Chapter 3Background on housing
With a current national vacancy average of less than 1 per cent, expanding and creating new jobs is problematic. Many businesses report that the ability to fill skills shortages is only part of the challenge, with the ability to house [workers] proving at least equally problematic.
3.1The primary issue affecting workforce development in Northern Australia is housing affordability and availability.
3.2However, housing shortages are also a state/territory, national and, to some extent, international issue, with local, national and international causes. Many of the factors leading to housing shortages across Australia are likely to be exacerbated in parts of Northern Australia.
3.3This chapter sets out the background to housing shortages atboth the national level and in Northern Australia, where data was available. The chapter covers:
how housing affordability and rental costs have changed over time in Australia;
reasons for issues with housing affordability and availability; and
data on housing and rental affordability in Northern Australia.
3.4It should be noted that there is far more data reported publicly on housing affordability than availability. However, the affordability of housing is a reflection of supply and demand. To put this another way, if housing is becoming less affordable over time, this suggests that there are not enough homes to meet the needs and/or demand of the population, and there is an issue with availability.
Measuring housing affordability
3.5There are multiple ways to measure housing affordability, including:
real house prices: the actual cost of houses, whether average or median, over time;
ratio measures: the proportion of household income spent on housing over time; and
residual measures: the capacity of a household to maintain acceptable living standards after housing costs.
3.6In Australia, housing affordability is typically reported using the following terms:
price-to-income ratio: the ratio of housing costs to gross household income; and
housing stress: the proportion of lower-income households that spend more than 30 per cent of their gross income on housing costs.
Housing affordability in Australia over time
3.7The available information on housing affordability in Australia indicates that Australia has insufficient affordable housing to meet current demand. This is not a new issue, but it is one that has become particularly apparent since the onset of the COVID-19 pandemic. Even in 2015, it was apparent that housing supply was not keeping pace with demand. The data suggest that housing affordability and availability has worsened considerably since then.
3.8According to OECD data, between 2001 and 2021, house prices increased in both real terms and as a proportion of income in Australia, especially in the last two years (Figure 3.1).
Figure 3.1Development of house prices, Australia, 1996–2021
Source: OECD, HM1.2 Housing prices (spreadsheet 1.2.1 AUS), https://www.oecd.org/housing/data/affordable-housing-database/housing-market.htm (accessed 3 October 2023)
Box 3.1 The international experience Trends in the declining affordability of housing seen in Australia mirror those experienced internationally, largely driven by labour shortages, shortages in construction materials, the frequency and impact of natural disasters and climate change, the impacts of COVID-19 lockdowns, and historically low interest rates. The cost of housing has grown faster than incomes in most countries, according to data from the International Monetary Fund. As of late 2022, more than 1.8 billion people did not have access to adequate housing. Around 1.6 billion people are expected to be affected by a global housing shortage by 2025. |
Home ownership and rental affordability in Australia
3.9Long-term data indicates that home ownership rates have been declining over recent decades, with more and more Australians renting for longer. According to data from the ABS, between 1999–2000 and 2019–2020, the percentage of Australian households owning their own home:
with or without a mortgage decreased from 71 per cent to 66 per cent;
without a mortgage decreased from 39 per cent to 30 per cent; and
with a mortgage increased from 32 per cent to 37 per cent.
3.10In relation to rental affordability, according to a 2023 paper from the ABS, rent increases have 'become more common and larger on average' since 2021.
3.11Around a third of Australian households rent their homes privately or in public housing. Renters are more likely to experience rental stress and are more likely to be from low socio-economic backgrounds compared with homeowners, both those with a mortgage and those who own their home outright.
3.12The ABS publishes quarterly Consumer Price Index (CPI) data in index form about price changes in actual rents (Figure 3.2). April 2023 statistics indicate a steep increase in advertised rents since around May 2020, and a slight increase in rents as measured in the CPI (which measures price changes for the stock of all rentals, not just asking prices for those advertised).
3.13Since July 2018, the ABS has recorded data on private rental properties across regional and capital city areas, comprising 32 per cent of rental dwelling stock as recorded in the 2021 Census. The ABS reported that June 2022 to June 2023 recorded an annual rental price rise of 6.7 per cent—the largest increase since 2009.
Figure 3.2CPI rents, May 2005–May 2022
Source: Australian Bureau of Statistics, New Insights into the Rental Market, 24 April 2023, https://www.abs.gov.au/statistics/detailed-methodology-information/information-papers/new-insights-rental-market#cite-window1
Note: Monthly data are available for CPI rents from September 2017. CPI rents are not seasonally adjusted, and advertised rents are seasonally adjusted.
3.14Some of the key factors driving the decline in housing affordability and availability in Australia include rising interest rates, labour shortages, strong housing demand, tax, stamp duty, GST costs associated with construction, and issues with planning restrictions, zoning, and regulations.
Data on housing and rental affordability in Northern Australia
3.15Data specifically on housing affordability in Northern Australia are limited. However, the ABS has reported estimates of the median price of established house transfers by jurisdiction, divided into capital city and the remainder of the state/territory, by quarter since September 2003.
3.16Figures 3.3, 3.4 and 3.5 present this data for unstratified houses for the three states that are partly or wholly located within Northern Australia. In short, median house prices for established houses have risen in regional areas of the three jurisdictions since the beginning of the COVID-19 pandemic in 2020, particularly in Western Australia and Queensland.
3.17It should be noted that while broader issues about housing in Australia relate largely to affordability, issues raised in evidence to the inquiry about housing in Northern Australia have related often to a lack of housing stock for the additional population needed to meet workforce demands in particular areas. In other words, employers reported that they were unable to import workers from other parts of Australia (or overseas migrants) because these workers were unable to locate suitable and appropriate housing, whether to purchase or rent, before commencing employment. As such, data on housing affordability may not give an indication of a decrease in housing availability in Northern Australia for additional people seeking to move there.
Figure 3.3Median price of established house transfers in Queensland (unstratified), June 2004–June 2023 ($ '000)
Source: Australian Bureau of Statistics, Total Value of Dwellings, 12 September 2023, https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/total-value-dwellings/latest-release, spreadsheet for Table 2: Median price and number of transfers (capital city and rest of state)
Figure 3.4Median price of established house transfers in the Northern Territory (unstratified), June 2004–June 2023 ($ '000)
Source: Australian Bureau of Statistics, Total Value of Dwellings, 12 September 2023, https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/total-value-dwellings/latest-release, spreadsheet for Table 2: Median price and number of transfers (capital city and rest of state)
Figure 3.5Median price of established house transfers in Western Australia (unstratified), June 2004–June 2023 ($ '000)
Source: Australian Bureau of Statistics, Total Value of Dwellings, 12 September 2023, https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/total-value-dwellings/latest-release, spreadsheet for Table 2: Median price and number of transfers (capital city and rest of state)
3.18The most recent ABS data release on housing occupancy and costs, or the sum of rents, rates, mortgages and loans, by state/territory for 2019–20 indicates average weekly housing costs for households were highest in the Northern Territory ($381), with Queensland as a whole coming in as fifth most expensive ($300) followed by Western Australia as a whole ($293).
3.19While it provides only limited data on affordability, the Parliamentary Library publishes electorate-level data on housing based on the 2021 Census. This information provides an indication of electorate-level differences in housing affordability across Northern Australia. For example, 47 per cent of households in the electorate of Lingiari, which covers most of the Northern Territory, were in rental accommodation as at the 2021 Census. Fifteen per cent of occupied private dwellings were housing provided by the Northern Territory Government (social housing). Almost 10 000 people in Lingiari, or 4 per cent of the population, were living in severely crowded dwellings. Only 12.6 per cent of households were paying more than 30 per cent of their household income on rent.
3.20On the other hand, at the time of the 2021 Census, in the electorate of Capricornia, which includes the Queensland city of Rockhampton:
30 per cent of homes were rented, of which only 2.5 per cent are provided by the Queensland Government;
23.2 per cent of households were spending more than 30 per cent of their household income on rent; and
78 people were living in severely crowded dwellings.
3.21As a general note, nine of the top ten most socio-economically disadvantaged Local Government Areas in Australia are located in Northern Australia. Most of the Northern Territory is classed as being among the most socio-economically disadvantaged areas in Australia, according to ABS data. In particular, there is 'significant overcrowding in remote Central Australia' where a house may have up to 14 people living in it.
3.22This varies from other parts of Northern Australia. The Queensland Government, for example, reported that according to the most recent Census data, 81.2 per cent of Aboriginal and Torres Strait Islander peoples in Queensland live in appropriately sized (not overcrowded) homes.
Data on rental affordability
3.23Like data on house prices, there is limited data on rental affordability for Northern Australia. As a general note, since 2021, rental inflation has increased across regions, property types and for new and existing tenants, with rental increases becoming more common and larger on average. According to ABS data, between June 2019 and June 2022, rents in general increased the most in regional areas that were furthest away from a capital city. For example, rent for dwellings located more than 1000 kilometres from the Central Business District of a capital city increased by 6.6 per cent. Over the year to February 2023, rental costs increased by around 6 per cent in both capital cities and regional areas (Figure 3.6).
3.24The Rental Affordability Index, published by the National Shelter, Community Sector Banking, Brotherhood of St Laurence and SGS Economics & Planning, provides limited data on housing affordability by postcode, excluding the entire Northern Territory and most postcodes in Queensland and Western Australia. The Index uses 30 per cent of income as a minimum benchmark to determine rental affordability stress. According to data reported for Quarter 2 of 2022:
rent for postcode 6725, for Broome and surrounds, was moderately unaffordable;
rent for postcode 4703, near Rockhampton, Queensland (including Yeppoon), was moderately unaffordable; and
rent in other postcodes for which there were data available in Northern Australia were acceptable or better.
Figure 3.6Annual rent inflation - Capital cities versus regional areas, June2019–June 2022
Source: Australian Bureau of Statistics, New Insights into the Rental Market, 24 April 2023, https://www.abs.gov.au/statistics/detailed-methodology-information/information-papers/new-insights-rental-market#cite-window1
Note: total price dwellings excluding rent assistance. Stratified by Statistical Area 3 (SA3) and property type
Concluding remarks
3.25As outlined in this chapter, Australia is experiencing a housing crisis, with housing becoming less affordable and less available. These issues are even more acute in Northern Australia. Chapter 4 will discuss some of the reasons and impacts related to the lack of affordability and availability of housing in Northern Australia and will outline the committee's views and recommendations to address these matters.