Ensuring all Australians have a safe, secure and affordable home is an important focus of Anti-Poverty Week 2023 (15-27 October). Here, Professor Stephen Whelan from the University of Sydney School of Economics (@USydneyEcon) and Life Course Centre (@lifecourseAust) examines the current state-of-play in Australia’s housing market, its influence on experiences of poverty, and what can be done to improve the future health, welfare and dignity of all Australians.

Adequate housing and shelter is a fundamental human right. It is central to our life experiences and is often used as a marker of poverty. Critically though, affordable, secure and appropriate housing does not simply raise the welfare of households and lift them out of poverty. Rather, it is an enabler. It creates opportunities to engage in economic and social life, escaping or avoiding poverty.

The housing circumstances of Australians have evolved over time. There are now increasing numbers of Australians experiencing housing precarity, housing stress and homelessness. The decline in homeownership rates among younger Australians has been profound and is often cited as a marker of evolving housing challenges as ownership rates have fallen by around one-fifth for those aged 25-34 years of age over the past three decades.

This is leading to a systemic decline in homeownership rates. Recent evidence highlights that Australians are not simply delaying homeownership, many remain excluded even as they approach retirement. Housing has been described as the ‘fourth pillar’ of social insurance and the current situation creates a long-term policy challenge. The flat rate means-tested nature of payments for older Australians means lower rates of homeownership in retirement will expose more people to substantially higher rates of poverty.

As homeownership has been increasingly difficult to attain, more households are being exposed to a private rental market characterised by tenure precarity that has been identified among the worst across developed countries, dwellings that often lack basic amenities, and more recently, a dearth of affordable dwellings.

High housing costs directly contribute to poverty

*Safe, stable and affordable housing is central both to poverty alleviation and also to breaking intergenerational cycles of poverty.* ***Photo by Pexels Oleksandr P***

As the cost of housing has increased, over one million low-income Australia households experienced financial housing stress in 2019-20, spending more than 30 percent of their income on housing. The problem is particularly acute for low-income households in the private rental sectors, with more than half of these households experiencing housing stress.

The burden of high rental costs has become particularly acute in places such as Hobart, where vulnerable groups, including pensioners, singles and the unemployed, face some of the most unaffordable rents in the country.

While high housing costs directly curtails the ability of households to meet other needs and entrenches poverty, housing experiences also permeate almost every other dimension of life. Precarious housing directly impacts the well-being of individuals, through both forced moves and unaffordable housing. Housing precarity in turn feeds employment precarity, limiting opportunities to engage in meaningful employment and creating a feedback mechanism that accentuates poverty.

Research shows that individuals from insecurely employed households had five times greater odds of also experiencing housing precariousness. Precarious housing circumstances is particularly acute for low-income singles, young people and physical violence victims amongst others, which can further perpetuate non-housing vulnerabilities, including poverty.

As a part of the social safety net, social housing has played a relatively minor role in meeting the housing needs of Australians over time, compared to other countries. Moreover, it is a role that has diminished over the past four decades with the limited number of social housing dwellings characterised by long wait lists and available only to an increasingly marginalised population.

The relationship between social housing and poverty is complex. While poverty rates and social housing density are positively correlated, it is not the case that all locales with high poverty are associated with high rates of social housing.

The increasing challenges of securing stable and affordable housing has meant that more Australians are exposed to the risk of homelessness. While the rate of homelessness decreased marginally between the 2016 and 2021 Census, females and especially young females experienced increases in homelessness over this period. Rates of homelessness remain particularly high among Indigenous communities, with one in five Australians experiencing homelessness being Indigenous.

What can be done?

If governments are serious about alleviating poverty, they must address housing.

The solution is not unidimensional, nor is it simple. Rather it requires:

· A sustained commitment and investment by all levels of government to create solutions and opportunities for individuals and households faced with housing insecurity, unaffordable housing options or at risk of homelessness.

· Increased rates of income assistance including Commonwealth Rent Assistance (CRA) payments and additional investment in social and affordable housing dwellings.

· Legislative change to make rental markets work for tenants, creating security and the opportunity to participate in social and economic opportunities.

· Fundamental changes to the way that housing is treated in the tax and transfer system.

The development of a national strategy to address housing and homelessness in Australia is laudable. But it simply represents a first step. Change will not be costless and will represent an investment in the future health, welfare and dignity of all Australians. The potential payoff is enormous and much more remains to be done.

Posted by @LifeCourseAust

Why Housing is Key to Understanding, and Alleviating(!), Poverty