By Ben McEachenWednesday 4 Jan 2023Money: Faith & FinancePodcastsReading Time: 3 minutes
There is one thing everyone can agree on.
We all want somewhere to live that we can pay for.
Housing affordability is an ongoing concern and conversation in Australia, so Money needed to get involved.
Sydney accountant Pete Burrows and Hope Mornings’ Ben McEachen took a positive approach to this real-time pain point.
What strategies exist to help make housing more affordable?
What part does morality play in this debate about dwellings?
Firstly, though…
What is affordable housing?
“It’s housing that is affordable,” Pete said.
Ben would not let Pete stop at such an obvious definition.
Spurred on, Pete explained how the Australian Government defines affordable housing “housing that people can afford, without financial stress”.
Before you could ask, Pete added that “financial stress” is when your housing costs are more than 30 per cent of your “gross family income”.
This might be your situation right now.
Some have chosen to outlay more than 30 per cent but, for others, this amount is excessive and untenable.
Pete and Ben briefly examined several options for the possible easing of housing costs in Australia.
More rental homes you can afford
In the October 2022 Federal Budget, the Labor Government announced the “aspirational” target of one million new rental properties in five years, starting 2024.
Pete pointed out that based on pre-COVID levels of home construction in Australia, this goal was not out of the realms of possibility.
“It’s ambitious; it’s the Government trying to build an accord between itself, the banks and investors such as super funds which have not traditionally been brought into this,” Pete said about the Government’s “one million” target.
Seemingly key to success of this accord is the Government actually being able to establish such collaboration, and the financial incentives it offers to entice private sector into affordable housing projects.
What other strategies are there?
One of the most unpopular strategies for combatting housing affordability issues has been the scrapping of negative gearing.
Pete said the tax incentives, such as those linked with negative gearing, have “skewed” many Australians towards property investment.
Getting rid of negative gearing has been floated as a way to discourage property investment and deflate prices.
But as Pete pointed out. “it’s unpopular” for governments to suggest scrapping negative gearing.
“There are a lot of voters that have built their wealth, finances and future around their investment in rental properties.”
So, Ben and Pete dive into other ideas for making housing more affordable.
Have you heard about the National Rental Affordability Scheme? Ben had not until Pete filled him in and it sounds like a great scheme for subsidising rent.
And it already exists in Australia.
Along with NRAS, Pete and Ben consider the Welcome Mat as another example of deliberately choosing to charge less rent for those who most need financial respite.
“This sounds like a great potential solution,” said Ben, “but one of the challenges is that the landlords have to be the ones who take a [financial] hit.”
Such discussion about subsidy of rent leads Pete and Ben to try to apply the Bible’s wisdom about housing.
Surprisingly, in a chat about housing affordability, they take a swing at the idea of housing as a “human right”.
“I don’t think God cares that we have to live in a brick, tiled three-bedroom in a capital city and have 2.2 kids,” Pete said.
“I don’t know that [God’s] that specific about what’s our right for the standard of housing we should live in.”
Ben agreed and pointed to Jesus’ summary statement – “Love God and Love your neighbour” – as a better foundation for approaching what we can do about housing affordability.
Whatever applying it might look like, in whatever housing situation you can influence.
Listen to the full Making Housing More Affordable episode in the player above or wherever you get your podcasts.