How Australia could fix its housing problem

Sam Hawley: Hi, I’m Sam Hawley, coming to you from Gadigal Land. This is ABC News Daily. Australia’s in the middle of a severe housing crisis. But did it really need to be this way? If you look to Scandinavia, the answer is no. Today, Dr Sidsel Grimstad from Griffith Uni on the co-operative Housing Networks in Denmark, Sweden and Norway that mean barely anyone’s left homeless, and how they could work here too.

Sidsel, many Australians are really finding it difficult at the moment when it comes to housing, and to understand how we got here… into this rather tricky situation… We really need to go back to the end of World War Two, when there was a real boom in the number of houses that we were building. Just tell me about that time in Australia, and what was happening in housing.

Dr Sidsel Grimstad: Well, like in most countries after the Second World War, there was a big housing boom. And in Australia the government embarked on huge housing construction schemes, throughout all the states really.

Reporter: …in this way, the Commonwealth Reconstruction Training Scheme is helping to solve the gigantic housing problems and build the future for many thousands of ex-servicemen. Yes, the home a man can really call his own…

Dr Sidsel Grimstad: But also, it was supported through what we call “cooperative building societies”, where people would be saving money, and then be able to get access to funding to build their own house or buy houses. And these were reasonably priced, so accessible for everybody really.

Sam Hawley: There was a huge amount of immigrants, of course, that arrived in Australia after the war.

Reporter: The liner ‘Orion’, on her first peacetime voyage, brings a party of British tradesmen to help the Commonwealth rebuilding program…

Sam Hawley: Something like 2 million between 1945 and 1965. So there was a need for a lot more housing, wasn’t there?

Dr Sidsel Grimstad: Absolutely. And that’s, you know, that makes Australia different to other countries. It was a land of plenty and opportunity. So a lot of people came.

Reporter: Since the war, Australia has welcomed nearly a million migrants, of whom half a British, half have come from other European countries to take their place in the community with them.

Sam Hawley: So I guess I just want to touch briefly with you then on what happened to that. What happened to all the housing? What happened after those post-war years?

Dr Sidsel Grimstad: Well, most of this housing actually became privately-owned housing. The social housing sector eventually has kind of become minuscule because they were sold off. That took them out of the social housing sector. And so the number, or the percentage, of social housing now is very, very low. I think it’s around 3 to 4% in Australia. You know, there’s years on a waiting list to get into social housing at the moment.

Sam Hawley: Yeah. Okay. So we’ve got a problem here, because we have a lack of social housing now, and that changed dramatically in recent years. It wasn’t the case, of course, after the war. Now, I want to have a look at another approach, an approach that perhaps we could have taken after the war, but we didn’t. The Scandinavian countries, they went in a different way, didn’t they? Let’s have a look, first, at Norway. What happened in Norway after the war, in terms of housing?

Dr Sidsel Grimstad: Well, in all the three… In Norway, Sweden and Denmark… There was a similar, huge housing boom after the Second World War, because the governments wanted to provide, you know, decent quality housing, but they didn’t want to promote private rental. They said, ‘private rental leaves their tenant very weak’, so they opted for what they called ‘housing cooperatives’, which is, you can call it, a co-ownership. So, you had developers that would build a big building. Then, once the building was finished, each building was then organised as a cooperative, so the co-op would own the building and then families would then buy a membership, and in a way buy a flat in that co-op. So, in the sense you have a co-ownership between the members owning the flat, and the co-op that owns the building. So, in a way, it’s similar to strata. But the big difference is that in a co op, members are very active in decision-making. In Sweden, which is the country that has the largest co-operative housing sector, it’s 24% of the housing stock. In Norway, it’s 14%, but for instance, in Oslo, where I’m from, housing co-ops comprise 40% of all housing in Oslo, the capital.

Sam Hawley: Gosh, that’s a lot.

Dr Sidsel Grimstad: Yeah. And in Denmark, they chose a slightly different model. They said, well, not all people can own a housing co-op flat or a house. So we are going to have a different model, where we have housing, rental housing, and co-ops, which is affordable housing. And that sector is huge. In Denmark, it’s around 20% of all housing stock.

Sam Hawley: And what about the tenants’ rights in those co-ops? Because a big problem here, of course, that we have is that, you know, tenants feel like they’re not protected enough.

Dr Sidsel Grimstad: Yeah, well, in the housing co-op – and this is what makes it a unique model and very, very different to private rental, for instance – is that your tenure is secure. You can’t be, should I say, thrown out of a co-op unless, of course, you do something, you know, you don’t pay your rent at all, or you you do other things that, of course, is antisocial. But tenants can participate in setting the rent, for instance, if they want to. And this is quite an interesting model. That part of the rent, a tiny part, goes to a national housing building fund. And this fund, now, because this arrangement has lasted for, you know, decades, this fund is a substantial fund and makes it possible to continue constructing new rental housing co-ops, in a way, in perpetuity.

Sam Hawley: So, Sidsel, what about the co-op houses you actually have to buy? How do they work?

Dr Sidsel Grimstad: So the difference between, then, a co-op flat that you own is that, first of all, it can’t be used as an investment object. You have to live in it. There is also strict regulation around letting it out. You can’t really let them out, and you can’t also use them for AirBNB.

Sam Hawley: I can see that Norway’s largest co-op has more than 500,000 members, and it’s considered the largest developer in the country. So, yeah, it’s really significant. They sound great. But tell me, Sidsel, how are they financed? Because I guess, the the point for investors is: why do you want to put money into something if you’re not going to have a lucrative sort of return?

Dr Sidsel Grimstad: So housing co-ops, they are now so large that they, in a sense, have their own funds, and because they have their own funds, they can access cheaper finance options. But the big thing here is that external investors, they look for what, I say, cheap investment options. They’re not, you know, for maximum profit investors, so to speak, and any surplus they get, through their construction, is then ploughed back into the sector then, so that you can build more housing.

Sam Hawley: So more interested in the public good, I suppose, what’s best for everyone.

Dr Sidsel Grimstad: Yes, exactly.

Sam Hawley: Okay so Sidsel, tell me, how has this co-op approach stood the test of time? Since the end of World War Two?

Dr Sidsel Grimstad: I would say it has stood the test of time very well. What I find really interesting is that the security of tenure is so fundamental to creating good, you know, just living conditions and good communities. We know in Australia, more and more people are dependent on private rental because of the rising house prices. They go into private rental, and we forget how detrimental moving around, if you’re a family and having to move every six months, is – it’s detrimental, not only for the person, but the whole family, and the children’s schooling and so on. And I think another element that’s really important to know is that the success, in a sense, of the co-op model is that there is more rights to the tenant. The tenants are more protected in the Scandinavian countries, whereas private rental in Australia, the tenant has so little rights.

Sam Hawley: There are, of course, some co-ops in Australia. But do you think, Sidsel, that the model, from the Nordic nations, could work here and, you know, we could have much better housing system in this country?

Dr Sidsel Grimstad: Well, it’s… It’s a really big question. The housing co-op sector that we do have in Australia, which is like less than 1% of the housing stock, is in the social housing sectors. They’re quite successful. They’ve been around for decades, these small housing co-ops, and we would like to see that expand. But it needs finance, and we need kind of support systems, because the big housing co-op sectors in Scandinavia, they have peak bodies like we do have some in Australia as well. But the peak bodies are actually very actively supporting the co-op, so that they are successful in managing and making decisions. But finding those investors and, you know, superannuation funds, I think maybe they would be a good place to start. It’s a small sector, but it can grow, but it needs also a focus on how to support it to grow, and then become more self-sufficient. People who live in co-op housing hope… they feel, it’s a home, and they feel it’s their own. Which is very different to when you rent privately in Australia. And that is community building in itself. So if it’s both affordable and you’re actively involved in creating your own living space, I think those are two social benefits that we really need more of in Australia.

Sam Hawley: Dr Sidsel Grimstad is a senior lecturer at the Centre for Systems Innovation, at Griffith University. If you want to hear more about how Australians are being locked out of the rental market, have a listen to the episode from the 9th of May – that’s in your feed. This episode was produced by Flint Duxfield, Veronica Apap 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.