South Australia’s housing crisis explained

We all know someone who’s been priced out of the property market or struggled to secure a rental home in the past few years.

Perhaps it’s you.

These experiences, which have been shared by thousands of South Australians, are due to a housing crisis that’s currently plaguing the country.

Access to safe and secure housing is one of the most basic human rights, and housing affordability was the subject of much debate in the lead up to both the state and federal elections.

But what does it mean to be in a housing crisis, and what is the solution?

The answers to these questions and more were unpacked in the ‘Beyond the Housing Crisis – A Home For All’ Report, released by Believe Housing Australia and UniSA earlier this month.

The current state of our housing market

Usually, we’d celebrate rubbing shoulders with cities like London and New York in global rankings — but not when it comes to housing affordability.

In 2021, Adelaide was ranked the 13th most unaffordable metro area out of 92 major international housing markets. This is only two spots behind London, and less affordable than New York.

Across the state, skyrocketing market prices are putting home ownership out of reach for more and more South Australians, while the cost of most private rentals leaves low-income earners without enough money for basic needs like food, heating and clothing.

Anglicare Australia’s 2022 Rental Affordability Snapshot, which analyses how many available rental properties people in low-income groups can really afford to rent across the country, uncovered some sobering statistics.

After reviewing 46,000 rental listings across Australia, the 2022 Rental Affordability Snapshot found:

• 336 rentals were affordable for a person on the Age Pension
• 8 rentals, all share-houses, were affordable for a person on JobSeeker
• 778 rentals were affordable for a person earning a full-time minimum wage
• 65 rentals were affordable for a person on the Disability Support Pension
• 1 share house was affordable for a person on Youth Allowance

It’s clear we’re in a housing crisis when low-income earners can’t even afford to rent a home, let alone buy one.

“We’ve been to literally hundreds of other rental properties…and whether the house was 100% suitable or not, you applied for it anyway in fear of not being able to get a home,” a Believe Housing Australia tenant said, when sharing their experiences of looking for a private rental.

“It was extremely stressful. You know, obviously, I don’t want to be homeless…and it was coming to the stage where, if we can’t get a house soon, we’re going to be cramming into whatever space we can or living in the car.”

Reaching crisis point

We didn’t reach a crisis point overnight.

Australian home ownership rates used to be among the highest in the world, at about 71 per cent, right to the end of the last century.

That was until the Capital Gains Tax was halved in 1999.

As a result, investors are only required to pay tax on half of the profits made by selling a property — and that property investment is more tax-friendly than wages. This phenomenon is further fuelled by negative gearing.

This means that first home buyers, and those who fall out of home ownership, can’t compete with capital-rich investors looking for these tax breaks.

Meanwhile, record low interest rates enable people to borrow more, which increases house prices, and pushes lower to middle income households out of the market.

But it’s not just government policy that has contributed to the soaring levels of homelessness and housing demand across the state, Michelle Gegenhuber, Believe Housing Australia’s Executive General Manager said.

“Low rent affordability and availability, low incomes, a skyrocketing property market and the effects of COVID-19 have all played their part in creating a perfect storm of high need and low supply,” she said.

“With secure employment increasingly hard to find, vulnerable groups like older people, low-income earners, First Nations peoples, youth, and people with illness or disability, are finding themselves forced into homelessness.”

There’s no denying that COVID-19 has reshaped the way we spend our money – and where we live too. Nearly 500,000 expat Australians returned home in the first year of the pandemic looking for a haven for themselves and their capital.

And, due to global supply chain issues, shortages of building materials and increasing freight prices have pushed up construction costs.

Meanwhile, as house prices have inflated, household incomes have not kept up.

As a result, more people than ever are turning to the government or providers like Believe Housing Australia with a desperate need for housing.

But a dire shortage of social and affordable housing stock means only a fraction of those who need help will receive it.

The way forward

South Australia was once a world leader in the provision of social housing — and there’s no reason we can’t be again with a coordinated, focused response across government and the whole of the housing sector.

At Believe Housing Australia we believe the first step is to generate conversation about the true nature and extent of the crisis.

Then, we need to define the groups in most need, design solutions that will help, and work together to deliver them.

To do this, during 2022-23, Believe Housing Australia will be facilitating workshops to develop a set of practical strategies and actions to help create a more efficient housing system in South Australia.

“We need a coordinated, focused response across government and multiple sectors,” Michelle said.

“Everyone is already working as hard as they can, but the impacts will always fall short while we work within a failing system.

“We know that when people are securely housed, savings through increased social participation and reduced service use far outweigh the cost of investment.”

Along with Believe Housing Australia, the South Australian government has committed to action, too.

The new Labour government has promised to invest $181m over four years to build 400 more social housing dwellings and upgrade 350 more that are currently vacant.

Together, we can believe in better for vulnerable South Australians.

Representatives from all levels of government, NFPs, housing and homelessness, and the private sector are invited to join Believe Housing Australia’s upcoming housing roundtable series. To find out more information and to register your interest, click here.