Adequate and affordable housing must be a national policy priority

1. Executive summary

Key points

1. Adequate housing is central to our social and economic wellbeing
2. Adequate housing is a national policy priority, as well as a local one
3. Robust, timely data must drive our national housing policy
4. Administrative and transactional data drawn from across government and business has the collective potential to enable a real-time ‘live’ national census of housing

Australia’s housing market has long faced a range of underlying issues that have made it among the most expensive and unaffordable in the world. Since 2020, these factors have been exacerbated and complicated by the COVID-19 pandemic, closed borders and localised natural disasters.

Overseeing this market, Australia’s housing policy, planning and regulation are spread across three levels of government and multiple agencies.

Collectively, this creates a complex landscape in which housing adequacy, availability and above all, affordability, have become challenging for an increasing number of Australians, across an increasing range of locations.

The solutions are equally complex. Gaining access to reliable data and research to truly understand our national housing market dynamics in real-time is a critical first step in designing responses that are effective and appropriate.

PEXA plays a central role in property transactions across Australia and is interested in partnering with government agencies and private sector bodies to enhance data assembly and access to improve Australians’ access to affordable homes.

2. Adequate housing is central to our social and economic wellbeing

Australians have long held a singular interest in all things property. Indeed, securing – and preferably buying – a home has become something of a national obsession, while forecasting the next move in house prices has become a popular past-time for many.

Housing is widely regarded as a good investment that is ‘safe as houses’, but access to adequate housing is also rightly regarded as a human rights issue globally. In this context, the Australian Human Rights Commission notes that:

“The right to housing is more than simply a right to shelter. It is a right to have somewhere to live that is adequate. Whether housing is adequate depends on a range of factors including:

• legal security of tenure
• availability of services, materials, facilities and infrastructure
• affordability
• accessibility
• habitability
• location
• cultural adequacy.” ¹

When considered against this universal criteria, Australia’s housing market is clearly not as successful as it could be (or should be) in delivering adequate housing to all. Measurement, assessment and benchmarking against the aforementioned criteria is not straightforward. It requires a carefully structured framework and multiple data inputs, from multiple sources.

Assessment frameworks are available internationally and have helped to inform Australian housing research, but they have not, to date, been utilised comprehensively at a national level. In an Australian first, OECD Wellbeing Indicators were included in the last Federal Budget, released in October 2022, but only one Wellbeing Indicator was available for Australian housing – housing affordability. Australia scored ‘above the OECD average’ on this indicator, but Treasury notes in the Budget papers that this positive score was largely because the indicator is calculated as the “share of disposable income available after deducting housing costs” that include rent, home maintenance and servicing costs, but not home purchase or mortgage costs.²

This definition may be appropriate in countries where few households own their home, but Treasury notes that Australia’s relatively large homes and high home ownership rates³ mean that “this metric is not effective at assessing housing affordability in Australia as it does not directly capture the upfront costs or mortgage serviceability costs of housing … and does not capture variation between income levels or quality of housing”.

The current Australian Government plans to adopt more of the OECD Wellbeing reporting framework over time, so Australia’s national housing wellbeing indicators will be expanded and refined as better data and internationally comparative measures become possible. This will be a welcome addition to Australia’s annual federal budget reporting systems and to our understanding of genuine housing adequacy.

The factors contributing to the shortcomings of Australia’s housing adequacy (and especially to the long-term decline in affordability) are often hotly contested, as are the distribution of responsibilities, possible responses and preferred solutions.

Without delving into each factor in detail, Australia’s demand for housing seems to be chronically out of balance with its supply, in terms of aggregate volumes and distribution.

On the demand side, Australia has one of the highest adult population growth rates in the developed world, with above-average lifespans and consistently strong rates of net migration. All people need dwellings and the prospect of gaining one (or gaining a better one) in Australia has long been a key attraction for our inbound migrants. We also enjoy relatively high average incomes and wealth to spend on our homes, although the distribution of income and wealth means too many still miss out.

On the supply side, the amount of well-located land for new suburban homes is more limited than is often assumed, and so the huge popularity of Australian housing is overwhelmingly reflected in in its price – as Economics 101 tends to predict will happen in any unrestricted market. Australia’s cities regularly top the annual lists of ‘most liveable cities’ and ‘most popular cities’, but this popularity has also pushed them into the ‘most expensive’ lists for housing and living costs.⁴

Overlaying the fundamental imbalance between supply and demand are a range of complexities relating to the significant role of housing as a wealth asset and investment, as well as a home. These aspects of housing markets touch on Australia’s taxation, retirement, pensions and international investment systems and tend to be more contentious.

3. Adequate housing is a national policy priority, as well as a local one

Housing issues tend to be multi-faceted, with far-reaching social, financial, economic, legal and other considerations⁵. It is therefore somewhat surprising that Australia has not always had a national housing minister or a national housing policy in place. The first dedicated housing minister was appointed in 1945 by the post-war Chifley Government. Since then, there have been repeated and sometimes lengthy gaps between federal housing ministers⁶, despite the perennial importance of adequate housing to national wellbeing and economic development, plus the central role of commonwealth-state funding arrangements to public housing and homelessness services.

Adding further policy complexity, housing infrastructure, planning and regulation is largely funded and implemented by local and state governments around Australia. This decentralised system can work well at a local place-based planning level, but it can also mean that housing policies, regulations and data are fragmented, variable and sometimes uncoordinated or inefficient. Housing market concerns that are manifestly national in origin, incidence or significance can be fiendishly difficult to tackle at this disaggregated, local level. As neatly summarised by Professor Hal Pawson of UNSW:

Multi-faceted problems such as homelessness, unaffordable rents, mortgage stress and a lack of social housing demand joined-up solutions. … micro-measures targeting selected aspects of that system are liable to have minimal or even counter-productive impacts. Housing therefore demands strategic policymaking rather than an incremental or reactive approach.⁷

Within this complex policy landscape, the reintroduction of a national Housing Minister (from 2019) and a national housing policy (the ‘Housing Accord’, announced in 2022) provides timely recognition that Australia’s housing issues are national as well as local.

The Housing Accord is structured to roll out over the next five years. It appropriately recognises the role of all levels of government in housing, together with the property industry, businesses and communities. The roles and responsibilities of each party to the Accord are yet to be negotiated. The Accord – and housing policy more widely – will be advised and guided by a new National Housing Supply and Affordability Council, which will be tasked with providing independent advice, data, research and reporting on key issues in housing policy. Independence and adequate resourcing for the Council will be crucial to establishing its credentials and its ability to shape Australia’s complex housing policy arena.

Collectively, these changes will provide a much-needed national lens across housing issues.

4. Robust, timely data must drive our national housing policy

As housing availability and affordability have deteriorated in recent years, the public debate about possible causes and responses has tended to become more heated. A sound evidence base is now critical in bringing stakeholders together, and to drive a focused, fact-based discourse in this contentious area of national policy and Government service provision.

It is therefore refreshing to see a strong emphasis on building a national housing policy framework that is based on evidence. This is explicit in the Bills to establish the Housing Affordability Council, the Future Fund, Housing Australia (formerly National Housing Finance and Investment Corporation) and the revised National Housing and Homelessness Plan. In support of all of these policy and funding mechanisms, the Housing Council will need to:

Undertake research into conditions which impact housing supply and affordability. … home ownership, rental affordability, homelessness and the number of new social and affordable houses being developed. The Council will also work collaboratively with Commonwealth, State, territory and local government bodies and key stakeholders to collect and publish nationally consistent data. This data may include the volume and price of land, building costs, availability of labour, training schemes, enabling infrastructure and time taken to navigate planning and development processes. … market and non-market housing, land supply and housing density. ⁸

In undertaking this work, the Council will be assisted by Australian Treasury staff and it may engage external consultants for specialist research and reports. The Council itself is not a new idea (similar advisory functions were provided by the National Housing Supply Council before it was abolished in 2013), but this time around, the centrality of its role will hopefully ensure that national housing policy and funding decisions are firmly grounded in national evidence. The data and research itself will need to be wide-ranging and multi-disciplinary. Economics, planning, public health, digital, engineering and environmental research will all be crucial in the development of policy, because the stakes are high and ineffective policies can be costly.

At the other end of the policy process, data-driven, evidence-based program evaluation is also crucial across all areas of government expenditure. Evaluation too seems to be back in vogue with the Australian Government, as articulated by Assistant Treasurer Andrew Leigh:

“Too often, policies are rolled out with little or no evidence to back them up. Some of the worst decisions of recent decades … emerged from an evidence-free vacuum … Failing to rigorously measure what works can literally lead to people getting hurt … Everyone makes mistakes – the key is to avoid making the same mistake twice. Good evaluation helps us learn, adapt, and improve the next time around.⁹

5. Administrative and transactional data drawn from across government and business has the potential to enable a real-time ‘live’ national census of housing

Australia’s newly established national Housing Council (and Housing Minister and housing funding bodies) will require deep access to the latest, widest range of data sources and research capabilities, with a strong emphasis on current, comprehensive, nationally consistent data. Some of the more useful data is held by various national, state and local government agencies, but they require careful collation, coordination, storage and security in order to create comparable, consistent, and accessible national datasets.

Significant national housing data is already collected and curated by federal government agencies including the Australian Bureau of Statistics (ABS), Reserve Bank of Australia (RBA), Australian Institute of Health and Welfare (AIHW), and the data.gov.au initiative that operates under the ‘Open Government’ principles that “require all government agencies to make non-sensitive data open by default”.¹⁰

Australia’s national Housing Census tends to be regarded as the gold-standard or ‘single-source-of-truth’ for Australian housing research. Like all survey-based research however, it is infrequent, costly and somewhat slow to be compiled and released. The Census has excellent participation rates, but for smaller more specialised surveys, survey fatigue can be a limiting consideration for survey-based research at a national level.

Where they are available, administrative and transactional datasets can be preferable to survey-based data and can even supplement and support the Census. In the 2021 Census for example, the ABS used administrative data to improve the accuracy of housing occupancy counts and to fill information gaps that emerged or widened due to the COVID-19 disruptions that affected Census data collections across multiple locations.¹¹

This data is becoming more visible in government reporting and research, which is helping to reduce reliance on costly survey-based or census reporting. For example:

• in national labour market reporting, the long-running ABS monthly labour force survey of households has recently been supplemented by aggregated payroll data drawn from the ATO. This payroll data is more timely than the monthly survey (available weekly and with faster processing time but published monthly by the ABS) and provides wider coverage (85% of all employees are covered by the ATO single-touch payroll system).
• in national consumer expenditure data, the long-running ABS monthly retail sales survey of retailers has recently been supplemented by aggregated consumer spending data drawn from major banks’ transactions records. This transactions data is more accurate than the monthly retail survey and provides a wider coverage across categories of household spending (which can range far beyond physical and online retailing).
• in national housing data, the ABS has published monthly building approvals data since the 1980s, collected from permits issued by local government and other certifying authorities. The ABS notes “The Building Approvals collection is a census and hence is not subject to sampling error … [it] is collected as an administrative by-product”.¹² This high level of accuracy makes the monthly releases of building approvals data one of the most valued and closely watched data sets available for the national housing market.
• in national housing services data, the AIHW publishes annual estimates of homelessness, based on assistance applications collected from non-government housing services.

Another avenue is to investigate data that is collected for seemingly unrelated purposes but can shed light on key housing trends. For example, the RBA is now regularly monitoring changes in household size and composition by examining data collected incidentally in monthly household surveys by the ABS (labour force) and Roy Morgan (consumer confidence) rather than waiting for the 5-yearly Census updates.¹³ Incidentally, this data shows a sharp drop in average household size since the COVID-19 pandemic. The RBA says this drop contributed significantly to rising housing demand pressures over this period and requires more research to fully understand its structural significance.

These various types of data sets and data sources are most powerful when used in combination. No single data source can comprehensively cover everything we could wish to know about housing, but a range of data is available – or potentially available – that could collectively help researchers to answer the big housing policy questions and to identify the most effective policy responses. Some types of housing data could also assist with national security or risk issues, such as international money laundering through Australian property sales.

Rental markets are currently a significant blind spot in our national data collections, but these information gaps could conceivably be bridged with a range of public and private-sector sources. There is also a gap in tracking the supply and utilisation of private-sector affordable housing projects that are built by developers who have gained a concession or incentive in exchange for renting or selling ‘affordable’ housing units to particular categories of occupants (e.g. essential workers or low income households). Private-sector affordable housing is encouraged through a wide range of mechanisms (e.g. consent conditions, subsidies, incentives, philanthropy etc) and has the potential to become an important asset class. There is no central count of such homes, however, and little ability to track whether these homes continue to be utilised as originally intended over time.

In the home ownership segment of the housing market, suitable transactional and administrative data exist but are not made available– in an aggregated, privacy protected and de-identified form or at all – by the local, state or federal agency that hold them (for examples of existing and potential datasets, see Table 1). In some cases, there is no good reason to continue this data lockup.

In an ideal data world, we could collectively enable something akin to a Census of Housing, in real-time and available all of the time, for national housing research and policy purposes. The principles of Open Government and the need for comprehensive, informed and strategic solutions to our national housing issues demand a more collaborative and interactive approach.

¹ICESCR, article 11 and https://humanrights.gov.au/our-work/rights-and-freedoms/projects/housing-homelessness-and-human-rights 

²Australian Treasury, Oct 2022, Budget October 2022-23, Budget Paper 1, pp. 130-134.

³66% of Australia’s 10.8 million privately owned dwellings were owned by their occupants outright or with a mortgage in the 2021 Census. https://www.abs.gov.au/statistics/people/housing/housing-census/2021 

⁴EIU Feb 2023, Global Liveability Index 2022; EIU Feb 2023, Worldwide cost of living 2022.

⁵Other dimensions of housing policy include environment, health, cultural, equity and public safety.

⁶The longest gaps between federal housing ministers were: 1951 to 1963, when house construction came under the Minister for Works in the Menzies Government; 1994 to 2007; and 2013 to 2019.

⁷Hal Pawson, 8 Feb 2023, “Albanese government tackles housing crisis on 3 fronts, but there’s still more to do”, The Conversation, https://theconversation.com/albanese-government-tackles-housing-crisis-on-3-fronts-but-theres-still-more-to-do-198509 

⁸Australian Government Jan 2023, Housing Australia Future Fund Bill 2023, National Housing Supply And Affordability Council Bill 2023, Treasury Laws Amendment (Housing Measures No. 1) Bill 2023. Exposure Draft Explanatory Materials, p. 40. 

⁹Andrew Leigh, 2 Feb 2023, “Let’s stop governments from making the same mistake twice”, Australian Financial Review. https://www.afr.com/policy/economy/let-s-stop-governments-from-making-the-same-mistake-twice-20230130-p5cgl6

¹⁰https://data.gov.au/page/about

¹¹https://www.abs.gov.au/articles/how-administrative-data-improved-quality-2021-census.

¹²https://www.abs.gov.au/methodologies/building-approvals-australia-methodology/dec-2022

¹³Luci Ellis, May 2022, “Housing in the endemic phase”, keynote speech to IDIA 2022 National Congress, RBA; RBA Nov 2022, Statement on Monetary Policy, p. 28.