Economics Opinion

Economic reform vital to solving housing crisis

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A steady-state economic system would help to eradicate the housing crisis (Image via Pix4free - edited)

The current economic system that relies on growth is a major factor in worsening the housing crisis and change is urgently needed, writes Mark Allen.

THE CONSTANT PRESSURE to develop is feeding the ongoing housing crisis and this is leading to ever-worsening social and environmental outcomes. By transitioning to a post-growth or steady-state system, we can take a regenerative approach to development that will tackle the housing crisis and the climate and ecological emergency simultaneously. 

The current approach is based on so-called green growth and it is not working. Our collective emissions are increasing as progress in certain areas such as the massive rollout of renewables is offset by a massive increase in the number of planes that are in the sky at any one time. Under the current model, the Jevons Paradox comes into play, whereby any improvements in energy efficiency result in greater consumption of resources over time in the presence of greater demand.

So, we urgently need to transition to a steady-state model that enables some industries to grow (such as railway travel) while enabling others to shrink such as aeroplane travel.

The need to scale down is true also of our housing and development industry. The emissions that are inherent with perpetual development coupled with biodiversity loss and reduced agricultural capacity upon our city’s food bowls means that we must redefine development as renovating, retrofitting and selectively replacing our existing housing. This is as opposed to the current imperative which is to perpetually expand outwards and upwards.

How do we begin this transition? Firstly, we need to phase out negative gearing while providing immediate protections for the hundreds of thousands of Australians who are privately renting. This means rent caps, vacant housing taxes and limits to short-term rentals such as Airbnb. But changes to rental regulations, while important, will make little impact in the medium term.

For the medium term, we need to ween Australia off its reliance upon property investment for capital gains. Otherwise, demand for property will always be manipulated to outstrip supply. This can in part be achieved by transitioning towards a build-to-rent development model, comprising partnerships between the Federal Government and the private sector.

A recent article in The Conversation, titled ‘Greening the greyfields: how to renew our suburbs for more liveable, net-zero cities’, concluded that a new Better Cities program is required in order to better increase densities in the existing suburbs (the greyfields). It also concluded that it should be ‘led by the Federal Government, to establish greyfield precinct regeneration authorities in major cities and build partnerships with all major urban stakeholders’.

The Town Planning Rebellion approach is for these authorities to selectively buy up multiple properties at a time (preferably the most run-down and least robust housing stock) for the purpose of redevelopment. This in turn would enable decent medium-density precinct development to become a reality, unlike the current approach which is slow and piecemeal, leading to duplexes and battle-axe subdivisions.

My own neighbourhood is filled with run-down fibro asbestos houses that, aside from becoming increasingly dangerous, require huge amounts of energy to heat and cool. Even though the area is zoned for medium density, the cost of removing asbestos becomes prohibitive, especially when combined with increasing construction costs coupled with the administrative costs associated with subdivision. This means that homeowners often resort to renting them out as they currently stand, knowing that with demand being so high, they will always find a tenant.

For the most part, we do not have the resources and emissions budget to flatten all our low-density suburbs and start again. Therefore, as we transition to a steady state low carbon society, the main emphasis must be on preserving, reimagining and retrofitting what we already have. This is why zoning regulations that lead to the razing of entire streets while leaving others to go untouched is the wrong approach. Authorities would instead be able to insert appropriate medium-density developments into all areas while ensuring that most of the housing (especially the most robust stock) is kept intact.

A current example of an affordable medium-density precinct project is Murundaka in Melbourne. This is a co-housing project that was constructed on the site of two post-war bungalows. The development has also retained a substantial amount of the original garden which is important. What Murundaka shows is that development of this nature can be done and with systemic change, it can be done at a much greater scale. Transitioning from a predominantly private rental culture to a government-backed build-to-rent culture will ensure the best possible design and energy efficiency outcomes.

Secondly, it will ensure that there is a strong component of public housing without the gentrification that comes with upzoning. Thirdly, it will provide job security for people who are working in an increasingly unpredictable construction industry because, as the sovereign wealth provider, the Federal Government can provide as much funding as is required, as long as the resources and people are there to carry out the work.  

Super funds would also be encouraged to invest in these authorities so that they, too, can make the important transition from investing in developers for the purpose of capital gains towards the long-term rental returns that come with the build-to-rent approach. Even many of the ethical super funds currently invest in property developers such as Stockland, which is currently fighting local opposition to its plans to build on a floodplain.

Another crucial reason for transitioning away from an investment culture that is focused on capital gains is that demand for property will no longer need to be kept inflated. This will enable us to embrace a path towards population stabilisation, which is a crucial component of any steady-state model.

Of course, populations will fluctuate as we prioritise family reunion visas and provide asylum to those who are increasingly becoming displaced by world events. But the focus will no longer be on perpetually driving population growth in order to grow GDP. Instead, it will be about working proactively at home and abroad through mutual aid to build regenerative communities. This consequently leads to both lower fertility rates and families being in a better position to stay closer together at a time when we need to reduce flying to almost zero.

Town Planning Rebellion does not have all the answers to ending the housing crisis but it does emphasise the need for joined-up thinking at a time when we are facing multiple crises that are linked to limits to growth. What we know for sure is that Australia’s housing crisis cannot be solved without systemic change. The good news is that this is a wonderful opportunity to reimagine our society to suit a steady-state model of living that deeply understands that we are all part of nature and not above it.

Mark Allen is an environmental activist based in Melbourne who focuses on holistic activism, sustainable town planning and food ethics.

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