{"id":17400,"date":"2020-09-28T11:58:37","date_gmt":"2020-09-28T01:58:37","guid":{"rendered":"http:\/\/www.socialpolicyconnections.com.au\/?p=17400"},"modified":"2020-09-29T10:49:46","modified_gmt":"2020-09-29T00:49:46","slug":"after-covid-well-need-a-rethink-to-repair-australias-housing-system-the-economy","status":"publish","type":"post","link":"https:\/\/www.socialpolicyconnections.com.au\/?p=17400","title":{"rendered":"Hal Pawson et al. After COVID, we’ll need a rethink to repair Australia’s housing system & the economy."},"content":{"rendered":"\n

Hal Pawson UNSW<\/a>, Bill Randolph UNSW<\/a>, Chris Leishman<\/a>, Duncan Maclennan University of Glasgow<\/a>. <\/h4>\n\n\n\n

A new <\/a>report<\/a> from the New South Wales Productivity Commission (NSWPC) announces that \u201c[higher] housing costs [\u2026] impose broader economic costs\u201d. That chimes with our own newly published research<\/a>. The implication is that Australia\u2019s heavily capitalised housing market will weigh down economic recovery from the shocks of the coronavirus pandemic.<\/p>\n\n\n\n

A niche group of economists and epidemiologists had warned<\/a> the world for decades that a pandemic would have devastating economic and social consequences. When it comes to Australia\u2019s housing, though, the COVID-19 crisis has only served to highlight<\/a> deep and long-standing faultlines.<\/p>\n\n\n\n

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Coronavirus lays bare five big housing system flaws to be fixed<\/a><\/strong>.<\/h5>\n\n\n\n
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The housing system has produced triple crises<\/a> of rising homelessness<\/a>, growing queues<\/a> for non-market, affordable housing<\/a> and the pervasive affordability problems<\/a> for middle- and lower-income households who depend on the private housing market. All these pressures were building well before the pandemic.<\/p>\n\n\n\n

However, a particularly cruel COVID-19 effect has been the concentration of pandemic impacts on public-facing economic sectors and jobs. Young<\/a> <\/a>people and female employees<\/a> have been hit hardest. The fallout in the lower end of the labour market will only make existing pressures worse.<\/p>\n\n\n\n

Australia is about to embark on an audacious economic and social experiment as it tries to wind back the JobKeeper and JobSeeker programs temporarily protecting about 3.5 million people<\/a>. Treasury projections envisage a gradual withdrawal. In reality, especially if any eviction moratoria are allowed to lapse, the start of this process will likely trigger huge immediate challenges in managing the housing and homelessness fallout.<\/p>\n\n\n\n

Beyond that, the recession will drive home the need for political leaders to more fully appreciate the integral role of housing in the economy. The housing system plays key roles in shaping economic productivity, stability and inequality.<\/p>\n\n\n\n

How on earth did we get here?<\/h4>\n\n\n\n

For many decades economics-leaning policymakers have assumed the housing market is largely a well-functioning system driven by helpful economic forces. Most famously personified in comments by<\/a> former prime minister John Howard, and very much in tune with dominant media messaging<\/a>, Australian governments have generally welcomed rising house prices as signifying consumer confidence. Even academic researchers<\/a> and government analysts have cited house prices as a sign of the \u201csuccess\u201d of cities and regions.<\/p>\n\n\n\n

More recently, ever-rising house prices have finally been recognised as a driver of wealth inequality<\/a>. The problem is linked to rising mortgage debt and increasingly recognised<\/a> as likely to add to instabilities in the macro economy and financial system.<\/p>\n\n\n\n

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The housing boom propelled inequality, but a coronavirus housing bust will skyrocket it<\/a><\/strong>,<\/h5>\n\n\n\n
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There are also growing policy concerns that city living is becoming too expensive. This in turn harms economic productivity. [OECD data<\/a>] show Australia is on a similar path to the US, with the metropolitan share of national GDP per capita falling in recent years.<\/p>\n\n\n\n

How has policy thinking become so blurred?<\/h4>\n\n\n\n
\"Chart<\/a>
Metropolitan GDP per capita has been declining in Australia and some other countries. Data: OECD. Author provided.<\/figcaption><\/figure><\/div>\n\n\n\n

The NSWPC report recognises that the combination of excessive rents<\/a> and insecure tenure<\/a> can damage children\u2019s educational attainment and prospects. Prices and rents are particularly unaffordable in Sydney<\/a>, making it a more stressful place to live and work. Resulting migration to other parts of the country reduces employers\u2019 access to the supply of willing and productive labour, thus damaging productivity.<\/p>\n\n\n\n

But the NSWPC analysis of housing-to-economy interactions does not go anything like far enough. As our research<\/a> shows, Australia\u2019s dysfunctional housing system results in a battery of other economically harmful impacts. These include:<\/p>\n\n\n\n