Can Australia revive the ‘golden era’ of housing?

Samantha Hawley: Hi, I’m Sam Hawley, coming to you from Gadigal Land. This is ABC News Daily. If you rent or know anyone who does rent, you’d know costs are soaring and there’s barely anything on the market. That’s apart from in the Airbnb world where there are tens of thousands of properties ready for short term lease. So how did we get to this point and how do we get out of it? Today, the ABC 7p.m. News finance guy, Alan Kohler, on how successive governments ruined the golden era of housing.

Samantha Hawley: Alan, We know we have a real problem with housing in this country at the moment, but to understand how we could fix this, it’s good to look at how we got here. This is home and that takes us all the way back to after World War Two.

Alan Kohler: That’s right.

Archival Tape: A sturdy roof to live under, a patch of ground trees and the fresh, clean wind. There is much to be done before every family can enjoy a home of their own.

Alan Kohler: The Commonwealth Housing Commission was launched in 1943. So it was actually before the World War Two ended. The Menzies government basically decided after after the war and in particular after 1950 or so, that the Commonwealth had a responsibility to help fund it. And that’s what that’s what happened.

Archival Tape: Lack of finance. No loans for home building, interest rates too high, fewer rental dwellings being built. That’s the story behind the housing problem.

Alan Kohler: So between 1947 and 1961, the housing stock in Australia increased by 50%, compared with a 41% increase in the population over that period. So the population was increasing enormously through immigration in particular from Europe. But housing was increasing even more and the direct contribution of the Commonwealth and state governments to that increase in housing was 221,700 houses or 24% of the total increase.

Archival Tape: The government set up a housing commission with a clean cut directive that it provide as many homes as possible for as many people as possible in the shortest time possible. A big order.

Alan Kohler: And so, you know, home ownership actually increased during this period from 53% to 70%, which was the largest increase in home ownership in Australia’s history.

Samantha Hawley: So it was the golden age of housing. There was a lot of it. It was tracking really well. We were doing a really good job.

Alan Kohler: Well, it was. That’s right. Well, and also there was a decision made that the Commonwealth and the Government had a responsibility to ensure that people had a home.

Samantha Hawley: So when did it start to sort of run off track, Alan?

Alan Kohler: Well, towards the end of the Menzies period, the Coalition in the late 60 seconds, they started to run out of money, they cut back. So the Coalition government started to strangle the housing Commission and housing funding and it really kind of stopped after 1980 when neoliberalism took hold. All the privatisations were taking place, Governments were selling everything they can get their hands on. And basically the idea of governments building housing just basically stopped.

Samantha Hawley: And not only that, Alan, I think, you know, there were housing commissions, state housing commissions that were actually selling off the public housing that had been built.

Alan Kohler: That’s right. Exactly. So, look, I mean, few people I know my my wife and my one of my best friends were both brought up in housing commission houses. And I think they were sold during that time.

Samantha Hawley: Okay. Alright. During those years, things went off track quite substantially because of neoliberalism, as you say, because of privatisation. Things were left to the private market. Now Kevin Rudd came in and he did, didn’t he, try and fix it?

Kevin Rudd, former Labor Prime Minister: Mr. Howard tells working families that they’ve never been better off. Mr. Costello says that there is no housing affordability crisis. Well the problem is they’re wrong.

Alan Kohler: He brought in something called the National Rental Affordability Scheme, which was basically designed to assist people, people on low incomes to rent a house. So it was a subsidy provided of up to 20% of the rent. It was abolished by the Coalition in 2013. They capped it at $38,000 and then said that they would take no new entrants and they cut it off by 2026. And that’s where things stand. It’s due to end completely in three years time.

Samantha Hawley: And there’s a lot of people I can see through news reports that are coming off that scheme this year.

Alan Kohler: Yeah, that’s right. And the rents are going up enormously. You know, the rent, the average rent rent up by 15 to 20% last year and is continuing to rise.

Reporter: At least 17 residents of this complex have been asked to leave by June when their units are removed from the National Rental Affordability Scheme, sending the cost of the previously subsidised rents soaring.

Alan Kohler: And the rental vacancy rate in the country is in a lot of places less than 1%, so there needs to be some kind of way of firstly making more rental, more places available to rent and secondly to make them cheaper for those who can’t afford the the rents that now apply.

Samantha Hawley: Okay, so let’s have a look at that because we don’t have enough public housing anymore and that would take years and years and years to fix. It’s no short term fix just to build more. So let’s bring in now the Airbnb, because this is a major problem that we have, isn’t it?

Reporter: Emily Wright, her two kids and dog Epponnee-Rae were facing homelessness this year and she reckons she knows the reason why.

Emily Wright: You want to rent a house for Airbnb. It says there are over 1000 houses available.

Alan Kohler: Well you call it a problem, I think, you know, I think it probably is a problem. I mean, I went onto REA the other day, the REA website looked at how many places you can do a sort of just a general search.

Samantha Hawley: That’s real estate. That’s a real estate agent, is it?

Alan Kohler: Yeah that’s right. There are 53,000 places to rent and the number of Airbnb’s and the number of short term rentals is a bit hard. Harder to pin down because there are a lot of short term rentals and always have been. Of course there’s nothing new about it. It’s just that Airbnb has made it a bit more organised when they came to Australia ten years ago. But I rang a researcher at the University of Queensland who looks at this stuff, Thomas Sigler. He says that there are 300,000 or so short term rentals across Australia at the moment and that three quarters of those are on Airbnb. So that’s about 225,000 on Airbnb. What’s that? Six times the number of places for lease for long term rent are available for short term rent.

Samantha Hawley: It’s a lot. And I gather they’re choosing Airbnb landlords because they can make more money.

Alan Kohler: I think that’s the main reason. I just did an experiment for a two bedroom apartment in Paddington. What would it cost to rent on a lease? And the answer seems to be about $1,500 a week for a two bedroom place in Paddington. And I looked on Airbnb for the same sort of thing, and it was $3,500 a week. And I looked at other places as well, and it was a similar kind of difference. Renting something on Airbnb is riskier, clearly, because you might not rent it out. There is a case for the short term rental being higher than long term rental. It’s a bit riskier in the sense you might get people having a party and so on. So, so the question then is really what’s a reasonable risk premium on Airbnb or short term rental? The the risk premium is a bit too high. It’s attracting people to put their houses or their their apartments on short term rental instead of long term lease because, you know, you only need to rent the place for 2 or 3 days a week to make more, you know, than if you had it on a long term lease.

Samantha Hawley: Um, we can’t ban Airbnb’s, I assume, but they’re a big problem all over the world, aren’t they? Even. See, in Venice, we did a story. In Venice, there’s so many Airbnb’s that Venetians can’t even live in the city anymore. So it’s actually a worldwide problem. This What can be done, Alan? How can we make it more attractive, I guess, for landlords not to go to Airbnb?

Alan Kohler: I suggested in a piece in the New Daily that maybe the Kevin Rudd rental accommodation subsidy scheme could be rejuvenated and, you know, provide some sort of subsidy to those landlords that have got their places on Airbnb to put it onto a long term lease. They only get that money. If that happened, maybe that government subsidy could get the could get the risk premium as I put it down sufficiently that people would find it worthwhile to put their properties on long term lease instead of Airbnb.

Samantha Hawley: How much are they subsidised under Kevin Rudd’s scheme and how much would that need to go up to actually provide that incentive to get your place off? The Airbnb is an end to the long term market.

Alan Kohler: At the moment. The rental affordability scheme subsidises by about $215 a week. Nowhere near enough obviously. Would 500 be enough? I don’t know. The cost would run into the billions, so I just don’t know.

Reporter: Labor’s promising to build 30,000 social and affordable homes over the next five years.

Samantha Hawley: The Albanese government does have this $10 billion Housing Australia Future Fund.

Anthony Albanese: The Housing Australia Future Fund is about making sure that we have that investment in social and affordable housing.

Samantha Hawley: Is that golden enough?

Alan Kohler: No, no no. That’s that’s not quite fool’s gold, but it’s nothing. Nowhere near enough. They’re talking about 30,000 houses over five years in that scheme. We need hundreds of thousands of houses. But, you know, they’re going to have to do more for sure.

Samantha Hawley: Okay. So what is the answer then? What would you do, Alan, if you were in government? They have to do something.

Alan Kohler: Yes, I agree. And so I think the National Rental Affordability Scheme needs to be restarted and continued and there needs to be more money put into building affordable housing. Landlords need to take their properties off. Airbnb need to be enticed to do that because I don’t think the Government can force them. They need to be enticed to take their properties off short term rentals and make them available for long term rentals. And the only way to do that, I think, is to change the way that the risk premium for short term rentals works and so that the money you get for a long term lease is is higher.

Samantha Hawley: Alan Kohler is the finance guy on the 7p.m. TV news. Airbnb says it’s helping people combat the rising costs of living and growing mortgage repayments by giving them the opportunity to rent out their properties short term. It also says it supports a levy on tourists that governments could use to build more affordable housing. This episode was produced by Veronica Apap, Chris Dengate and Sam Dunn, who also did the mix. Our supervising producer is Stephen Smiley. I’m Sam Hawley. ABC News Daily will be back again tomorrow. Thanks for listening.