing in a queue that stretches past 55,000 people ... we say past 60,000 people.

Postscript

It is unclear why the waiting list figures published in Table 18A.5 of the Productivity Commission's Report on Government Services (51,571) and those now published by FACS Housing (55,949) vary. Both exclude the number of suspended applications and both come from the same original source. Indeed, this has been the story for the last few years, although not so pronounced.

Further notations in Note (d) of Table 18A.5 here may tell some of the story:

- waitlist data should be used with caution as over counting may stem from the use of a single integrated social housing waiting list (since 2010) for public housing and SOMIH (which includes those who have also applied for community housing, but not applicants for community housing only).

- fewer waitlist applications were closed in 2015-16 because a review and redesign of the annual Housing Eligibility Review (HER) process delayed its completion until 2016-17. Data for 2016-17 may not be comparable to 2015-16 due to outstanding data remediation at that time.

FACS and figures: Delving behind the figures for the waiting list and new social housing dwellings

Post authored by Robert Mowbray, Policy Officer - Older Tenants.

On Monday, 5 March 2018 the Minister for Family and Community Services, Pru Goward, sent out a media release

Hundreds of people on the social housing waiting list and hundreds more will have access to brand new homes as the NSW Government continues to deliver on its promise to build more housing through the sale of properties in Millers Point. ... We are assisting vulnerable people by building new social housing. ... To date, the Government has completed construction on 775 new homes with a further 372 under construction ... funded through the sales program so far.

Let’s delve behind the figures for the waiting list ... and other vulnerable people, and for new social housing dwellings in this State.

Waiting list

At 30 June 2017 the social housing waiting list in New South Wales remains in excess of 50,000 applicants.

Source: Steering Committee for the Review of Government Service Provision, 'Report on government services 2018', Productivity Commission, 23/1/18, Table 18A.5. Figures for 2008 to 2012 from previous reports. (You can view Table 18A.5 here.)

The seriousness of this figure is reinforced by the fact that specialist homelessness services provided support to just under 75,000 people in New South Wales in 2016-17. (View Table CLIENTS.1 here.)

And, indeed, the recently released 2016 ABS Census ‘Estimating homelessness 2016’ data shows that the number of people who are homeless in New South Wales has soared by more than one third between the 2011 and 2016 censuses. On Census day in 2016 they numbered 37,715 people. You can check this out here. You can read more about this here.

In a recent article in The Conversation, Emeritus Professor Gavin Wood and others of RMIT University, assert that ‘public housing is the most important factor in preventing homelessness among vulnerable people’ and, further, ‘the empirical evidence also suggests that community housing fails to provide the same protection for people at risk of homelessness.’ Read their article here.

Yes, the Minister is correct in saying there are hundreds of people on the social housing waiting list. Indeed, over the last ten years this figure has been increasing. However, the figure at 30 June 2017 represents a decrease of 7,460 (12.6%) on the previous year’s. Note (d) in Table 18A.5 (referred to in the above figure) states that ‘data for 2016-17 exclude suspended applicants’. So what is meant by suspending an application? You will find the answer in a policy document here . FACS or a community housing provider participating in Housing Pathways may suspend (make non-active) an application for social housing or transfer for many reasons, including:

• Pending receipt of further information or proof of social housing eligibility or housing requirements.
• If a client is temporarily unable to accept an offer of accommodation because of:
  - being currently in prison;
  - illness, hospitalisation or holidays;
  - caring for a family member.

• If a client has a debt from a former social housing tenancy of more than $500
• If the client applying for a transfer has rental arrears, nuisance and annoyance breaches or any other tenancy breaches that are currently under investigation.

So, it appears that the reduction in the number of applicants on the waiting list in New South Wales over the last year may be due primarily to an ‘administrative cull’.

Other vulnerable people

No-one would disagree with the assertion that a very large number of people on the housing waiting list in New South Wales are vulnerable, given the state of the housing market.

But, let’s not forget the residents of Millers Point who were forced to re-locate.

Family and Community Services Housing kindly has provided the following information. At the beginning of the process there were 579 tenant and household members (in 399 tenancies) to be relocated. At 8 February 2018, 578 tenant and household members have either vacated or are committed to moving. One tenant is refusing to move. There are no tenancies remaining in the Sirius Building. During the course of the forced relocations, the sales of 28 properties in Millers Point were deferred. These were set aside for some of the remaining tenants and household members in November 2015. Of these, 21 are occupied by 19 tenancies.

The impact on the residents of Millers Point and the Sirius building who have been relocated has been traumatic for many. Their experiences have been documented by Professor Alan Morris in a report entitled ‘A contemporary forced urban removal: The displacement of public housing residents from Millers Point, Dawes Point and the Sirius Building by the New South Wales Government’, published by Shelter NSW here. Also, you may read Professor Morris's article called '"It was like leaving your family": Gentrification and the impacts of displacement on public housing tenants in inner-Sydney' in the Australian Journal of Social Issues here . In this article, Professor Morris places the events at Millers Point in a broader context. Watch this space for Professor Morris's forthcoming book with a similar title.

New dwellings

To meet such a massive need for social housing, it is worth asking whether there has been an increase in the number of such dwellings across New South Wales over the last three years.

We start to obtain a picture by looking at the Productivity Commission's 'Report on Government Services 2018' released in January 2018. Here we find the latest figures on the number of social housing dwellings across Australia. You can check these here . Table 18A.3 clearly shows that there was a net decrease in public housing stock in the three years to 30 June 2017 (latest published figures) by a figure of 584 dwellings.

Productivity Commission's 'Report on Government Services’ and other government data are not transparent about increases and what is affordable, as distinct from social housing.

Source: Steering Committee for the Review of Government Service Provision, 'Report on government services 2018', Productivity Commission, 23/1/18, Table 18A.3. See Note (d) for correction to figure for 2011.

Over the same period, there has been net increase in community housing dwellings of 2,754 (after deducting National Rental Affordability Scheme tenancy rental dwellings).

Source: Steering Committee for the Review of Government Service Provision, 'Report on government services 2018', Productivity Commission, 23/1/18, Table 18A.3. Community housing data include affordable housing. However, this table has been adjusted to omit National Rental Affordability Scheme community housing tenancy rental dwellings for 2016 and 2017, because these were omitted for previous years (see Note (d). Other affordable housing that is included is properties transferred over several years from the Nation Building Economic Stimulus Program.

A key question is how many public housing dwellings were transferred to community housing between 30 June 2014 and 30 June 2017. The Productivity Commission's report does not provide figures on the number of social housing dwellings transferred. Family and Community Services Housing advises that the number of properties transferred from public housing to community housing between 1 July 2014 and 30 June 2017 was 679. This leaves us with an increase in community housing dwellings over the three year period of 2,075. Part of the increase in community housing stock in recent years comes from the Nation Building Economic Stimulus Program (NBESP). There are no published figures here.

So, there appears to be an increase in public housing of 95 dwellings, if we don’t count transfers to community housing.

Sales of Millers Point properties to 22 February 2018 number 172 (check here) and total $527.4 million (plus stamp duty of a further $28.3 million). You will find information about the public housing properties built with the proceeds of these sales here. 775 dwellings have been built up to January 2018, with another 372 under construction. To calculate the net gain from these proceeds, you will need to subtract 371 dwellings (399 less 28 retained dwellings) which represent the stock being lost in Millers Point.

Also, the number of public housing dwellings will have been reduced by properties demolished to allow for the new construction, and any dwellings removed from the stock as part of Communities Plus. These figures are unknown.

It is not unreasonable to assume that the need for social housing increases at least at the same rate as the population. (Indeed, in times of high housing stress, it should be greater) The rate of increase in social housing stock over the last three financial years is only a third of the rate of population growth in NSW.

Source: Population data from ABS at Jun 2014 and Jun 2017. Former viewed at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/allprimarymainfeatures/54A5E977BB10644CCA257E1300775B9B?opendocument Latter viewed at: http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/3101.0Main+Features1Jun%202017?OpenDocument

The construction of new dwellings from the proceeds of sales of Millers Point properties represents small growth only. Yes, we have seen a steady, but modest stream of new supply. So, what of the future?

There is slim hope that the Sirius building can be retained as social housing. In mid-February of this year, the Tenants’ Union of NSW forwarded a submission to the NSW Planning and Environment arguing that future use of the Sirius site incorporate significant proportions of social and affordable housing, in addition to any private ownership of residential dwellings that may be permitted within the building to help give it a viable financial future. You may read our submission on their website here.

It is disappointing that sales of public housing are used to give very modest increases in stock at a time when the NSW Government ran a budget with a substantial surplus and, accordingly, had available to it substantial, alternative funds for its building program. What is also noteworthy was the lack of consultation before the decision to sell in Miller's Point.

Let’s hope that the future is brighter. On 14 August 2017, the Minister Goward announced the successful tenderer for the Ivanhoe Estate at Macquarie Park where social housing dwellings will increase by more than three-fold – from 259 social to 950 social and 128 affordable dwellings. (You can read about this in a media release here.) The NSW Government is pressing ahead with its Social and Affordable Housing Fund (SAHF) as ‘an innovative approach to the way we are delivering social and affordable housing in NSW’. You may read more about it here. On 12 September 2017, Premier Gladys Berejiklian and Minister Goward announced that the Government had now committed to a target of 3,400 new social and affordable dwellings through this fund, following 2,200 announced in March 2017. Check here. On 7 Feb 2018 the NSW Government officially opened the Expressions of Interest for the second phase of its Social and Affordable Housing Fund (SAHF), which will deliver up to 1,200 additional social and affordable homes. In this phase, at least 70% are to be social housing. Check here.

Uncertain futures - Renters in the Census 2016

The second round of the 2016 Census was released last week, and amongst employment, education and travel statistics there's the question of whether respondents had moved in the previous few years.

We took a look at this question across different tenure types. It probably comes as no surprise that renters in the private sector were nearly 3 times more likely to have moved in the last year as any other tenure type. In fact, more than a third of renters in New South Wales moved home in the last year.

In the last 5 years, more than three quarters of renting households had changed. This is entirely consistent with findings included in our latest Rent Tracker about the churn of rental bonds in NSW.

The story continues for people aged 60 years and over:

People who may particularly need to remain in a single home are, because they are in the private rental sector, three times as likely to have moved in just the previous year as any other tenure type. There were about 136,000 tenants aged 60 or over at the Census, meaning 23,000 had moved in the last year, and a further 44,000 in the last five.

This level of insecurity is unsustainable. Previously, people who were unable to purchase their own home in order to have housing stability and affordability in retirement would be able to rely on social housing. As above, movement in social housing is fairly comparable to owner occupiers, but years of under investment has meant it is reaching historically low levels.

As people are increasingly renting into retirement, change is needed to ensure private renting is stable, livable and affordable - primarily, the removal of unfair evictions.

Renting with pets: a canary in the coal mine

To keep, or not to keep a pet? Ever since we raised the issue in our contribution to the review of NSW renting laws, debate has raged about whether this should be a decision for investors or homemakers to make. Unless you've got a particular love for, or an aversion to animals yourself, the side you come down on will perhaps be influenced by whether you spend your time talking to landlords or tenants.

Our views on this issue have been clearly and firmly put, and are a matter of public record. Today we're going to step back a little to explore what this discussion tells us about the state of our housing market. Our conclusion is that the "renting with pets" debate is a study in all that is wrong with our housing system, and a clear indicator of why it needs to change.

There are two stories to tell here. The first is how the private rental market has become the long-term landing place for a growing number of Australians looking to establish a new home, with limited prospects for debt-free home-ownership in the lifetimes of many. The second is how the residential property market remains dominated by small-time investors who are not motivated by the needs of householders, nor any broad sense of social responsibility, but by capital gains.

In New South Wales, there were 83,870 more rented dwellings at the 2016 Census than there were in 2011. Compare this to owner-occupied dwellings, which grew by 35,362 over the same period - with 19,649 more owned outright, and 15,713 more owned with a mortgage. The number of unoccupied dwellings grew by 19,403, which means any new dwelling built in the last five years, or established dwelling that changed hands during that time, is more likely to have become a rented home than anything else.

Of the 2.15 million renters in New South Wales at the Census, almost 90% were in the private rental market relying on so-called "mum and dad" investors for a place to call home. That's up from about 83% in 2011. The lion's share of renters are aged between 20 and 40, and a quarter are aged between 40 and 65. 41% of renter households are families with children, making them the single largest group of renters, while 20% are couples making a home together. 27% of renters are single and living alone, and 9% are sharing with others. Many would like to bring a pet into their homes.

Analysis from the 2011 Census confirmed that a growing number of households are renting for ten years or longer - not necessarily in the same home - and we expect to see this pattern continue as academics and researchers crunch the 2016 data. The proportion of dwellings that are owner-occupied is in slow decline, but those that are rented is rising more sharply, showing that fewer renters are now exiting the market to take on home ownership.

Critically, the number of people taking on debt to achieve home ownership has tapered off quite considerably. The growth of homes owned with a mortgage has slowed in each Census period since 2001. Compared to rented dwellings, for which that sharp rise has been recorded, this growth has been particularly slow in the last five years.

The number of homes owned outright has recorded similarly slow growth, which provides an ominous sign for the growing ranks of long-term renter households - even if you do manage to buy a home some day, chances are you'll never pay it off. In a nation that has defined itself as egalitarian and propertied, that's a source of frustration in its own right. Add the lack of agency Australia's renter households have over basic questions such as whether to plant a tree, paint a wall, or keep a pet, and it's easy to see why the "renting with pets" issue continues to flare up. For those who would write these frustrations off as mere indulgence, bear in mind that for the large numbers of tenants who are grown-up, pursuing long-term relationships and raising families in their rented homes they are simply the issues of the day. In another ten or fifteen years from now we may well be wondering why our aged-care and retirement systems - designed with a home-owning population in mind - have simply collapsed in a heap around us, but for now the "renting with pets" debate is a clear sign that all is not well and those most affected are not going to forget it anytime soon.

On the other side of this equation are our landlords, who by definition do not find themselves in the position of having "missed out" on property ownership. It's a little harder to get a handle on them, but we can use statistics from the Australian Tax Office to paint ourselves a picture. The last data we have available is from the 2014/15 financial year, and it tells us that the vast majority of Australia's tax-paying landlords own only a single rental property or two.

They're mostly one-off or small-time investors, "mums and dads" who are more interested in property for its capacity to generate wealth than providing homes for families. They'll hang onto a property for maybe five years or so then sell it, banking the gains or putting them towards their next investment. For the most part, Australian landlords are not interested in building large portfolios, and they don't want to concern themselves with the day-to-day workings of property investment. They tend not to engage with things like renting laws, tribunal procedures, or tenants' rights unless they have to. Many are happy to ignore these aspects of investment altogether, handing them all over to real estate agents who know only too well they won't have anyone looking over their shoulder as long as the rent rolls in and the outgoings stay under control.

Because they're not building economies of scale, landlords tend to stick to a simple and rigid formula. The tax data also shows that while they're holding property, almost two-thirds of Australia's landlords are operating at a loss.

They do this because they can count their investment losses against non-investment income, such as salaries and wages, for income tax purposes. By running at a loss, landlords can reduce their day-to-day tax liabilities, masking the expense of holding property. They also expect property to go up in value, providing tax-discounted windfalls when they sell. In a sense they're gambling - losing a little money today in the hope of making it all back and more in the future, and our tax system encourages this through negative gearing and capital gains tax discounts. But in the meantime the majority of Australia's landlords are still running at a loss, which makes them highly sensitive to unanticipated expenses.

For many, this sensitivity is built into their investment strategy, such that they will be overly concerned with the type of household they will rent their property to - and just as importantly, who they wont. Tenants with pets are seen as a risk, even though they are clearly liable under renting laws for any damage their pets might cause. Our renting laws are less clear on whether a landlord can over-rule a tenant's decision to keep a pet, but many take this as a given. It is common practice for tenancy agreements to include a "no pets" clause at the insistence of the landlord or their agent.

The "pets and renting" debate helps us identify key changes we need to make to our inequitable housing system in order that it may provide greater equality of experience. At the federal level we need to rethink the way property is taxed, and find ways to foster a view of investment that delivers homes for families rather than just bricks and mortar. At the state level we need to revisit renting laws, and give tenants greater agency over the decisions they may make, and the responsibilities they take on, as householders.

Australia's 10 million spare bedrooms

This morning The Guardian published an article using recent data released from the Australian Institute of Health and Welfare. It was a good piece, but it had a somewhat misleading headline. The Brown Couch's founder had this to say:

Badly misleading headline (on a decent article). Social housing vacancy rate is actually 3 per cent. https://t.co/01sVqLDDH7

— Chris Martin (@dr_chris_martin) July 20, 2017

If the vacancy rate in public housing is only 3% what was the headline trying to say? They were measuring the use of bedrooms in public housing and noting that one in six bedrooms is "under-utilised."

As it happens, this year the Census data introduced a specific measure of "Housing Suitability" which measures whether a household has spare bedrooms, or needs extra. Let's take a look at the state of bedroom use.

Not the typical use of a bed

The data shows about 75% of our spare bedrooms are in owner occupied housing. It isn't just that a majority of Australian homes are owner-occupied - 87% of homes owned outright have at least one spare bedroom, and almost 60% have two or more. Mortgaged homes are slightly better, as only 77% of these have a spare bedroom. 41% have two spare rooms or more.

Australia wide, the story is the same. There are more than 10 million spare bedrooms in Australia. Around two thirds of our mortgaged homes have spare rooms, as do 80% of homes that are owned outright.

Social housing looks very different. Not only do less than a third of tenanted social housing properties have a spare room, there are more in this tenure type that are mildly overcrowded. 2 in every 5 social housing dwellings are in need of at least one extra bedroom.


Renters both in the private rental market and social housing are much better at utilising their bedrooms than owner-occupiers. There are different reasons for this - where private renters are pushed to efficiency by price signals and competition (ie you generally only rent as many rooms as you need, unless you're either bonkers or rich), social housing renters are pushed by the allocation strategies of their landlords. Social housing tenants who do have a "spare" bedroom do so because they need it, and are entitled to it under the policies of their provider. For example, households may be given an additional room for a live-in carer, for family members who reside with them part-time, or for cultural reasons.

Of course, the other major reason we hear of social housing tenants ending up with a spare bedroom is that their allocation is not really suited to their needs, or their needs have changed since their allocation  made. You can't really blame a household for so-called "under utilising" if they're occupying the only property that is available to them - our failure to build enough social housing properties throughout the ages means many people have nowhere to downsize to as their needs change.

Despite this, social housing tenants are clearly putting their part of the nation's housing stock to the most efficient use, relative to the rest of the population.

Well done to you all!

2016 Census confirms housing unaffordability is for renters

Population and housing data from the 2016 Census has been released today, which means it's time to get your nerd on.

There are three critical things it tells us about housing in New South Wales.

First - there's been an increase in the number of households living in our state over the last five years, up from 2,471,305 in 2011 to 2,604,320 in 2016. The number of unoccupied dwellings has also increased, from 265,338 to 284,741. In percentage terms, unoccupied dwellings have risen from 9.7% to 9.9% of all dwellings. The idea of a sustained influx of foreign investors who leave properties empty is looking a little shaky on these numbers, but even so we're going backwards. It's clear we should be doing more to encourage property owners to put those empty dwellings to use, like taxing the unimproved value of land rather than transactions and transfers.

Click for full size!

Next - there's been a significant increase in the number of people renting in New South Wales. There were 826,922 renter households at the 2016 Census, which was 83,870 more than there were in 2011. To put this into context, that's almost double the increase we saw between 2006 and 2011. It also means our renting population has gone up in percentage terms since 2011, too - from 30.1% to 31.8% in 2016. There are more owner-occupiers, too, but as a percentage they've gone backwards. Households who own outright have gone from 33.2% to 32.2% of the population, while households who own with a mortgage have gone from 33.4% to 32.3%. That means home ownership across New South Wales has declined overall since 2011, from 66.6% to 64.5%. It also means that more people are renting for longer.

Finally - it will come as no surprise that making the rent is a growing struggle. The median rent across New South Wales has risen from $300/week in 2011 to $380/week in 2016. More telling is the number of renters whose rent takes up more than 30% of their income - that's gone up from 11.6% to 12.9% of the renter population. On the other hand, the number of home owners with a mortgage who find themselves in similar financial circumstances, paying more than 30% of their income towards their loan, has decreased from 10.5% to 7.4%. In case it wasn't already clear, low interest rates are great for those who already own a home, but they're not so good for anyone hoping to join their ranks in the foreseeable future. As much as they might appreciate grants and stamp duty discounts, what prospective homeowners need most is to be able to save.

So, here's our take-home message for policy makers at all levels: there can be no housing affordability without fixing the rent.

Rental affordability deteriorates, again

Hot on the heels of the Anglicare Rental Affordability Snapshot for 2017, the SGS Economics and Planning, Community Sector Banking and National Shelter Rental Affordability Index for December 2016 reveals what most Sydney-siders and New South Welsh-folk already know: the squeeze on rents is getting tighter.

Picture by thepurpah

The headline finding is that Sydney's rental affordability is as bad as ever, having plunged to a record low towards the end of last year. The average household now pays around 29% of their income on rent - meaning that renters with even reasonable wages are heading towards a form of housing stress, if they're not already there.

Unsurprisingly, the least affordable suburbs are harbour-side. They include Elizabeth Bay, Rushcutters Bay, Potts Point, Woolloomooloo, Double Bay, Milsons Point, Kirribilli, Darling Point, Point Piper, Edgecliff and Woollahra. For a dual income household with kids, bringing in $140,000 a year, a three bedroom home in any of these iconic suburbs would be unaffordable (30%-38% of income) or severely unaffordable (38%-60% of income), according to the index. For a single working parent earning around $70,000 per year, a 2 bedroom home in most of these suburbs would come in at the unaffordable range. Rent for an unemployed person looking for a single bedroom unit would be extremely unaffordable (60% or more of income) in all of these suburbs.

There's still some hope for working families. The dual income couple with kids might find a three bedroom home with an acceptable rent (20%-25% of income) around places like Hornsby, Epping, Lidcombe, Lakemba, Earlwood, Kogarah or Miranda. A single working parent might pay an acceptable rent for a two-bedder around Liverpool or Penrith.

But there's no such hope for the single unemployed person. Rents for one bedroom homes remain in the extremely unaffordable range for this cohort, throughout the entire Greater Sydney area. Even if three or four unemployed folk decided to pool resources and go in together for a sharehouse, rents for suitable properties remain extremely unaffordable until about Blacktown, Liverpool or Engadine. Further out they become severely unaffordable, but that's as far is it goes across the remaining suburbs.

Things improve for dual income households with kids once you get past the limits of Sydney, with the rest of New South Wales showing rents for three bedroom homes as generally acceptable, affordable (20%-25% of income), or very affordable (less than 20% of income). Of course, that's based on an annual household income of $140,000, which might be harder to come by in some of the further flung parts of the state, so take that with a grain of salt.

Single working parents will also do better outside of Sydney, subject to the same caveat: two bedroom homes for a household with an income of $70,000 per year will be acceptable, affordable or very affordable in most parts of New South Wales. Wollongong, central Newcastle and Byron Bay are the exceptions.

Where available, single bedroom homes remain severely unaffordable or extremely unaffordable to an unemployed person receiving an income support payment, right across the state. For those prepared to share, a two bedroom place might be moderately unaffordable for anyone on an unemployment benefit (25%-30% of income) around Wellington, Parkes or Cobar. If you can find a third person, rent for a three bedroom home might be acceptable in Cobar. Of course, your income payments might take a bit of a hit if you leave Sydney for one of these towns, as your chances of finding paid work will be somewhat diminished. You'll probably have your payments cut for up to 26 weeks after moving to an area with lower work prospects so don't forget to factor that in...

Why is this happening?
Conventional wisdom is that prices go up when supply doesn't keep up with demand, but there are a number of indicators telling us things are a little more complicated when it comes to rents. For a start, contemporary discussion around housing affordability tends to focus on the supply and demand of housing as a financial asset, rather than for its purpose of providing shelter. "Housing demand" has become something of a proxy for "mortgage demand", and "housing supply" is geared towards meeting the needs of mortgagors rather than home-makers - even if at the micro level these are often the same thing.

A quick look at where the current demand for residential property finance is coming from reveals a whole lot of it is going to investors.

Aust. property lending monthly ('000), investment (red) v owner occupation (blue), Jun 2001 - Feb 2017. Source: ABS

Evidently there's been more money pulled into the rental market than for owner-occupation over the last little while. In other words, the rental market is currently enjoying the lion's share of supply. But we can't assume this puts us on a path to affordability because the vast majority of supply into the rental market is coming from investors purchasing established dwellings rather than new builds.

NSW property investment lending monthly ('000), June 2001 - Feb 2017, established (red) v new (blue) dwellings. Source: ABS

Much of the increase in rental market supply comes at the expense of supply for owner-occupiers. Potential first home-buyers are particularly impacted by this, and they're remaining in the rental market for longer. Increasing rental market supply is absorbed by a more-or-less corresponding increase in demand for rental housing. But as we can see from the blue line above, investors have been putting larger amounts of mortgage finance towards new construction over the last little while. New construction delivers supply to meet "mortgage demand" - not just the demand for shelter - which should be putting downward pressure on rents. But, as the index shows, it's not.

Our latest Rent Tracker report shows this as well, indicating that rents have gone up in Sydney even where large amounts of new supply has been brought into the rental market. Based on the number of new rental bonds lodged, Rent Tracker doesn't distinguish between new rental supply coming from construction compared to that which comes from increased investment in established dwellings. But checking this against data from the NSW Department of Planning & Environment we can see that a great many new dwelling completions across Sydney are in the form of new apartments. These are most likely being purchased by investors.

New dwelling completions, Sydney. Source: NSW Dept L&E

With a high proportion of one and two bedroom units turning up for rent over the last few months, despite families with children making up the highest chunk of demand for rental housing, it's evident that this kind of investment is not being driven by what households really need. Rental supply is not being driven by renter demand, because housing supply is being driven by mortgage demand.

That's the story with new construction, but it's also the story with increased rental market supply in general. Investors aren't pulling established dwellings away from owner-occupiers because they want to provide housing for people who can't afford to buy, but because they hope to grow their wealth. The allure of wealth, after all, is what is driving demand for mortgages. Aided by tax settings that expedite the debt-to-wealth strategy - negative gearing and capital gains tax discounts - investors are encouraged to buy property based on prospects for profit rather than any measured demand from renter households. They're buying more expensive property as higher price tags come with faster and bigger gains. They're leaving the cheap stuff to developers who can turn it into more expensive property in order to meet investor demand...

Over time, this has changed the shape of the rental market. Affordable rents are a thing of the past.

Volume and rents ($/2011) of Australian rental properties over time. Source: AHURI

For that matter, we don't measure demand for rental housing like we used to. Back in the olden days the National Housing Supply Council - now defunct - used to report on the affordability and availability of rental housing. Then, as now, there was a shortage of properties available for rent to households on the very lowest incomes, for much the same reasons that we can see today. But it's easy to imagine that if this work had continued with appropriate levels of government support, we'd have a much clearer understanding of our rental affordability challenges and how to tackle them once and for all. Instead we've allowed things to get much worse.

Last week's Federal Budget has pinned a lot of hope on measures to increase supply. This includes the renewal of the National Affordable Housing Agreement, to be renamed the National Housing and Homelessness Agreement (NHHA). Under the NHHA the Australian Government will work with the states and territories to increase the supply of (mortgage driven) private rental housing through measures such as planning and zoning reforms. With the latest Rental Affordability Index in mind, we'll take a closer look at these Budget measures in a later post. In the meantime, parties to a new National Housing and Homelessness Agreement would do well to consider monitoring both rents and demand for private rental housing across the income spectrum, to ensure this Budget's impacts are being properly accounted for down the track.

Where do our landlords live?

Last week's release of tax data from the Australian taxation Office has renewed discussions about who benefits from negative gearing and whether the perk could be better spent. However, the data also produced some insights about where our landlords live. That is, the post-codes of people who declare rental income to the tax office are now recorded. Now isn't that interesting?

We've previously discussed how tenure breakdown is becoming an increasingly important electoral factor, and why all politicians should support tenants' rights. The growing number of households who are long-term renters could begin to have an impact in elections for marginal seats. It's clear from the new tax data that landlords are concentrated in particular regions, and continue to outnumber tenants in a relatively large number of spots where a high rate of owner-occupation remains the norm. However, as the demographics of New South Wales change, this will also change, potentially bringing more and more votes into play as members of the community allow their votes to be influenced by housing policy and promises.

Particularly those for whom current tax settings and regulatory frameworks do not work and are in fact harmful - namely tenants - this data should be of interest. We've made three maps exploring this data with one question in mind: where do our landlords call home? Although it is important to note that this data only records where a person reports their income - the rental income may come from an entirely different state. They might actually be someone else's landlord.

The interactive maps here can be explored by click and dragging, and zooming in and out with the + or - buttons on the screen.

First, we looked at just the raw numbers of people who declared some rental income in the 2014-15 year. Baulkham Hills (postcode 2153) was the clear leader here - 7,709 taxpayers from that area declared some rental income. Two other Western Sydney areas featured highly in this count - postcode 2145, to the west of Parramatta and postcode 2170 located around Liverpool.

The picture starts to colour in a little when we look at landlords as a percentage of all people declaring income of any form. It's important to note that even though almost all adults or near adults pay tax (for instance, through GST) not all people lodge tax returns. Tax data should be treated with some caution on account of this, but it can give us a reasonably clear picture. On this map, blue signifies where more than the national average number of landlords per tax declarant reside, and green shows where there are less than the average. The North Shore's relatively high number of landlords comes through, but Sydney's south and south west also feature strongly. In fact the two areas with the highest proportions of landlords per tax declarant are Orchard Hills and Horsley Park in the south west.
This high proportion is partly due to the relatively low numbers of people in the areas, but it could also suggest some things about how housing investment works. These areas were developed not so long ago, and new homes may have been purchased by households who already had a foothold in the property market; or they may have been purchased by first homebuyers who have since tapped into rising house prices, borrowed up and bought some more... Getting to the bottom of that would make for an interesting research project.

Finally, we looked at the number of landlords in an area compared to the number of bonds lodged with the Rental Bond Board. This gives a clearer indication of areas where landlords live compared to where they invest. Green indicates less than a 1:1 ration of landlords to tenants, which is what you would expect since there are fewer landlords than then there are tenants. Blue indicates there are more landlords than tenants in an area - indicating that these are the areas where housing is not being brought into the private rental market. In Sydney, the postcodes 2156 (Annangrove) and 2125 (West Pennant Hills) are noticible as centres for landlords, joining Orchard Hills and Horsley Park. We haven't tried to account for "rentvestors" of course who will contribute to both counts.



However across New South Wales there are a number of areas which have very high numbers but can be explained by very low numbers of both tenants and landlords - for instance postcode 2898 (Lord Howe Island) has the highest ratio of landlords to tenants in the state - at least partly because there are only 3 bonds lodged. It is still interesting to see the locations where landlords outnumber tenants, sometimes by quite a margin - and of course, this doesn't account for landlords who are also tenants themselves.

Bonus: National versions of the first two maps are available.
The number of landlords in each Australia postcode
The percentage of landlords of tax declarants in each Australian postcode

Rent Tracker

Over the last few years we've been looking at various ways of measuring rents in New South Wales, and pointing out that there is a really powerful source of data to which of us tenants who pay bond contribute.

The Rental Bond Board holds nearly 800,000 bonds and each one tells a story - what the rent was for a particular property at a particular time in a particular location. If you add all of those stories together, you get the Rent part of the Rent and Sales Report, as published by Family And Community Services.

Today we released the report version of Rent Tracker. We've dug in to the Rent and Sales Report and drawn out extra data, to help give more context to changes in rents. We've also looked at advertised rents as well as the actual rents, to help add depth and understanding to the stories reported in the media.

This data source should be seen as one of the go to sources of information about what is happening in renting. It's important to know what landlords and agents hope to get for a property they advertised, but it's at least as important to know what they actually do get. As well as ongoing improvements to the report, we'll keep blogging about how this data can help understand the state of the rental market!

Check out Rent Tracker here.

NSW Budget: Social Housing funding

The Government will officially hand down the budget today, but much that will be of interest to us on the Brown Couch has already been revealed.

There's no shortage of measures relevant to the Social and Affordable Housing space. A joint statement by Treasurer Gladys Berejiklian and Minister for Social Housing Brad Hazzard has added more meat to the bones of 'Future Directions' - the Government's ten-year plan for management and growth of the Social Housing portfolio. We detailed the three priorities of the document back in January, when the plan was announced: more Social Housing, more opportunities to avoid or leave Social Housing, and a better Social Housing experience. Much has happened on the 'more Social Housing' front since then (our Clearing House has been keeping tabs), but little otherwise. Until now; the initiatives revealed in the joint statement are best categorised under 'more opportunities to avoid or leave Housing'. They amount to $14.4 million of spending, mostly delivered over four years, for jobs, education, and support programs for Social Housing tenants. 

The 'Future Direction' of Housing is increasingly clear (though doesn't include tree houses...yet)

For one, the State will provide $4 million for a free job seekers' service for Social Housing tenants, and a further $1.2 million for 150 tenants to receive training, support, and work placements as care workers. Most important is that the job seeking service will be accessible on a voluntary basis. This would seem to satisfy our reflexive concern that such initiatives to 'improve opportunities' could in fact threaten tenancies, if tenancy agreements were conditional upon participation. And if the initiative to move tenants into work as carers seems oddly targeted, consider that the impending rollout of the NDIS is expected to create considerable new demand for care workers throughout Australia. There is also thought to be unmet demand for care workers in the aged care sector. So whilst the scope of the latter measure is decidedly modest, the strategy appears sound. We hope it captures some of the hundreds of thousands in the community performing this valuable work without pay.

For education, there's $3.2 million towards scholarships and support services for high school students from "low socio-economic backgrounds", with a view to assisting school leavers access tertiary education. We might query whether the Government hasn't shoehorned another agency's program into the Social Housing sphere, because unlike other initiatives, there's nothing in the announcement suggesting the program is actually targeted at students residing in Social Housing.

Also announced is a further $2 million, which will be provided as "seed capital" to deliver "opportunities" for students from Social Housing of pre-school age. We'd call that explanation clear as a heavy fog, in a blizzard, at night, with sunglasses on, but it's all we have to go on. So we will refrain from commenting on its worth at this stage. 

For support, the State promises $4 million "for nurse home visiting to improve child development and assist with the co-ordinated care of vulnerable and at-risk families". Given it is targeted at all vulnerable families, this presumably falls as much into the 'avoiding Social Housing' bracket as it does the giving of 'opportunities' for current public housing tenants. Though it is certainly no panacea, assistance of this kind could be a great assistance to families at risk of homelessness.

The one other detail of substance is that total spending on Future Directions programs over the next four years will come to $280 million, so it's reasonable to expect more announcements to follow.