The Guardian • Issue #2015

The devil in the details of the “housing crisis”

Part 2

Photo: rodtuk – (CC BY-NC-SA 2.0)

In part one, we revealed that approximately one-fifth of households surveyed by the 2021 Census own nearly fifty per cent of the total amount of private dwellings in Australia. We then looked at some of the solutions proposed by the major parties to address this problem and the deficiencies of those approaches. In this part, we’ll be looking at some of the consequences of this housing distribution. It must be said from the outset: housing that is distributed according to financial gain rather than social need will always create and perpetuate these problems. The current “crisis” within the housing market is not an anomaly, it’s the rule.

The most glaring contradiction that this “housing crisis” presents is: how is it possible to have homelessness in a country with over one million empty houses? This can be answered in a relatively simple way, that is, as with all markets under the capitalist mode of production, housing is also subjected to an artificial scarcity. In this case, because houses can be owned as investments, those who purchase multiple houses do so with the idea of financial gain in mind. Thus, they will not allow people to live in those investment properties who are unable to at least cover the costs of it (mortgage repayments etc). Stagnating wages and the rising cost of living are increasingly shrinking the pool of people able to financially fill that role. There are myriad other factors which compound this problem but ultimately it all stems from the private ownership of property for financial gain.

According to the Census data, there were 116,427 people classified as “homeless,” the highest number since the data began being collected, at a steadily increasing rate since 2006. It is important to note the methodological difficulties in counting unhoused people as well as the varying definitions. The general definition of homelessness given by the Australian Bureau of Statistics (ABS), and used by other independent bodies such as Mission Australia, Homelessness Australia, and Street Smart, considers a person homeless “if they do not have suitable accommodation alternatives and their current living arrangement:

  • is in a dwelling that is inadequate
  • has no tenure, or if their initial tenure is short and not extendable
  • or does not allow them to have control of, and access to space for social relations.

The largest increase in homelessness came under the first definition, where, between 2011 and 2016, persons living in “severely” crowded dwellings rose by a quarter. According to Mission Australia and the ABS, around seventy per cent of Aboriginal and Torres Strait Islander people experiencing homelessness live in such overcrowded dwellings. While the rate of homelessness amongst Aboriginal and Torres Strait Islander people has been going down, they still remain a vastly overrepresented group accounting for twenty per cent of the total amount of homelessness in the country. Furthermore, homelessness has been increasingly affecting the young and the elderly, for the former “nearly sixty per cent of homeless people in 2016 were aged under thirty-five years, and forty-two per cent of the increase in homelessness was in the twenty-five to thirty-four years age group” and the latter, those older than fifty-five, encountering a twenty-eight per cent increase between 2011 and 2016, which has been rising steadily since 2006.

Housing is clearly a class issue. Street-Smart: Action against Homeless reports that that fifty-four per cent of people become homeless because they are unable to afford housing, which sits at heart of the complex intersection of other possible factors such as suffering from mental illness (thirteen per cent), sudden loss of employment (fourteen per cent), and attempting to escape from domestic violence (thirty-four per cent). The reality of that final statistic is addressed in Guardian “The tragedy of inaccessible housing and domestic violence” #2014 which lays bare one amongst many examples of the devastating consequences of inaccessible housing. These are the material outcomes of the way our housing market is structured; this is the real housing crisis.

Homelessness isn’t the only social impact of this housing crisis. We saw in part one, the actual distribution of housing in Australia, where one fifth of households own nearly half of habitable dwellings, is hidden behind the innocuous figures given by the ABS. This has created an enormous class division between homeowners and renters. Research conducted by Everybody’s Home, a coalition of housing, homelessness and welfare organisations, found that to rent a single room in a two-bedroom apartment in any of Australia’s major cities requires over a third of a young hospitality or retail worker’s pay. Furthermore, they found that between half and three quarters of renters across fifteen of Australia’s eastern seaboard electorates, both regional and metropolitan, are experiencing “rental stress.” The ABS defines rental stress as “housing that costs more than thirty per cent of the gross household income.” Renting creates a huge structural problem as more and more Australian households are forced to fork over more of their pay just to cover rent, let alone be in a position to be able to save up for a house deposit.

As housing becomes more expensive and rent takes up more of a renter’s pay, this creates a monopoly within the housing market, where renters increasingly subsidise the mortgages of investors. Ironically, this tendency towards monopoly creates a double-edged sword. More expensive housing means bigger mortgages, which means for first time investors getting their additional houses means charging more rent to cover themselves. An increasingly common tactic was to use investment properties as AirBnBs, where the owner could make far more from numerous short-term stays than from long-term renters, however this practice has obviously taken a massive hit during the ongoing COVID-19 pandemic. The symbol for this crisis made national headlines in the form of a 25m2 apartment in the inner-city suburb of North Adelaide. The one room rental was advertised at $400 a week and has a glass-walled bathroom inside the kitchen, which doesn’t have a stove. Unsurprisingly, the apartment was formerly used as an AirBnB. An apartment in Sydney’s Surry Hills made headlines in 2020 with a similar design. When it comes to renting, if the rent keeps increasing to cover the mortgage repayments, renters become less able to keep up with the rising prices and are forced to move to more affordable locations. This process can only be maintained for so long. If an investor can’t make the mortgage repayments without the renters, then they are forced to sell, but if there isn’t anyone with enough money to purchase the house, the investor will likely default on their mortgage repayments and the house then gets repossessed, typically by a bank. There are various ways this process can play out; for example, a property developer may purchase the land and build an apartment block on it, thus dividing it into smaller, more affordable properties which are then sold or rented out at enormous profits. However, even this outcome can only bring a temporary stability to the market. Rapidly rising house prices initially attract investors looking to buy cheap then sell at a profit but if too many of them do it at once then there’s no-one left to sell to. This process eventually leads to a housing bubble forming which has a tendency to collapse the market. Unsurprisingly, there is only one winner in this cyclical process: the biggest investors with the most capital who are able to weather the storm of the market that swallows smaller investors whole.

This brings us all the way back to the beginning: one million vacant properties in Australia where an enormous number of people either don’t have access to adequate housing at all or are struggling to make the rent to live in one. This state of affairs is the logical outcome of a system that is designed for profit not for need. “Social housing” is tautological, all housing is social, we don’t need to build more of it to address the immediacy of this “crisis,” the infrastructure already exists. Housing needs to first be distributed according to social need, not financial gain for, no matter how much a house costs on the market, particularly in the case of investment properties, ultimately this has no meaning, for, to conclude with Marx’s words in Grundrisse, “[…] a house where no one lives is in fact not a real house.”

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