Who can best tackle the housing affordability problem in Victoria?

By Dr Kate Raynor
Melbourne School of Design, University of Melbourne

Tagged:

election; social-policy; population Election; Social Policy; Population Growth

Main points

Liberal Party policy:  

  • Decentralisation agenda aimed at guiding jobs and population towards regional areas
  • Establish a Population Commission with the ability to implement planning restrictions in Local Government Areas to constrain growth until certain infrastructure and employment requirements are met
  • Releasing almost 300,000 plots of land on Melbourne’s fringe
  • Changing zoning rules to decrease medium-density housing on established streets in Melbourne

Labor Party policy:

  • Strategies targeted at first home buyers such as abolishing stamp duty, doubling the First Home Buyers grant in regional areas and a shared equity scheme
  • Rezoning 100,000 housing blocks in Melbourne's north and west, and creating 17 new suburbs
  • Public Housing: 1,000 new units for up to 1,800 people, specifically aimed at family violence survivors; and a Public Housing Renewal Program that will generate small amounts of social housing through the sale of public land
  • Changes to the Residential Tenancy Act to support long-term rental leases and increased rights for renters

Greens Party policy:

  • Mandating that all new developments include portions of “affordable” housing
  • 40,000 new public housing dwellings over the next six years, followed by a further 40,000 public, social and “affordable” dwellings in the following six years
  • Rent increases capped at 2.5 percent each year in line with inflation

Analysis

There is no doubt that a lack of affordable housing is seriously restricting livability in Victoria, with the cost of housing being felt most strongly by low-income households.

The gap between median incomes and median house prices have reached an unprecedented level and rental affordability is decreasing.

There is a 164,000 unit deficit of affordable housing in Victoria and over 80,000 people on the social housing waiting list.

The Liberal Party argues population growth and constrained land supply are making housing unaffordable.

Population growth: The Coalition is pursuing an aggressive decentralisation agenda focused on encouraging growth in regional areas with more affordable housing and reducing population pressure in Metropolitan Melbourne. This agenda is supported by key infrastructure pledges like improved regional rail links, reductions in pay-roll tax for regional businesses and policies to encourage new immigrants to settle in regional Victoria.

Restricted land supply: The Liberal party has pledged to release 290,000 new lots on the city outskirts by 2020. This land release will purportedly reduce housing costs by increasing supply. However, the impact of land supply on house prices is questionable as developers often ‘drip feed’ supply to avoid saturating the market and reducing prices.

The Liberal Party is also targeting their traditional voting base: residents of Melbourne’s most expensive, leafy inner-suburbs. Their campaign includes a promise to return to previous zoning rules that constrained development in residential zones to a height limit of nine metres and prohibited the construction of medium density housing in established streets.

They have made no comments about social housing.

The Labor party argues the problem is declining home-ownership for young people and an insecure and unaffordable rental market.

Labor is taking a more broad-based approach to housing focusing on first home buyers, removing impediments to development, rental rights, social housing and homelessness.

Labor continues to focus on declining homeownership rates among younger Victorians, highlighting the impact of upfront purchase costs on home-owners. They therefore abolished stamp duty for most first home buyers, doubled First Home Owner Grants for regional properties and introduced a shared equity homeownership scheme in their housing policy in 2017. Their election platform includes promises to continue these policies.

The Labor Party has also committed to releasing 100,000 new housing lots on Melbourne’s fringes – considerably less than the Liberal Party. Labor is also targeting several key sites in Melbourne’s inner and middle suburbs, focusing on the renewal of previously industrial land for new housing development.

Labor’s policy includes modest increases in social housing across several initiatives. This includes the so-called Public Housing Renewal Program that will result in the demolition and replacement of 1,000 ageing public housing units across Melbourne and a net increase of least 110 new social housing units. The proposal will sell public land to developers to fund this development and will deliver significant new private dwellings on these sites.

The Greens argue the problem is market-driven housing outcomes and lack of investment in social housing.

The Greens Party lays the blame for the lack of affordable housing on long-term underinvestment in public housing, an under-regulated housing market and a housing system that privileges home owners over tenants. They focus almost exclusively on private and public rental, paying little attention to homeownership.

The Greens want all new housing developments to include a proportion of “affordable” housing (30 percent for 100+ dwellings, 20 percent for developments with 15-100 units). They also propose building 40,000 new public housing dwellings over the next six years, followed by a further 40,000 “affordable” homes in the following six years. They estimate this will cost up to $15 billion to deliver.

The Greens would like to see a cap on rental increases of 2.5% per annum.

They would also like to introduce new mandatory height limits as well as minimum apartment sizes; and have at least 50 percent of roof space dedicated to gardens or solar panels for apartment buildings above five storeys.

Similarities and differences

The Greens and Labor parties share similar goals: a fairer rental system and more social housing. However, Labor is far more modest in their goals and are less interventionalist in the role they see for the government in achieving these outcomes. In the context of housing need in Victoria, their policies are unlikely to make a substantial impact on housing affordability. In contrast, the Greens’ targets depart so far from existing development outcomes in Melbourne that they are unlikely to be economically feasible in the short term.

The Labor and Liberal parties share quite a bit of overlap in their policies as well. Both parties support substantial land release on Melbourne’s outskirts and both are proposing initiatives aimed at encouraging regional development. Labor housing policies are more well-rounded than existing Liberal promises, targeting solutions across the housing continuum from homelessness to homeownership. This is partially as the opposition has had less need to advance a defensible housing strategy.

The Liberal Party focus on decentralisation may support regional growth if supported by sufficient infrastructure and employment opportunities.

This article is part of a series of policy analysis ahead of the Victorian election on November 24, 2018.

Image credit: Bernard Spragg/Flickr

Coalition - Primary Policy Documents

Land & Housing Supply Payroll Tax Planning Limits Population Commission

Labor - Primary Policy Documents

Rent Public Housing New Suburbs First Homeowners 1

The Greens - Primary Policy Documents

'Liveable' Apartments Rent Public Housing

Tagged:

election; social-policy; population Election; Social Policy; Population Growth

Election Watch: Past Editions