JENI O’DOWD: Quick, dumb fixes won’t solve Australia’s housing crisis. This will

One of the most absurd proposals to solve Australia’s rental crisis is that retirees should move overseas and rent out their homes to free up living spaces for younger Aussies.

According to real estate researchers Suburbtrends, this move would inject 130,000 new rentals into the market during record-low vacancy rates while enabling retirees to maintain their pension benefits abroad.

While theoretically, increased rental stock might lower rents, the notion of asking older Aussies to uproot themselves from their families and communities and live overseas for years is breathtakingly ignorant.

Moreover, the idea of allowing people to continue receiving the same pension benefits while earning rental income as an incentive to move to another country makes no economic sense.

I just can’t cope with the stupidity of it.

Australia is already divided into the haves and have-nots. You either own property or you don’t, and if you don’t have parents who do, you may never own a home.

According to the annual Demographia International Housing Report, Australia is ranked the second most unaffordable housing market in the English-speaking world. Yep, we sit just behind Hong Kong and ahead of Vancouver and Los Angeles.

The average median house price in Sydney is over $1.6 million; in Melbourne, nearly $1.1 million.

And that’s even if a first-time home buyer can afford a deposit to start with — the average wage in Australia is $98,000, and with the cost of living, most of that is taken up by basics such as food, utilities and other essentials.

So, if you can’t buy, you rent. But renters are also feeling the squeeze, with rents hitting record highs and the national vacancy rate sitting at just 1.1 per cent.

Many young people can rely on the bank of mum and dad for a house deposit, or they can decide to live at home longer so they can save. But equally, many cannot.

And the situation will only get worse until housing prices stop increasing and rents start decreasing.

Australia’s housing crisis is a long-term problem with no quick fixes.

In the 2024 Budget, the Albanese Government announced a $6.2 billion pledge to address the crisis.

Critics say most of that money will go towards infrastructure rather than actual homes, and the Government won’t help homebuyers with the enormous cost of buying a property.

In last week’s State Budget, the NSW Government set aside a record $5.1 billion to create 30,000 homes, including new builds, social housing, and affordable housing for Sydney’s essential workers.

The Minns Government identified newly released government land in an ongoing audit of unused State-owned properties and landholdings. Smart move.

But should governments also be talking about increasing land zoned for medium-density housing, a move certain to be unpopular with people lucky enough to live in wealthy suburbs?

I’m not talking about towering apartment blocks but townhouses, walk-up apartment buildings, and duplexes near the city, which are perfect for young professionals.

The well respected Dr Michael Fotheringham, managing director of the Australian Housing and Urban Research Institute, says people need to temper their expectations on how quickly the crisis can be fixed, pointing out it has “taken several decades to dig ourselves into this hole, and it’s going to take a couple more decades to dig our way out”.

“There are no quick fixes … what we need is a comprehensive approach across all three tiers of government, keeping local government heavily engaged and working with the building industry,” he told The Nightly.

Regarding actionable priorities within an overall national and co-ordinated plan, Dr Fotheringham notes the pressing need to boost social housing, which accounts for a mere 4 per cent of Australia’s total housing stock.

“The decline of social housing and home ownership due to straight-up affordability problems, in turn, puts enormous pressure on the rental market,” he said.

“Vacancy rates in the rental market have been hovering around 1 per cent for 18 months. They haven’t been consistently that low since our data was first recorded about 25 years ago.

“We need to think about our housing supply overall. Quite simply, we don’t have enough housing, and one of the ways to achieve that is to think more about infill development, particularly in the middle suburbs where we have had inefficient land use.

“That could be rationalised, so where there was a large block, there could be two smaller plots or townhouses.”

Dr Fotheringham says that to achieve this, governments must encourage and incentivise people and reduce the barriers to building a new home.

For instance, neighbours can object if an old house on an acre block is knocked down and two smaller homes on the same block are proposed. Should they be able to object?

“If you propose building seven stories next door to someone’s suburban house, I can understand objections. But in many cases, we are talking about pretty minimal change,” he said.

“It’s not just zoning. It’s about incentivising and working on community acceptance. In many areas (medium density) is well accepted, but some areas are highly resistant to any increase in density.”

Dr Fotheringham’s third actionable priority is to boost the number of housing construction workers by targeting skilled migration and making our apprenticeship programs more attractive.

“We cannot fix the supply problem without more people using the tools. We need sparkies, chippies and the full range of construction workers,” he said.

Given these challenges, the idea that relocating retirees overseas could somehow resolve the rental crisis seems even more outlandish.

Instead of looking for quick, illogical fixes, we must focus on sustainable, long-term strategies: re-zoning land for medium-density housing, boosting social housing stock, and increasing the construction workforce.

Although complex and time-consuming, these measures will address the root causes of the crisis.