Charishma Kaliyanda is a Labor Councillor on Liverpool City Council
In the 1970s, Gough Whitlam declared that an individual’s health, well-being and life chances were more shaped by where they lived than their occupation, religion or ethnicity. This statement is just as relevant in modern Australia as it was almost 50 years ago. The raging debate about the housing affordability crisis in Australia reveals a deep-seated dissatisfaction with life in Australian capital cities, particularly Sydney. Earlier this year, the annual Demographia report ranked Sydney one of the most unaffordable housing markets surveyed, second only to Hong Kong (Beer, 2017). People in NSW are feeling the squeeze thanks to federal and state government policies. Between concern over the lack of housing affordability, university and vocational training fee hikes, and stagnating wages, the climate is ripe for what Jason Twill calls ‘bright flight’, where an educated, talented core of workers are priced out of major cities (Twill, 2017). While some choose to set up in more affordable regional cities, others may choose to leave the state or country to seek their fortunes elsewhere. But this isn’t just a result of housing that is becoming increasingly unaffordable for people without an existing asset base or significant support, it is also a consequence of social infrastructure that has not kept pace with the changing needs of the communities it seeks to serve. As the nature of work and jobs changes with the impact of technology, policy makers must also give importance to the spaces that people live in to ensure that the talent that attracts investment and jobs is retained.
The last few decades have seen a shift from the idea of housing as an integral part of the ‘Great Australian Dream’ accessible to all, to a key wealth generator and driver of the economy. There is an undeniable cultural facet to owning your own home. As Briohny Doyle articulates, a home owner is a member of a street, a community, a successful adult who owns a piece of the pie (Doyle, 2017). This has created strain among those who aspire to this ‘Australian Dream’, who feel they have been sideswiped in this process. The gap between those with existing assets and those who are attempting to buy into this aspiration is widening, resulting in households taking on record levels of debt. Another consequence is that some have given up on this aspiration altogether, and the idea of renting as a transition to home ownership is giving way to people who expect to be lifelong renters. Those who give up on the idea of home ownership are more likely to be young people, new migrants, refugees and other groups who find themselves without existing assets or support to get a foot in the door of the housing market, so to speak.
Earlier this year the median house price in Sydney hit $1.5 million. It was yet another indicator of the growing housing affordability crisis facing most Australian capital cities, especially Sydney where house prices grew a whopping 13.1% in a single year. It’s not just house and apartment prices that have increased rapidly, the 12 months to March 2017 saw the largest rental price increase since 2011 (Duke, 2017). The Age reported that 500 people were moving from Sydney to Melbourne every week (Booker and Martin, 2017). However, internal migration data shows that most people migrating from Sydney are moving to regional NSW, which has been linked to the massive growth in housing costs in Sydney (Capuano, 2017). Although this is not a new trend, with Sydney usually gaining population from overseas but losing population to other parts of the country as the first port of call for new immigrants, it seems to be accelerating.
Cities need to acknowledge this and respond to this migration trend and provide adequate housing solutions to retain talent. Otherwise, it is a major economic challenge as we rely on this cohort of knowledge sector and technology-focused workers to lead us into the digital economy. If local and state governments don’t take measures to better balance increased density and growth with liveability, affordability and a sense of place, we may find ourselves in the unenviable position of watching companies follow the talent – straight out of here.
Fundamentally, cities are shaped by the people that live within them. Unaffordable housing tends to push out the very workers that make our cities function (social workers, paramedics, teachers), who define their culture (artists, designers, writers, musicians) and who will shape their future (software developers, clean tech experts, data scientists) (Twill, 2017). Often, it is these people who are trying to get into the housing market for the first time. This is reflected in the substantial drop in first home ownership from historic rates around 18% to 5%. For some, the answer may be to relocate to regional areas or interstate, but this is not sustainable in the long run and the question of how to address affordability in Australian cities must be answered.
The section of so-called “forgotten ones”, who are trapped between not qualifying for social housing and not affording market-rate housing should be of concern to decision and policy makers. It is these people who often have the skills, talents and abilities that are integral to ensuring that the NSW economy is not just propped up by stamp duty contributions. In his analysis of the location of jobs in the growing knowledge-based economies of the United States, Enrico Moretti makes the point that where talent goes, so too does investment, resulting in a multiplier effect (Moretti, 2012). According to Moretti, the multiplier effect shows that for each job in the knowledge sector, approximately five more are created in sectors that provide goods and services, the non-traded sector.
The Smart Cities Plan recently announced by the Turnbull Government, and the agenda of the current NSW Government share the belief that just building hard infrastructure such as highways and railways will produce more productive cities where everyone will have a job. Neither share Whitlam’s understanding that hard infrastructure alone does not create a community worth living in and contributing to. Research suggests that there is a two-speed process occurring in Australian cities, where the relatively well-off and upwardly mobile improve the areas they live in over time, while the more economically vulnerable move more frequently into less advantaged areas. The housing affordability crisis has the effect of entrenching people into more and less advantaged areas (Baker et al. 2016). In order to ensure that it does not create a cycle of deeper disadvantage, the response to the housing affordability crisis cannot and must not simply be in increasing the supply of housing.
As urban populations grow, so too does the level of investment needed for cities to function well. Investment is needed to expand mass transit, build or improve ageing infrastructure, increase housing supply and expand the reach of civil services (Twill, 2017). However, the design of such infrastructure must be given importance as there are social and economic consequences to poor design. There are immediate and intergenerational effects when pockets of disadvantage are created as a result of poor design, when families are pushed into areas with poorer educational outcomes, higher transport costs and fewer resources to deal with health problems effectively. There are fewer job opportunities, or they are too far away to access practically (Baker et al., 2016). Often, there is a great deal of social isolation and loss of a sense of community.
A focus on good design in cities must also be accompanied by meaningful planning of, and investment in, social infrastructure to achieve better outcomes for Australian cities. Social infrastructure refers to an interdependent mix of facilities, places, spaces, programs, projects, services and networks that maintain and progressively improve living standards and quality of life in a community (RDSA, 2013). In short, what makes a community attractive to be a part of. Social infrastructure are important parts of our cities. They are places, or provide platforms where connections can be made, lives enriched, services accessed and the vulnerable supported.
Provision of social infrastructure has many advantages, such as encouraging social inclusion, supporting diverse communities, and creating sustainable communities. Evidence from around the world suggests that well-developed social infrastructure and social networks have positive effects of community well-being and resilience, leading to greater community cohesion (RDSA, 2013). The current challenge, however, is that social infrastructure is separated into local, district and regional levels that are funded, planned, constructed and maintained in very different ways. This has resulted in poor coordination between the evolving needs of communities served and the capacity of the social infrastructure to meet these demands.
Targeting social infrastructure and economic policies in order to address housing affordability must be informed by a consideration of how people experience housing affordability. Analysis by Rebecca Huntley and Emma Baker suggests that while some people transition in and out of housing affordability, others appear to remain stuck with housing affordability problems for long periods of time. The characteristics of these groups appear different, with those who remain stuck more likely to have a disability or be a carer, more likely to be a woman and older than those who experience intermittent housing affordability problems (Baker and Bentley, 2015). Furthermore, it is necessary to consider housing affordability in the context of whether it is an isolated problem or if it is one amongst multiple problems. Research suggests that a household or individual is likely to be resilient and adjust if they have a housing affordability problem alone, but this capacity to adjust or respond it reduced greatly when other problems such as unemployment, insecurity or illness are added (Baker, 2017). This indicates that any interventions considered must take into account these differences in order to be effective, as not doing so could cause misidentification and misdirection of assistance.
The economic and social dimensions to the housing affordability crisis have been well documented. Current approaches by policy and decision makers however, tend to focus on increasing housing supply and changing aspects of the taxation system. However, Australia’s housing affordability problems are more complex, and require more sophisticated and multi-layered action, than simply dealing with supply. It is only then that we will be able to properly address an issue that underpins employment, growth and productivity, as well as impacting the educational outcomes and well-being of our community.
Baker, E 2017, ‘Housing affordability problems might not be all bad’, The Conversation, February 14, viewed 4 June 2017, <https://theconversation.com/housing-affordability-problems-might-not-be-all-bad-72354>.
Baker, E and Bentley, R 2015, ‘Slippers and stickers the hidden victims of rising house prices’, The Conversation, June 5, viewed 4 June 2017, <https://theconversation.com/slippers-and-stickers-the-hidden-victims-of-rising-house-prices-42816>.
Baker, E, Beer, A and Bentley, R 2016, ‘Smart cities wouldn’t let housing costs drive the worse-off into deeper disadvantage’, The Conversation, June 21, viewed 4 June 2017, <http://theconversation.com/smart-cities-wouldnt-let-housing-costs-drive-the-worse-off-into-deeper-disadvantage-61213>.
Beer, A 2017, ‘A housing affordability crisis in regional Australia? Yes, and here’s why’, The Conversation, January 27, viewed 4 June 2017, <http://theconversation.com/a-housing-affordability-crisis-in-regional-australia-yes-and-heres-why-71808>.
Booker, C and Martin, P 2017, ‘Melbourne a magnet for sydneysiders moving south’, The Age, March 24, viewed 4 June 2017, <http://www.theage.com.au/victoria/melbourne-a-magnet-for-sydneysiders-moving-south-20170323-gv5f58.html>.
Capuano, G 2017, ‘What’s driving Sydney’s population exodus?’, .ID The Population Experts, May 30, viewed 4 June 2017, <http://blog.id.com.au/2017/population/australian-population/whats-driving-sydneys-population-exodus/>.
Doyle, B 2017, ‘Off the plan: shelter, the future and the problems in between’, The Conversation, May 8, viewed 4 June 2017, <http://theconversation.com/off-the-plan-shelter-the-future-and-the-problems-in-between-75839>.
Duke, J 2017, ‘Sydney rents rise at fastest rate since 2011 in ‘worrying’ trend’, Domain, April 20, viewed 4 June 2017, <https://www.domain.com.au/news/sydney-rents-rise-at-fastest-rate-since-2011-in-worrying-trend-20170420-gvo921/>.
Moretti, E 2012. The Geography of New Jobs. Houghton Mifflin Harcourt, Boston.
RDSA, 2013, Regional Infrastructure Summit
Twill, J 2017, ‘From white flight to bright flight the looming risk for our growing cities’, The Conversation, May 15, viewed 4 June 2017, <http://theconversation.com/from-white-flight-to-bright-flight-the-looming-risk-for-our-growing-cities-76787>.
This essay was first published in the Australian Fabian pamphlet A New Vision for NSW: Ideas for the next NSW Labor Government.