Australia chose to have a housing crisis and we can choose to fix it
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Version 0 of 1. Everybody in Australia seems to be interested in housing, and in its sheer costs and inequalities. It’s one of the last languages we have left to express class conflict. In the last year or more there has been an extensive conversation in our newspapers and mass media about the difficulties of affording housing. It reflects, of course, the famous obsession Australians seem to have (especially in Sydney) with real estate. Take part in any conversation and the subject will eventually turn to one of the Rs: rent, renovation, or repayment. Dry debates about tax, inheritance, infrastructure, public transport, and even telecommunications (and the NBN) always seem to get back to questions of the housing price. Our television even features programs that make celebrities of people who do nothing more than take part in DIY. Related: Banks have treated our housing market like a Ponzi scheme, and it's about to bust | Lindsay David This is not a superficial phenomenon. It speaks to fundamental conditions of our society. There is no escaping the violent beginnings of this Australian concern with property. James Scott showed that across Europe, Asia and North America, the encroachment of the state, in the form of mapping tools like the cadastral survey and “ordered” agriculture, always disrupted older forms of living and of ownership. It’s not necessary to re-elaborate how traumatic and violent that process was for Aboriginal people in Australia, except to remember that legal forms of land ownership, tenancy, and title, that all of us still use, began their lives on this continent as weapons of dispossession and frontier. Even for non-Aboriginal Australians, the ways we think about land and property are quite new, and the products of history. Our counterparts in the well-funded thinktanks of the political right stress the importance of private property and of alienable landholding to their view of liberty. It’s a tradition, now going under the fashionable phrase “classical liberalism”, that goes back to Locke and to Grotius. Humans, as the political tradition stresses, enjoy a fundamental right to property and to ownership of space. That this space is theirs and able to be worked on, and to be the source of profit, leads to other benefits; markets, prosperity, and so on. In this system, land can be priced, transferred, inherited, or confiscated. It is the subject of valuation, mapping, assessment, and entire fields of law. Most importantly, especially if you happen to own some, landholders enjoy the right, backed by the full violence of the state, to exclude other people, or require them to pay rent. Before one can close the door, and lock it, to enjoy the plain rights of safety and privacy, you need some kind of legal right or deed. The film The Castle (1997) stresses this completely and forcefully: for Michael Caton’s character Darryl Kerrigan, there is no difference at all between his individual ownership of a house and land and his communal identity as part of a family (and community of neighbours). They are, because of two centuries or more of history, bound up together. One of the film’s most poignant and cutting half-jokes involves Darryl Kerrigan, whose house is to be compulsorily acquired by the airport for profit, bitterly complaining that he’s “beginning to see how the Aborigines feel”. It’s a surprisingly dark joke that works on a number of levels. If our current systems of land title stress some forms of ownership (private, individual, corporate) at the expense of others (common, collective, tribal, and so on) it is the state that is arbiter. The story of Australian governance is rather unlike the history of the state in other countries. When it comes to questions of land we’ve got relatively weak national government – none at all before 1901 – and, in comparison to state governments, incredibly weak local government. We have no really equivalent entities to the powerful city governments of the United States or UK councils. Hilary Golder’s Sacked!, for example, tells the story of the City of Sydney council, for almost its whole life the plaything of political and commercial interests, and the object of capricious sacking by the colonial and later NSW state governments. Housing is not just shelter, in the system we have, it is formal legal security. The relative powerlessness of municipal governments, and the relative apathy of the commonwealth, has meant that colonial and then state governments have led the urban design of Australian cities. They have built the infrastructure, drawn the railway and highway corridors, released the land, and provided the schools and hospitals. It’s true now of NSW government growth planning, but it’s also true of the post-war dominance of particular modes of housing: private, suburban, led by for-profit development, and guided by state government spending on roads, railways, and infrastructure. It’s not the only model of government involvement in housing, however, which has existed. The commonwealth government, after the second world war, helped put together the rather communitarian 1948 County of Cumberland Plan, and established agreements with the states for vast public housing schemes. In Canberra, in particular, the commonwealth (and later territory) government has been completely involved in urban design. In more recent years, the Hawke and then Keating governments began the urban “renewal” building better cities program which saw the redevelopment of suburbs like Ultimo and Pyrmont. Governments of all kinds have been involved in housing in different ways to the ways they are now, and there is no reason why they should not be in the future. That housing has value and a price makes it a perfect field for economics and economic history. It’s worth looking at the European past of human shelter in Australia as it’s legible to economists, if only to see just how unusual our own period is in the long term. Colonial and 20th century Australian economies boomed and busted, largely on the basis of global demand for commodities: wool, gold, grains, minerals, ores (including uranium) and most recently coal and natural gas. Migration patterns have followed it, not only in and out of the country itself but between cities and between regions: for a lengthy period of time between the 1840s and 1920s Sydney was a definite second Australian city to the larger and richer Melbourne. Even in the post-war period, social scientists and public officials worried that more immigrants were being tempted to leave the country than to arrive, with higher wages and better conditions in America and Europe. The story of long-term boom and price always rising isn’t quite as easy as it’s made out. Booms in the 1830s, 1860s (with gold), 1870s-1880s, 1950-60s, and 1980s were followed by busts and depressions. The economy was strongly depressed in the 1890s, nearly destroyed in the 1930s, “squeezed” by credit policy despite the long boom in the early 1960s, subject to oil shock in the 1970s, and sent into recession in the early 1990s. Architectural historians can read the history of those booms and busts in the wealth and size of the houses built in the good times, and even, as Robin Boyd famously did, complain about the crass commercial taste of the Victorian rich. Social historians can look back at times in which the state of housing affordability, as in the 1930s, late 1940s and early 1950s, has been very much worse than it is in 2015. It’s far easier to borrow now, in the deregulated environment of finance we have, than for almost all of the 20th century. We have a huge diversity of lenders and a mushrooming market for finance. They’ve replaced a large diversity of older forms of financing, from mutual lenders, to building societies, so called “permanents”, to stranger institutions like Starr-Bowkett Societies and other interest-free semi-lotteries. How many rooms in a house, how many people to a room? We don’t live in our houses in the same way as we have in the past. Australian suburbs have not always been Ramsay Streets of numbers of nuclear families together in two- or three-generation familial units. The houses themselves have had different numbers of rooms – many fewer in the nineteenth century – and those rooms and houses have been used for different things. The sexual revolution of the 1950s through 1970s changed many things but for our purposes has nearly abolished a number of categories of tenant: the lodger, for instance, the unmarried man or woman living with families or boarding for money. Women’s entry into the workforce over a half-century has meant that one-income households are a rarity, and a notably difficult achievement, rather than a norm. Household formation and dispersion is now much more frequent, much more diverse, and tends towards smaller household units: fewer people per house, making for a less dense pattern. So we have, at the end, a society of housing in Australia in which land ownership is exclusionary, difficult to enter into, but also profitable. Blair Badcock in Home Ownership and the Illusion of Egalitarianism showed that despite the myth of egalitarian mass home ownership – a nation of mortgagees – the fact was that large-scale home ownership had distinctly inegalitarian effects: indeed that under “certain market conditions” large numbers of people having capital in housing could be a social evil. There has after all been a long-term explosion of private building in the post-second world war. Private housing forms a major part of an entire middle class’s savings pattern, at the expense of other forms of investment, including superannuation. Related: Sydney house prices jump 22% in one year to reach $1m median, report says Housing is not just shelter, in the system we have, it is formal legal security for place, capital for retirement, and equity for further investment. The process we call “gentrification” – the displacement of one poorer group of people from a suburb – is really just the large-scale use of relatively small amounts of private capital. There is a certain paradox here. The effects of the 1990s/2000s financialisation of housing has accelerated a concentration of wealth in the hands of an owner-occupying majority, yet also increased exclusion (among those who lack the stake to buy in) and “housing affordability stress” (amongst those who have bought in, but find their investment burdensome). As the French economist Thomas Piketty has recently shown, there are few easy ways to break this tendency for capital gains to keep returning wealth to relatively fewer and fewer owners. This background does not propose any simple answers or silver bullets to “solving” land use and housing affordability. There are many traditions of Fabian and other centre-left thought which have done, and still do. From the single-land-taxing Georgist strain to the traditions of communal living and ownership, to more technocratic and financialised proposals (shared equity, community housing, microfinance, and so on) a diversity of political reactions to inequality have existed. We have the system of housing that we do because we have made political and social choices – and because those choices have been made for us. What choices should we be making now? This is an edited version of Liam Hogan’s contribution to the Australian Fabian pamphlet Housing Affordability in Crisis. His original essay can be read here. |