Homeowners

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The proportion of Australian households renting their home increased to 32 per cent in 2017–18, according to new figures released by the Australian Bureau of Statistics (ABS). 
It was an increase from 27 per cent in 1997–98. Over the same 20-year period, the proportion of households that rented their home from a private landlord increased to 27 per cent (up from 20 per cent), while the proportion of public housing tenants decreased from 6 per cent to 3 per cent. "Most of the increase in renter households was in the private rental market," said ABS Chief Economist, Bruce Hockman. 
"Some of the decrease in public housing numbers can be attributed to recent trends in social housing provision which have seen the community housing sector taking on an increasingly prominent role." The proportion of households that owned their own home fell to 66 per cent, down from 70 per cent in 1997-98. The proportion of households that owned their home without a mortgage decreased to 30 per cent (down from 40 per cent), while the proportion who owned their home with a mortgage increased to 37 per cent (up from 31 per cent). One in five households (20 per cent) owned one or more residential properties other than their usual residence. Of those households that owned other residential property, 71 per cent owned a single property, while 5 per cent owned four or more properties.
 Housing costs remained steady for most household tenure types when compared to recent years. On average, in 2017-18, renters paid $366 per week on housing, while housing costs for owners with a mortgage were $484 per week. "Interest rates have remained relatively low over the past several years and we have seen a recent softening in the rental market in some major cities," Mr. Hockman said.  The data shows that renters continued to devote more of their income to housing than home owners. On average, private renters paid 20 per cent of their income on housing costs, compared to 16 per cent for owners with a mortgage and 3 per cent for households who owned their home outright. Lower income households spent a greater proportion of their household income on housing. On average, lower income households renting privately paid $339 per week which was 32 per cent of their gross weekly income. Lower income households who owned their home with a mortgage paid on average $376 per week which was 29 per cent of their gross weekly income.
Housing costs include rent payments; rate payments (water and general); and mortgage or unsecured loan payments (if the initial purpose of the loan was primarily to buy, add, or alter the dwelling).
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j.ballantyne1990-6AQqhLzZaK

Renters on the rise as outright home ownership falls to 66 percent: ABS

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<img src="https://counter.theconversation.edu.au/content/82320/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Australia’s state governments, as well as some ambitious local councils, community housing providers and forward-looking private developers, are finally taking note of the housing affordability crisis in our cities.
One proposed solution is to provide relief to cash-strapped households that cannot afford skyrocketing deposits by incentivising a new “build-to-rent” affordable housing sector.
Build to rent simply means developers build housing with the intent of retaining the building and renting it out to lower-income families at prices affordable for those families.
Australia has almost everything it needs to kick-start this sector. These efforts could not come soon enough: failing to tackle the situation will cost us billions of dollars. However, state and local efforts cannot reach their full potential unless the federal government steps in with something only it has: cash.
US model shows the way
The federal government has tried build-to-rent schemes before, with the National Rental Affordability Scheme. Built off a similar US model, the program rewarded investors in affordable housing with tax credits. 
The program’s US counterpart, known as “tax credit housing”, is so popular that a bipartisan group of senators are working to expand its funding by 50%. Australia’s super funds have even invested in US tax credit housing. 
However, Australia abandoned the National Rental Affordability Scheme in 2013. The government is instead creating a “bond aggregator” agency to support build-to-rent affordable housing. This agency will issue government-backed bonds to provide cheap loans to housing associations to build affordable housing.
<a href="https://www.propertyobserver.com.au/images/2017/08/31/file-20170829-10454-1xs49oh.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/08/31/file-20170829-10454-1xs49oh.jpg" alt="">
Mind the gap
But truly affordable rents for Australia’s low-income households cannot cover the combined cost of building and operating apartment buildings, even with cheap loans. US housing experts call this problem the “housing finance gap”, and many of their Australian counterparts have called on the federal government to help fund it.
To illustrate, below is a rough hypothetical example of a breakdown of tax credit housing funding sources, based on real numbers out of several Californian tax credit housing projects from between 2006 and 2016.
In Victoria, most of the pieces are being set up for the middle band of funding (in purple) as part of Plan Melbourne and other local government initiatives. Similar efforts are under way in New South Wales and Queensland. 
The federal government’s bond aggregator will be in place to maximise revenue of the project (plotted in green). Victoria is set to soon join NSW in providing a regulatory framework defining “affordable rents”. This will enable estimates to be made of how large this segment of funding can realistically be.
What Australia lacks is federal support to cover the remaining gap (shaded in orange). 
This is a rough sketch based on US numbers, which will not translate exactly. But so long as the project contains any truly affordable housing, as NSW defines it and as Victoria is looking to define it, projects will need more cash to close the gap.
Filling the gap while keeping things simple
Capital gains tax deductions and negative gearing cost the federal government roughly A$11 billion per year, even if the houses are vacant. It spends roughly half as much on public housing and rental assistance. 
A modest rebalancing of federal tax policy toward affordable housing could fill the funding gaps in build-to-rent housing. This would enable the bond aggregator to unlock hundreds of millions of dollars in matching private capital. 
The federal government should set a goal of shifting 20% of the tax dollars currently written off on negative gearing into a gap-financing fund managed by the bond aggregator. Unlike the National Affordable Housing Agreement schemes of the recent past, these funds should be dedicated exclusively to building new housing.
Alternatively, Treasury could issue cash vouchers to affordable developers to fill the gap. To keep this simple, the value of the voucher could be pro-rated, on a per affordable unit basis, using up-to-date construction cost data. 
The government could also offer this funding to private developers that are willing to set aside 30% of their units for low-income families, in exchange for gap financing of that 30% of units and the certainty the bond aggregator provides for the entire project. 
It can be done
Asking the federal government to cover around $90,000 per affordable unit may sound like a lot. But a decent apartment can last for 30 years before requiring substantial rehabilitation. That translates to just $60 per week. 
Although Australian construction costs are higher than in the US, even if we double it we are still spending only $120 per week. This amount is paltry compared to how much money the low-income family living in such an apartment will save if the apartment is located in inner Melbourne or Sydney. 
Add the long-term healthcare, social service and educational benefits and cost savings into the mix, and this is one smart investment.
<a href="https://theconversation.com/profiles/matthew-palm-399340" target="_blank">Matthew Palm</a> is Postdoctoral Research Fellow, Transforming Housing Research Network, University of Melbourne and author for <a href="https://theconversation.com/au" target="_blank">The Conversation</a>.
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jchancellor-FAypfDUnLy

‘Build-to-rent’ could be the missing piece of the affordable housing puzzle

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Homeowners and investors have got nothing in the Federal Budget, though no negative tax changes for homes either.
While superannuation cuts targeting high-income earners and small personal income cuts have been scheduled, the rules relating to negative gearing and capital gains tax will not be changed, Treasurer Scott Morrison confirmed in his Budget speech on Tuesday evening.
Mr Morrison said they will not “remove or limit negative gearing – that would increase the tax burden on Australians just trying to invest and provide a future for their families”.
“Those earning less than $80,000 a year in taxable income make up two-thirds of those who use negative gearing,” he said.
“We do not consider that taxing these Australians more on their investments, including increasing their capital gains tax, and undermining the value of their own home and investments is a plan for jobs and growth.”
LJ Hooker head of research Mathew Tiller said “one of the most positive things is what is not in [the Budget] … the fact they’re not going to touch negative gearing or capital gains tax was flagged early on in the piece but it’s good to see”.
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Nothing in Federal Budget for first home buyers

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New South Wales homeowners will have to pay around $160 a year in an emergency services property levy which will be introduced by the Baird government in a tax reform that claims it will actually save people money.
Mike Baird, the New South Wales premier said that he estimated the move could see people save about $250 a year on their current insurance premiums, if they are insured.
Foreshadowed on the front page of the Daily Telegraph under the headline 'Triple-0 Tax', New South Wales treasurer Gladys Berejiklian ­made the announcement today ahead of a tax ­reform meeting of state treasurers, with the Baird government to label it its biggest tax reform in government.
Berejiklian said the new way of collecting the levy would bring NSW in line with other states and hopefully boost the number of people who take out home and contents insurance.
"This fairer model for funding fire and emergency services will reduce the cost of insurance and encourage more people to insure their properties," she said.
The emergency services property levy will replace the emergency services levy which now goes on household insurance bills.
It will fund firefighters and state emergency services workers around the state.
The new tax from its 2017 introduction will remove a similar charge from insurance bills that currently funds firefighters and state emergency services workers.
At present $800 million of the $1 billion a year cost of funding fire and rescue NSW, the rural fire service and the state emergency service is paid for by a tax on insurance companies, passed on to customers via higher premiums for home and contents insurance.
The government will argue that replacing this with the new system will mean the ­majority of householders are better off and that the system will be much fairer.
The government’s argument is that those who are ­insured are paying for services provided for landholders who are not insured and the introduction of the levy will create a fairer system.
They say NSW is the most non-insured state in the country and hope the change will encourage more people to have their property insured, as premiums will come down.
Under the current system, of an average $1000 a year paid in insurance, $200 is paid for the insurance levy.
For a person with that average land value, from July 2017, they will have a $160 a year charge on their council rates instead.
A new insurance pricing watchdog under former ACCC head Allan Fels will be set up to police the companies, who can face fines of up to $10 million for "unreasonable prices" should they not pass on the savings.
All other states have introduced similar levies and it has been estimated 810,000, or 36%, of NSW properties do not have home and contents insurance.
In Victoria, where a similar levy was introduced in 2013, a report by professor Fels found residents paid 18%less for ­insurance than before the reforms.
The ­reform was recommended by the Henry tax ­review and also by the royal commission into the 2009 Victorian bushfires with the goal of reducing the level of underinsurance.
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