Public Interactive Learning Labs – Housing Markets

Last year we decided to run a series of workshops that would help researchers to discuss their research and engage with the public in an interactive way. We called the workshops Public Interactive Learning Labs (PiLLs). At the end of each Lab we collated videos of the researchers’ presentations and we wrote short summaries of the event, including the public feedback and engagement. Some of the outcomes are available elsewhere but now we are putting all four events here in a series of four blogs. At about 10 mins each the videos are well worth watching!

Housing Markets PiLL

Property Markets, Public Policy and (big) Data by Prof Andy Krause

The Two Tier City and the Missing Middle by Kate Raynor

Rethinking the Big Australian Dream by Prof Piyush Tiwari


What’s up with the Australian housing market?

In a week where we were told that young people could buy houses if they ate less smashed avocado… we asked some researchers to talk about housing affordability, markets and design. In a broad ranging conversation, we learned that there is a common misconception that housing affordability is all about housing supply. Given the categorical rejection of this by our researchers we were taken through some of the other factors that affect affordability, design and supply of housing at different levels.

It turns out that our housing choices matter more than we know! Housing developers in Australia make significantly higher profits than in other countries but we have less choice in styles of housing or arrangements for co-development, co-housing or philanthropic development than other comparable countries. Australians are missing out on sustainable, community friendly housing options because of the lack of incentives and regulations that would encourage developers and investors to innovate in this space.

In a public discussion of the changes in housing markets and development in Melbourne suburbs, four University of Melbourne researchers Professor Piyush Tiwari, Kate Raynor, Dr Andy Krause and Professor Kate Shaw worked with an interested audience of public participants to understand the pros and cons of our housing market and what the alternative futures could be.

Those futures included housing designed for single individuals as Prof Piyush Tiwari indicated that this a significant growth area of housing need, with the number of single person households expected to exceed three million by 2020. Most single occupancy households will be young adults from the ‘millenial’ generation or older people looking to stay in their local communities while downsizing. The idea of ‘appropriate’ housing flowed through the discussion as Prof Kate Shaw showed international housing developments that are economically viable and put social and community needs at the centre of development. Prof Shaw’s research has indicated that more social housing would be made available if land released to developers included up front caveats on the inclusion of social housing.

Dr Andy Krause discussed the ‘rules’ of the housing market in terms of public and private ‘good’. Housing sits in a market area where home buyers need protections – it is a high value purchase and with generally not many available in the market at any time. On the other hand house owners often benefit disproportionately from public expenditure on social goods such as transport, roads and parks. House ownership also implies the ability to create a negative social impact through exploiting private property (for example renting space via AirBnB can create a problem for neighbours). All of these aspects of home ownership imply an unfair social and financial bias in favour of those who can afford to enter the property market.

The advantage extends even more so to those who live in the inner city, as Kate Raynor explained. Households on lower incomes tend to find more affordable housing in the outer suburbs but at the same time they then lack access to good public transport, jobs and other services that are centralised rather than dispersed. This makes accessing jobs and services more expensive in both time and fuel, creating further disadvantage.

There is a second demographic shift happening at the same time, according Dr Piyush Tiwari, as more Australians are looking for rental opportunities rather than buying their own houses. Developers are struggling to understand what the future market needs. Increases in rentals may be a side effect of the cost to buy but it could also be part of a demographic shift to being more mobile both locally and globally, and with Melbourne’s renowned multicultural ethos many immigrants are unaccustomed to the ideal of owning a house and are happy to rent.  This change in housing preferences leads to a need for the market to move to longer term leases and more effective caps on rent increases in order to maintain a reasonable level of housing equity.

Professor Shaw suggested that Australia is now well positioned to change the way that we approach social housing. Following the lead of Canada and Berlin we can look to new types of cooperative housing models, housing associations and other mixed market solutions. Investments required to make this work in Australia could include legislative change to ensure that superannuation funds invest ~1% of funds to low return social housing models. Funding new housing in this way would nudge innovations in property development and create benefits through secure (if low) returns on investment to all of us.