Housing Affordability

In Parliament - Wednesday, 1 July 2015

Mr DULUK (Davenport) (17:36:42): There has been a lot of debate recently about housing affordability, especially in the Eastern States, and in recent days we have spent a lot of time in this house debating the state budget. One issue not readily addressed in this year's budget is the issue of housing affordability. Housing affordability is not just an issue for the Eastern States but it is also a big issue in South Australia.

I rise today to speak on behalf of many South Australians, young and old, who wish to purchase their first home but are being priced out of the market. I would like to begin by explaining where we have come from. South Australia used to be one of the most affordable places in the western world to buy a home. This was in no small part due to the good work of the Liberal and Country League government establishing the South Australian Housing Trust in 1936.In the Playford era, affordable homes and plentiful jobs were one of the main reasons thousands of immigrants chose to come to South Australia. By contrast, today we have the highest unemployment in the nation and very expensive housing stock. Over 20 years ago in two of Labor's long list of economic calamities—namely, the State Bank collapse and Paul Keating's recession 'that we had to have'—mortgage rates were at double-digit percentages and were approximately 17 per cent at the height of the Keating recession.

Now we have the reverse situation, where interest rates are at record lows but house prices are so high so that they are affecting affordability and making it worse than it has ever been. The situation we have today is one in which many young Australians will only ever own their own home through inheritance or assistance from their parents. Australia is now ranked as the third worst country for housing affordability in the OECD on the measure of house prices to incomes. House prices to average income is one of the fairest ways to determine how much a house costs to the everyday person on the average income. Being the third worst country for housing affordability in the OECD is a shameful statistic for a nation which, according to the second verse of our national anthem, has 'boundless plains to share'.

We all know that the underlying cost of land is one of the biggest factors in house prices, as land is one of the few things that they are not ever going to create any more of. As a consequence, the release of land for housing construction is an important responsibility for state governments, and we have seen time after time the wrong decisions being made in this area, often in favour of special interests rather than first home buyers.

My vision for South Australia is one of a great property-owning democracy where everyone who wants to own their own home can and reasonably hope to do so. The role of government in the housing field is not solely confined to being the 'landlord of last resort', as Housing SA is at the moment, or alternatively to do nothing and hope for the best, which often seems to be the government's modus operandi. The role of government, through appropriate and farsighted planning, is to make sure that housing policy makes home ownership an achievable dream for any South Australian prepared to work hard and save for a place of their own.

The great Australian dream of owning your own home is becoming increasingly out of reach for many young people in our state. The median house price in Adelaide today is $405,000, a 4.5 per cent rise on last year. The median house price has been rising rapidly for a number of years at a rate much faster than that of inflation. In real terms this has meant that housing has become more and more unaffordable for first home buyers who, in many cases, have only their own income and meagre savings to put towards buying their first home.

Sales volumes in the Adelaide housing market have been declining; however, prices have continued to increase. Many young people—especially 'the working poor'—are currently trapped by having most of their weekly income going into overpriced rents, and are unable to save a significant deposit to break into the Adelaide housing market. The jobs crisis that this state is facing will only make the situation worse.

While releasing more land in the Adelaide metropolitan area via urban renewal and infill will help more first home buyers break into the market, there are other policies which must be adopted. Higher density housing along major public transport corridors is critical to providing affordable housing and reducing congestion in the city. Far too often we have witnessed new developments being built without any public transport to service those new areas. By allowing higher density housing alongside railway stations or our train lines there is the double benefit of lowering the cost of housing in metropolitan Adelaide as well as boosting public transport usage. The Belair line, which travels through my electorate, would be a prime candidate for high density living around the railway stations.

A further way to reduce the cost of housing is to encourage retired couples and empty nesters to downsize their homes. I propose that this should be done by providing incentives, or the carrot rather than the stick approach. Many older people I know have been reluctant, in the first instance, to consider the idea of moving into a retirement village, but once they have many have loved that decision. Retirement villages provide a wide range of services and activities to promote healthy and active ageing. However, we need living arrangements for older South Australians to be in the same residential areas that many of them have lived in for 20, 30 or 40 years.

Strong policies that develop South Australia's rural and regional areas, especially by increasing economic activity and thereby attracting more people to these regions, is a critical part of making housing more affordable. We are all well aware that this Labor government treats rural and regional South Australia with contempt, to the great detriment of our entire state. Regional areas need to be attractive for young professional people to want to live there. To be attractive to young people there must be jobs in those locations. Having more people move into regional areas would place significant downward pressure on today's housing affordability issues in suburban Adelaide as well as increasing the economic and human potential of our regional areas.

Affordable social housing is an important part of the solution. The government's moves to encourage more NGOs into the social housing field is one welcomed by me. The announcement this week that the government is demolishing 65 properties and replacing them with 80 to 90 new properties is a good start, but this increases the social housing stock by a net total of only about 30. This is nowhere near enough. The government must build more social housing in its own right as well as encouraging NGOs and other agencies to play a role in this field.

The state government's general response to escalating house prices has been worse than doing nothing. We know, from the Under Treasurer, Mr Brett Rowse, that there have been secret discussions within the state government on considering the sale of HomeStart Finance. This is despite Labor's promise of no privatisation of significant state government assets at the last election. We know that Labor simply cannot be trusted to keep its word.

HomeStart Finance has a lot to teach this government about finance and balancing the books. For example, HomeStart Finance has been profitable in every year of its operation since its creation in 1989. It has also helped more than 63,500 South Australians into home ownership and has filled a gap in the market for around 82 per cent of their borrowers, who were unable to secure finance from the private sector. To sell this asset would not only amount to economic vandalism of the highest degree but would also badly hurt those who need our help the most.

Increasing standards of living, and life getting better for each generation that follows, are important guiding principles for our society. Housing affordability is the issue which will define whether or not our young South Australians get a better deal than their parents and grandparents. It is our responsibility as parliamentarians not to ignore this issue and to make sure that all these young first homebuyers who are prepared to work hard, save and start a family, have a decent house to call their own.