Options to address the current housing crisis are generally informed by and confined to economic and regulatory measures. But they might be more effective if aligned with the deep emotional motivations underpinning Australian property ownership and occupation.
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Generally noteworthy for its shallow-as-a-puddle reportage of contemporary housing tastes, some articles in Dwell approach ankle depth.
Anjulie Rao’s jolly frolic in the white picket land of American TV crime fiction’s Murder he Wrote, starring the indefatigable Angela Lansbury, explores a recurring theme – passions unleashed by avaricious property speculation leads to untimely death.
These episodes might provide guiltily dark and cheesy fun, but their thematic link alerts to an all too frequently underrepresented feature of current debate on the housing crisis, which examine the problem through two main lenses. One is the economic conditions that set this crisis apart from other policy emergencies, and another is the political and regulatory conditions under which the crisis emerged or could be resolved.
The depth and power of the existential emotional
investment in our dwellings is another lens
in the housing crisis
This treatment is typical of “reductivist problem framing” the practice of confining analysis to the primary concerns of those entities examining the problem – in this case commerce and legislators respectively and the additional practice of reducing problem complexity into digestible binaries.
Yet, the plot trajectories driving Murder She Wrote remind us of a third lens; the depth and power of the literally existential emotional investment in our dwellings that enable us to develop and project our urban selves and feel at ease in our cities.
Let’s call it the Angela Lansbury lens.
The importance of motivations
According to many observers, the surprise result of the recent US presidential election was due to voters being motivated by feelings, not reason.
So, it is surprising that in current national housing affordability debates there is little accounting of the depth of emotional and cultural weight we place in housing.
It is the contention here that if affordable housing solutions are to succeed, they must be motivationally aligned. Those that do not will suffer from “motivational dissonance” and will almost certainly fail.
When viewed through the “Angela Lansbury” lens, Australian enthusiasm for single dwellings runs very deep, to the extent that apartment living ranks a distant second.
Therefore, successful affordable housing solutions must both increase the density of existing single dwelling development in our cities and overcome the motivational shortcomings of apartment living.
Drift and dilution of the affordable housing debate
The current federal and some state governments were elected on specific promises to resolve the housing affordability crisis.
Though still contested, state solutions coalesced around increasing the supply of dwellings – the “affordably” tag is often omitted – and some other policy tweaks.
Debate in New South Wales now centres on where new increased density might go. The major initiative, called Transport Oriented Development (TODs), is to increase density around public transport nodes.
The idea is sound, but not new.
Sadly though, debate has slipped into time-worn pre-crisis ruts.
Many local governments resist necessary planning changes.
Though keen on the commercial opportunities, the for-profit development industry resists more than 5 per cent affordable housing provision and seeks relief from pesky profit sapping regulations.
Various community groups are loud in opposition – or support – but are otherwise organisationally atomised, leaving renters increasingly desperate.
Other newer initiatives – like the “missing middle” and changed taxation settings – were quietly shelved.
Giddy contradictions infest debates; increased supply will deliver lower prices yet the electorate will reject any policy likely to lower housing prices. (Hint: both are myths, see End Note)
And so, the wheel turns…but only spins.
To impart greater clarity, let’s apply the Angela Lansbury lens to this mess.
As safe as houses
Australians love their houses.
For ill or good, the ideal of home ownership runs deep and is intimately bound up in the way we imagine, develop and project ourselves, in the way we relate to the cities in which most of us live and, most significantly, in our intimate notions of personal freedom. In short, the idea has deep emotive traction.
The home ownership ideal is historically enduring.
As Douglas Pike recounts, South Australia was established on a 19th century speculative settlement model with home ownership – one’s own piece of dirt – at its very centre. The “gold standard” of ownership, the Torrens Title, was invented in that state.
Myths of authentic ’Strayan-ness are set in our backyards.
As praised in that gentle solemn hymn to the modest glories of private home ownership, The Castle, we commemorate rites of family development, demonstrate sporting prowess, dry our washing, ritually cook fauna, keep other fauna as pets, and regularly reify our freedom and urban escape in and around our single detached dwellings.
These deep and complex affections figure little in current analyses of the housing crisis, other than obliquely and disparagingly as the source of NIMBYism, yet as portrayed in “Murder she wrote” these same affections motivate people to kill – at least in fiction.
Home ownership also has a downside. Due to high turnover costs and planning limitations on replacements, older Australians find it difficult to downsize, leading to the prospect of “tombstone suburbs” as populations age.
These atomic perceptions coalesce in national perspectives. The ecstatic praise of private home ownership features prominently in progressive rhetorics of universal social justice and is regularly recited from rubric-illuminated tomes of conservative political catechisms.
How about European style cities?
It is unarguable that we need to intensify development of our low-density cities.
What if Sydney resembled European apartment-dominated cities like Paris or Barcelona?
Short of total urban erasure from natural or human-instigated disasters – think Lisbon and Dresden – the chances that we could change our wayward settlement patterns to resemble these European counterparts is laughably remote due to differences between our respective social, cultural and political conditions, which diverged decades or centuries ago.
It is suggested here that the most importance difference lies in the “social infrastructures” of each locale that are expressed in respective urban settlement and occupation patterns.
To illustrate, though Australian apartment living may resemble European, the security of tenure differs markedly, to the extent that up to 40 per cent of some national populations rent-for-life with no more anxiety than home owning counterparts.
Equally, though the governance arrangements of shared buildings may superficially resemble Australia’s, in European contexts a more equitable balance of occupant and management expectations has evolved over many decades (or more) that permits renter and apartment owners to live as full and productive lives as house owners.
Expressed another way, though similar in regulatory and economic terms, when viewed through the Angela Lansbury lens European apartment living is “more socialised” to the needs and desires of occupants.
Is for-profit apartment delivery model suitable for affordable housing?
Let’s say it upfront: NO.
If it did, the yawning market demand for more affordable housing would already have been met.
Unfortunately, the for-profit sector has other problems.
After ballooning construction problems notoriously afflicted the recently-deregulated industry a decade ago, it had to be re-regulated. Improvements are still slow. The outgoing building commissioner estimated that some 20 per cent of new developments were still defective, despite his efforts.
Contrary to claims of greater land utilisation, Peter Barber and many others observe that precinct-wide apartment densities differ little from medium density houses – like “the missing middle”.
Peter Barber also estimates that the additional construction cost per apartment is some 25 per cent above domestic dwelling rates.
The construction cost burden is exacerbated by developer profits, often reported to be an additional 20-40 per cent of overall cost.
This probably explains why the industry seeks relaxation of current quality controls in order to improve affordability.
Further, apartment construction usually carries a carbon penalty for materials (such as concrete, steel, and glass) and for building operation (such as lifts, common-area lighting and heating) compared to domestic construction.
Anyway, the for-profit industry has repeatedly said it does not wish to deliver affordable housing to anywhere near the extent government now recognises as necessary to solve the problem.
The additional motivational dissonance of Australian apartment living
The management of strata properties is regulated in NSW by the Strata Schemes Management Act 2015 (SSMA). It’s worth a quick scan in order to reveal the complexity of shared ownership.
The SSMA essentially creates the “owners corporation” to manage collective property and confers on its considerable regulatory power to do so – often referred to as the “fourth tier” of government.
Discharge of these obligations in most strata schemes are generally responsibly managed but some go horribly wrong, with sufficient frequency that just about any strata owner can tell a horror story of ineptitude, pettifogging interference or outright fraud they’ve heard of, or directly experienced.
Regular news stories convey the deep incursion into ordinary lives that simply would not be tolerated by home owners, such as the laudable use of balconies to dry washing sustainably.
Likewise, what ordinary homeowners take for granted – the keeping of pets, use of outdoor areas, operation of barbeques, family celebrations, small ball games – are all routinely and minutely regulated in apartments.
For these reasons, the “fourth tier of government” might be better labelled the “Dad’s Army” tier (see title image).
Yet, a further impost is raising concern.
The SSMA obliges apartment owners to pay levies for the upkeep of common property. These are in addition to the taxes and levies they, and home owners, are obliged to pay national, state and local government.
The SSMA also permits the outsourcing of some of these functions – for a fee.
According to a recent ABC Four Corners investigation, this has generated a $7 billion for-profit industry that is marked by rorts, outright thefts and other eye-popping horror stories.
The program also interviewed the freshly appointed NSW Strata Commissioner.
Though largely divesting most of his $3.8 million (yes!) investment portfolio in strata management companies he still retained shares in the sector he was expected to regulate. Unsurprisingly, an investigation was ordered.
The rentier-ist features of the strata management industry are plain and it is apparently large and pushy enough to shape national policy in its own image.
Why should or would any affordable home owner or renter by obliged to find stable accommodation in such a system?
Better motivational alignment of affordable housing policies
Just as it would be silly to use a chainsaw to carve the Christmas turkey when other cutlery tools already exist for that purpose, so it is wrong headed to arm twist the for-profit sector to increase supply of affordable housing when the relatively small not-for-profit (NFP) sector already delivers into that market.
When viewed through the “Angela Lansbury” lens, European apartment living is vastly superior to Australian experience because the former has been much better “socialised”.
Current NFP providers and outfits like Nightingale do indeed attend to owner expectations in ways that resemble the experiences of European apartment living, as this report reveals.
This is why it is suggested here that the NFP and related sectors be turbocharged to service the affordable apartment market long abandoned by the for-profit sector.
Relieved of affordability expectations, the for-profit sector can then be left to address the markets it prefers.
Equally, as home ownership remains so persistently deep in our urban imaginations, the better affordable housing policy would ease its intensification and embedment within our existing urban limits by turbocharging “missing middle” initiatives. That way, “tombstone” suburbs would host urban renewal and aging-in-place would be supported.
To implement both of these outcomes would not require expensive direct government delivery of housing, just simple planning changes and modest investment to regulate the delivery structures.
Failure to resolve the housing crisis will harm our democracy
If we don’t solve the housing affordability crisis with practical solutions – not just restatements of past failed policy positions – then we risk more than the current high cost of living hardship. The US election has shockingly demonstrated that if democracies are to survive and flourish, they must tackle and resolve these tough problems.
When the capacity for problem solving dips below a critical threshold – “the terrain is ready for autocrats who promise simple solutions to complex problems”
Moises Nam describes what happens if they do not; they eventually become “new autocracies”.
He suggests that when even the best democracies are gripped by perpetual oppositional gridlock that leave all sides seething with contempt – when the capacity for problem solving dips below a critical threshold – “the terrain is ready for autocrats who promise simple solutions to complex problems.”
He adds, “this sclerosis can be chalked up in part to regulatory capture, in which industries, through lobbying and political contributions, are able to exert enormous influence over the regulatory agencies supposed to watch over them.” (emphasis added).
Though we are a long way from joining the kind of kleptocratic mafia states that Naim illustrates, we all too frequently discern shadows cast by special interests over our own national policy debates.
Recall, the property development industry was thought so democratically corrosive that donations from it are still banned in NSW – a feature shared with the liquor, tobacco and gambling industries.
In the arc of current housing affordability initiatives, there is nothing to suggest the industry’s influence has waned. The concern for “affordable housing” has all but disappeared, replaced by the need for “more housing”, the industry’s refrain for decades.
Government policy action appears to have reverted to “manage” rather than “resolve”; a condition that suits retention of the status quo.
Fortunately, our response to these kinds of crises has not yet followed America’s tragic democratic decline, though Australian interest in a Trumpian path is already disturbingly evident.
Thus far though, our bipartisan political failure has been corrected democratically with the growth of the crossbench, as the conservative Michael Yabsley observes of “the teals”.
It is perhaps no accident that they are women. As Erica Chenoweth and Zoe Marks observe, women offer effective democratic resistance to insipient authoritarianism.
It is therefore very encouraging to observe the teal’s concern and interest in resolving the housing crisis.
Let’s see if it lasts.
End note
Myth #1: greater housing supply will result in lower prices
The claim is not supported by evidence.
The number of under-utilised approvals points to self-imposed restrictions on supply and is easy to understand why: would any sane developer enter a market if doing so would lower its prices?
Unlike many commodities, construction is largely dominated by those that profit from it. Like markets for oil, diamonds and wool, its members operate competitively yet within a system that is monopolistic.
Myth #2: Policies to lower average house prices will destroy existing wealth
It is often claimed that the electorally-commanding property owning cohort deeply invested in their escalating property wealth will oppose any policies that will lower average house prices across the nation, fearing loss of that wealth.
The claim is misleading.
Suppose in a middle ring Sydney suburb there are two neighbouring single dwellings each valued at, say, $2 million. Let’s say one is purchased and adapted or developed for a further $1 million yielding four small affordable dwellings within the same or similar envelope. Thus, each new owner would need to pay $750,000 for their own slice of property heaven.
The average cost of each separate dwelling would plummet – halving from $4 million shared between two households to $5 million shared between five households – yet the individual “wealth effect” to both original owners would remain unaffected.
This was explored previously and formed part of the “Woollahra buyers’ club” model.
Thanks for this interesting article Mike. Your narrative builds nicely to the threat to democracy of our current ways (I suspect following eventual class division). I’m reminded of “The Tragedy of the Commons’ in a sense. When a basic human necessity (shelter/housing) is so heavily taxed, profited from and restricted in supply it will always lead to troubles in society.
..Suppose in a middle ring Sydney suburb there are two neighbouring single dwellings each valued at, say, $2 million. Let’s say one is purchased and adapted or developed for a further $1 million yielding four small affordable dwellings within the same or similar envelope. Thus, each new owner would need to pay $750,000 for their own slice of property heaven……..But in today’s world the house would be knocked down with the debris going to land fill and a high-rise built with each unit selling for about a million. And how many times can you do this? There are limits to growth.
Hi Don,
Thank you for your comments.
You are correct in general terms but perhaps you have overlooked the fundamental thrust of this and previous related propositions (see link to the “Woollahra buyers’ club”, WBC for short).
The proposition in this current article is that affordable home ownership cannot be fruitfully found in the “for-profit” sector, for the reasons set out. If it could then the unmet market demand would already have been met.
This sector is part of a larger system of housing provision and ownership that has become “financialised” – an awful term I know but now commonly applied.
This larger system is gradually consuming dwellings that were hitherto explicitly insulated from these more malignant market forces – consider what happened to the “Sirius” building and all of Millers Point – and entrenching social and intergenerational inequity as well explained in far too many press articles.
The NFP sector exists, both here and abroad, and delivers into both single dwelling home ownership and collective home ownership (note the Nightingale example).
I describe the Nightingale example of collective dwelling dwelling development as being “socialised” like European counterparts in that the often-competing needs of inhabitants and providers / owners are more equably balanced. An example of this socialisation is Nightingale’s admonition to exiting participants to sell back into the Nightingale eco-system and also not to buy more than one of their apartments, in order to prevent the accumulative property speculation that is a signature feature of the current financialised housing sector. For Nightingale residents nevertheless keen on investing towards their eventual retirement there would be nothing to prevent them doing so in sectors other than housing, such as shares or superannuation, both of which are better economically because they contribute to actual economic growth, not unproductive wealth increases that we currently see in housing sector.
The WBC proposition included binding provisions to this end, but also proposed that registered NFP participant providers of housing would also benefit from planning provisions that allowed them to obtain greater development yield than the for-profit sector. The grounds for this unequal treatment is to accelerate provision of affordable housing.
I suggest that these uneven policy treatments are legitimate grounds for policy intervention. Government has been left to deal with a mess that the market failed to address.
To stress, I don’t suggest that the for-profit sector be dis-benefited, just that existing policy settings remain the same for it as they currently are.
The dire scenario you adumbrate is valid only if the current financialised conditions persist, which is what the WBC and many other similar propositions explicitly aim to head-off.
I trust this assists.
Kind regards,
Mike Brown