Meet the Solutionists, with Mark Scott

Australia has more homes per adult than at any point in our history. So why is our housing crisis worse than ever?

Professor Nicole Gurran’s been studying housing for 15 years, and she says the solutions to Australia's housing crisis are obvious – it’s the execution that’s failing, and most Australians are being distracted by media and politicians.

Nicole explains why "cutting red tape" won't solve the problem, why  more than a million Australian households are living in housing stress, and what happened when government funding for social housing fell off a cliff in the mid-90s.

Mark Scott  00:01

This podcast is recorded at the University of Sydney's Camperdown campus on the land of the Gadigal people of the Eora nation. They've been discovering and sharing knowledge here for 10s of 1000s of years. I pay my respects to elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander people. You can't talk about housing in Australia without adding the word crisis. Young people can't afford to leave home. Renters spend more than half of their income on rent. Social housing seems like an afterthought. The diagnosis seems obvious: we don't have enough houses. The solution seems clear: build more. Across the political spectrum, there's agreement that planning regulations are holding us back, that red tape is the problem, that if we just cut through the bureaucracy and approve more developments, the crisis would resolve itself. But what if that framing is wrong? What if focusing on supply and planning reform is distracting us from the changes we really need to make. Nicole Gurran has been studying housing for 15 years, and she says the solutions to the housing problem are actually very straightforward, we're just not doing them. This is the Solutionists, I'm Mark Scott. Nicole Gurran is professor of Urban and Regional Planning at the University of Sydney, and director of the Henry Halloran Research Trust. She led the People's Commission report “Voices of the Crisis”, which outlines the real solutions to the housing crisis in Australia. Nicole, you're not sure people really understand the housing crisis. What's your understanding of the common view of the crisis? 

Nicole Gurran  02:08

Yeah, and you know this is a word that's crept in lately. Obviously there's always been inequality actually in housing systems, but if you listen to the news right now, you'd think that the housing crisis we've got in Australia is that we don't have enough homes. That's actually not the case. In fact, Anglicare’s sums show that we've got more homes now per adult than we've ever had at any point in Australia's history. The problem that we have is that the homes that we've got aren't equally available to the people who need them. And so we've got, you know, some people who are able to own multiple properties and have access to large space while we've got other low income earners who can't even affordably, actually, access a room to share, let alone an appropriate decent apartment to rent.

Mark Scott  03:00

So why is there this common narrative that doesn't tell the real story? What aren't we seeing?

Nicole Gurran  03:06

If we go back to fundamentals and say where the housing problem is in Australia, it's primarily a problem if you're a low-income renter and a middle-income aspiring homeowner. Then we're talking about a lot of people. So we're talking about 1.26 million households, low-income renter households, who are living in housing stress, paying more than 30% of their income on housing, doing without doctors, you know, dentists, food in some cases, you know, certainly facing precarity. That's not even talking about the rising visible homeless population, and then we've got a cohort of aspiring first home owners who are middle incomes and increasingly high incomes now, who simply can't get into the market because of the high deposits, and then the very high home loans that they need to accumulate. That group is crowding together in the rental system and creating even though, in fact, our private rental sector has grown phenomenally over the past 30 years. It's expanded the supply of private rental housing stock itself, expanded faster than household growth, for instance. But we've got all of this competition in a private rental sector that was never designed for people to live long-term. It was only ever intended to be a transitional.

Mark Scott  04:27

Passing through. We're recording this at the University of Sydney. Sydney seems obsessed by real estate. To what extent is this a Sydney issue, or is it really a national issue?

Nicole Gurran  04:39

Look, housing affordability actually is an international issue. I mean, it's a cruel irony though, that in a wealthy country like Australia, where you know, the value of our housing stock continues to rise and rise, and with it, the wealth of the two thirds of Australian households who do own their own property, as well as property investors. So a cruel irony that we can't then afford to decently house people on low incomes and people who aren't already in ownership. But it's a national problem. We look, those of us who live in Sydney, look at regional areas and see relatively lower house prices and also lower rents, but in actual fact, relative to income and certainly relative to job opportunities as well, those rents and prices are out of reach. And in fact, homelessness in regional areas is an absolutely chronic problem. Also in regional areas, you see very, very shallow rental markets, it's very difficult to actually find somewhere to rent, even if, hypothetically, the rents are lower.

Mark Scott  05:43

So, I want to come back to what the right solution might be. But I'm wondering if, in fact, an incorrect diagnosis, a diagnosis around housing shortages, is bringing an intervention that's been counterproductive. So, if in fact, we did kind of cut red tape and reduced regulation and provided the right incentives to developers, would that help solve housing issues we've got now or is that a diagnosis to the wrong disease?

Nicole Gurran  06:12

We've had several decades, actually, of planning reform, and every sort of five years or so, governments will say we need to cut red tape. And you know, a very plausible explanation for that is, firstly, in a country like Australia, where 2% of homes are supported by government and the rest are delivered by the private market, there's a limited amount that governments can do unless they're willing to go back to their 1980s and 90s, when there was considerable investment in social and affordable housing. Now, funding for social and affordable housing fell off a cliff in the mid 90s, and instead, we redirected our efforts to providing a very limited rental subsidy for low-income earners to rent in the private market. And of course, we're familiar with the generous taxation incentives for property investment, such as the capital gains tax discount introduced in 2000 and negative gearing, which was switched off for a short period of time, but that's the generous property tax incentive for investors. Those two things drive demand to the existing housing stock without any obligations for landlords, for instance, to provide an affordable or long-term or even decent, quite frankly, in many cases, rental unit. But it's left us in Australia, dependent on a fragmented private rental system dominated by individual property investors and a housing construction industry that increases volume when prices rise but tends to plateau when market conditions are poor. So we've got two things going on. We've got the very real need to continue to produce new homes in line with population growth and change, and that's important, and that's why I wouldn't say we don't need new housing supply, but we're kind of overcooking the solution. We need new housing supply. We need high-density housing supply. We need all of the things that we're talking about, but that's not going to solve the absolute housing crisis that's affecting low-income renters and people aspiring, middle-income Australians aspiring to first home ownership. To help that cohort, we need to go back to investing in social and affordable housing, adequate rental subsidies, and actually looking at how we create new housing products that aren't simply, you know, churned out by the market as investment products.

Mark Scott  08:51

If you look at the media in the public debate, it feels like the housing crisis is uniquely Australian, but in reality, it's an international problem, isn't it? What is unique about the Australian challenge, and how does it track with other countries?

Nicole Gurran  09:08

Yeah, that's fascinating. On the question of, you know, is housing affordability an international problem, It is, and it links to what researchers like to call the global financialisation of housing, or the assetisation of housing. A lot of wonderful researchers here at the University of Sydney actually, have you know, explained how with financialisation more broadly, sell access to cheaper finance that ended up being invested in things like property. And with a whole lot of financial innovation as well, you suddenly have people able to invest in property in one part of the world or in one part of Australia without actually even living in it. And you know, so houses have become a very good place to store wealth. So we've increasingly had this politics of housing ownership or property ownership as opposed to a politics of residence. You know, where people live, people being able to form and maintain strong bonds with their communities, communities that are inclusive enough for people to move into. And that problem, per se isn't uniquely Australian, but there's a couple of things that sort of shape our responses. The first thing is, because traditionally, we've only ever had quite a small proportion of households living in public housing or socially subsidized housing. We were about 6% through the mid 90s, even though our government produced more than 10% of the housing stock at points in time. But we've traditionally had not a very strong social housing sector. Now, countries like in Europe, for instance, in the United Kingdom, when the governments began to retreat from, you know, heavily subsidising the housing sector, they already had strong institutions able to continue to provide the homes that lower income earners needed at scale, and that's a very important part of the housing system. And even if we look at countries like Hong Kong or Singapore with very strong traditions and ongoing traditions of government involvement in housing development and in social housing production, Australia looks like an incredible outlier in comparison to those countries. And then the other thing is our unique geography, because despite being so large, we're one of the most urbanised countries in the world. And in fact, you know, 60% of the population live, you know, in two or three capital cities. And by failing to actually decentralise the geography of opportunity in Australia, we've made it even more difficult for people to have their choices in terms of where they live and are able to, you know, have decent housing that's within striking distance of their jobs, you know, let alone family and social networks.

Mark Scott  12:00

As you look around the world, are there countries or models you think Australia should be looking at for inspiration in dealing with these issues?

Nicole Gurran  12:09

We can look internationally, and we can see that there are a number of things that Australia could be doing and we aren't doing. There's some small things, like, for instance, Australia is an absolute outlier that when we rezone land for new housing development, or when we, you know, reuse government land, for instance, or you know offer it up for sale, we're not seeing a significant affordable housing component as part of that new housing development. Now we're an absolute outlier there on not using inclusionary planning as a, you know, as a baseline expectation. We have seen recent, sort of tentative steps in that direction, but, you know, at a very very small level, you know, in international scale. We can also see governments such as, you know, Singapore and Hong Kong very, very firmly involved in housing development, and particularly public housing and social housing development, and European countries doing that as well. And then we have the really inspiring examples of some non-market forms of housing that are aimed at people across the income spectrum, for instance, in various points in the life cycle. But housing cooperatives, deliberative housing development, that groups are able to do their own development together on a limited profit model. Community land trusts, where a non-profit organization owns the land, but individuals own the dwelling on the land and so, you know, again it's a it's a way of really decommodifying actually, housing and providing homes for people to live in securely build communities, but it's not about housing primarily as a financialised asset.

Mark Scott  13:58

That all sounds kind of intriguing and interesting and kind of fascinating that there are models readily available and accessible from around the world if, if good solutions are fairly straightforward, why have they got so little political traction in Australia? Why have we seen a failure of political will to look for these kinds of answers to what appears to be a pressing domestic problem.

Nicole Gurran  14:24

Well, a decade ago, my colleague Peter Phipps and I actually wrote an article saying, you know, why don't governments want to fix the housing problem? And we were talking particularly about Australia, and we use the term busy work to describe the tactic of whenever the housing problem comes up, what do you do? You announce a task force, you call for planning reform, you blame other levels of government, absolutely, because the politics of housing in a country like Australia remain weighted towards the existing two-thirds of Australians who own their own homes, plus the, you know, very significant property industry. Now, Australia is not the only country to have a politics of home ownership that is, you know, that kind of dominates the debate, but it's very tempting for governments to continue to call for things like, you know, planning reform, blame other levels of government, blame so called NIMBY communities, rather than do the more complicated things like tax reform, which is essential, actually, if we want to free up the financial resources even to reinvest in social and affordable housing, let alone even the playing field for first home buyers trying to purchase on the market. So, you know, we have a vested interest in maintaining the status quo and a set of tried and true political strategies for seeming concerned about housing, acting busy, but making sure that that status quo is maintained. And until we've got conviction, politicians who are able to lead us to a real path of reform around housing, the politics of housing are still going to push us in the other direction.

Mark Scott  16:21

So play it forward. You know, five years, ten years, twenty years. If we don't make significant reform, given the pressures that we see now on low-cost, affordable housing and home ownership affordability, what's a decade or two going to mean to what we're seeing on the ground?

Nicole Gurran  16:41

Well, we've barely begun to see what's actually happening under the surface, the absolute grinding poverty and the impact of that grinding poverty on the you know, 1.26 million households, Australian households, who are, you know, foregoing medicine and living in absolute precarity. Now that's going to continue to worsen, that the unfairness that we're seeing, the tenure-based inequality, will only worsen. We will unfortunately see more obvious street homelessness. We will see the intergenerational impacts of poor housing, and we haven't even talked about the combined crisis of vulnerability to climate change, and, you know, housing poverty, and that's already playing out. It played out in Lismore and in the Northern Rivers, you know, and in many other parts of Australia, because we know that lower income people who are precariously housed are also at the front line of the climate emergency. You know, they're living in uninsulated, poorly maintained, you know, properties that are often exposed to extreme heat, but also often in, you know, flood liable areas. And you know, and so it goes on.

Mark Scott  17:58

And you expect to see significant movements of young people away from the most expensive cities like Sydney and Melbourne in pursuit of home ownership?

Nicole Gurran  18:08

It'll be interesting to see how that plays out. At the moment, we still don't have the economic opportunities for people beyond the capital cities, and so we've certainly seen people want to regionalise in their housing choices. But often we see it's actually older people, pre retirees, perhaps move to the regions, you know, in their late 40s and finally able to achieve home ownership in the regions, actually triggering a ricochet effect in those regional towns, actually, you know, causing price pressures there as they go. So potentially, I think regional decentralisation actually would be a wonderful part of the housing solution, but that needs some planning around it to, you know, to make it genuinely an alternative for younger generations and also for people in the regions actually themselves, to not need to move to the cities themselves, you know, in search of economic opportunities.

Mark Scott  19:05

Why have Australian governments, state and federal, moved so strongly away from the provision of social housing? What was there about social housing that became politically problematic in Australia compared to other parts of the world?

Nicole Gurran  19:20

I mean, worldwide there has actually been a retreat of the so-called welfare state. It's just that Australia had a very low base to begin with, and so our retreat was, you know, from say 10% of housing production by government to, you know, less than 2% and at any one point only 6% it's stuck in the social and affordable housing sector. So we were caught up by the waves of neoliberalism that other comparable countries experienced, the shift to believing that the market was best placed to solve social problems and that government's job was to get out of the way. And that meant, yeah.

Mark Scott  20:00

Why wasn't the market well equipped to deliver that stock of housing?

Nicole Gurran  20:05

Well, in part, because of this assetisation effect that, you know, I've described in as much as housing has become more than only a place to live. Now, homes are also a very unusual good, if you like. They're not like, you know, bananas, where you know, when the price of bananas goes up, people switch to apples, you know, and oranges. You can't really do that. So houses aren't very substitutable. Bananas disintegrate at some point in time, so you can't stockpile them. Unlike houses, which are, you know, very durable, very expensive to produce. You know, one banana is pretty similiar to another banana, you know, if you asked me, whereas houses are very unique and they're fixed in place. So we've got sort of a narrative, an economic narrative about houses being just like bananas, and the only problem being one of, you know, artificially constraining the production of bananas, which actually is completely at odds with how housing systems have always worked. And then became even more at odds once we added in this, you know, the global financialisation of everything which ended up investing in housing in particular.

Mark Scott  21:28

The People's Commission report that you led gave a series of recommendations about that. Can you walk us through the essential findings?

Nicole Gurran  21:36

Sure, and I was a commissioner, independent Commissioner with Doug Cameron, former politician, and it was organised by a coalition of housing advocacy bodies around Australia. It was extraordinary, and we heard testimony from more than 1000 individuals and organisations as to the impact of the housing crisis for them. There are essentially three or four key recommendations that they’re repeating. The first is to reinvest in social and affordable housing. We need 640,000 social and affordable homes Right now, we're on track in Australia to about 55,000 by the end of the decade. So, you know, we really need to completely change the way that we invest in housing in this country. We need a fairer taxation system for all of the reasons that I outlined. We also need to look at a fair deal for renters in the private sector so that it becomes a secure and decent tenure to live in. We should also be looking at housing justice for First Nations communities. Now we can see many really wonderful examples, actually, in the First Nations Space of Indigenous-led designed models of housing delivery, but a lot more support and investment needs to go into that space as well. And lastly, of course, we absolutely have to look at a more environmentally sustainable and resilient housing system.

Mark Scott  23:10

That's Nicole Gurran, Professor of Urban and Regional Planning at the University of Sydney, cutting through the noise about what's really driving Australia's housing crisis. And if you're thinking about the systems that shape our cities and communities, you'll enjoy our episode with Ian Goldin from Oxford.

Ian Goldin  23:29

The cities aren't defined anymore by natural resources or crossroads, they're defined by being very liveable, good places to be. As more and more people from professional backgrounds come to them, they develop more wealth, and they become the places to be.

Mark Scott  23:44

You can listen to that episode of the Solutionists right now, and make sure you're following the show so you don't miss an episode. The Solutionists is a podcast from the University of Sydney, produced by Deadset Studios.

The Solutionists is a podcast from the University of Sydney, produced by Deadset Studios. Keep up to date with The Solutionists by following @sydney_uni on Facebook and Instagram, and @sydney.edu.au on Bluesky.

This episode was produced by Liam Riordan with sound design by Jeremy Wilmot. Supervising producer is Sarah Dabro. Executive editors are Kellie Riordan, Jen Peterson-Ward, and Mark Scott. Strategist is Ann Chesterman.

This podcast was recorded on the land of the Gadigal people of the Eora nation. For thousands of years, across innumerable generations, knowledge has been taught, shared and exchanged here. We pay respect to elders past and present and extend that respect to all Aboriginal and Torres Strait Islander people.