Creating new ways for low income families to own their own home is critical to tackling Australia’s affordable housing crisis and to reduce the reliance on the Federal Government’s billion dollar rental subsidy program.
New research argues that a $20 million pilot program involving government, the private and community sectors could put 200 low income families in home ownership and unlock the equivalent of $140 million in value.
Such a pilot could involve low income families providing ‘sweat equity’, in which they would work alongside community and corporate volunteers to keep the cost of new house builds lower. It would also involve governments providing access to discounted land.
Struggling families are being forced to live in substandard and transitory accommodation – or even being left homeless – because of an estimated shortage of more than half a million (553,000) affordable properties.
The fact so many families are locked out of home ownership is being blamed for creating a massive intergenerational wealth gap in Australia.
Yet a new report by Equity Economics commissioned by Habitat for Humanity Australia reveals new approaches to support social home ownership, land release and reforms in planning and zoning could improve the prospect of home ownership for families on low incomes.
The report cites some successful affordable housing programs in Australian states as well as a US program that has run for more than a decade and enabled 28,000 low income families own their homes. It is estimated the US program returns $7 of impact for every $1 in government funding.
“We can make the dream of home ownership possible for poor families and we must if we want to give their children a safe, decent, place to live and ensure we close the growing poverty gap in our nation,” Habitat for Humanity chief executive, Martin Thomas, said.
“Home ownership has played an important role in wealth accumulation in Australia, but for low-income families home ownership has typically been well beyond their reach. This not only impacts on their financial situation today but also excludes next generations from the benefits that come with home ownership,” Equity Economics chief executive, Amanda Robbins, said.
The report – Rediscovering the Great Australian Dream – finds that while public housing is critical to the ‘immediate and growing demand’ for affordable housing, creating a better “social home ownership” model could also help tackle intergenerational poverty in Australia.
The report found that low to moderate income purchasers, buying in lower priced suburbs where amenities are available, could still support wealth generation but also delivered greater stability such as less moves and better work and education outcomes.
The report argues that to make social home ownership a reality in Australia reforms would be needed such as:
- The federal and state governments working together to contribute $20 million in funding over five years to pilot a social home ownership model.
- The expansion of government or privately funded ‘shared equity models’ in which low income earners are able to access a mortgage with the necessary supports.
- Enhancing the role of community volunteerism, the provision of discounted materials and the requirements of families to contribute ‘sweat equity’ into construction of new, low cost housing.
- The provision of discounted land or mandated land provision targeting low income housing.
- Public Private Partnerships to more efficiently redevelopment run-down housing stock and finance new stock through capitalisation.