Housing

The Property Council of Australia has announced the important role the property industry will play in achieving net zero as NSW decarbonises its economy.

NSW director Luke Achterstraat said as NSW invests $4.8 million in speeding up the transformation of the state&rsquo;s built environment towards net zero emissions, buildings can provide some of the least cost abatement opportunities in the economy.&nbsp;

<blockquote>
&ldquo;Accelerating Australia&rsquo;s transition to sustainable housing could both protect the home building sector, as well as spur growth in delivering more than half a billion dollars of additional investment in the construction industry by 2030 and create over 7,000 new jobs,&rdquo; Achterstraat said.
</blockquote>

Effectively, this would also save Australians $600 million on their energy bills.&nbsp;

According to the Property Council, upgrading the energy efficiency of Australia&rsquo;s commercial buildings would not only stimulate economic activity through inputs of local labour, it would also deliver an estimated $12 billion in energy savings between 2016 and 2030.

&ldquo;Since efficient buildings are also healthier and more productive, gains in staff productivity are likely to dwarf the benefits in energy savings.&rdquo;

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According to the <a href="https://arena.gov.au/renewable-energy/renewables-in-buildings/">Australian Renewable Energy Agency</a> (ARENA), buildings account for more than half of the nation&rsquo;s electricity consumption and are a major driver of &lsquo;peak demand&rsquo;.

An additional 2019 study revealed that the construction, operation and maintenance of buildings account for almost a <a href="https://theconversation.com/buildings-produce-25-of-australias-emissions-what-will-it-take-to-make-them-green-and-wholl-pay-105652">quarter of greenhouse gas emissions</a> in Australia.

&ldquo;We encourage the NSW State Government to leverage the unique opportunity the built environment offers to dramatically reduce carbon emissions in highly cost effective ways that will also stimulate the economy,&rdquo; Achterstraat said.&nbsp;

&ldquo;As Australia heads towards a low emissions economy, governments must provide a clear pathway of policies that give certainty to industry and create economic opportunities for Australian businesses.&rdquo;

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Other key industry bodies, including the&nbsp;Green Building Council of Australia (GBCA), are also encouraging the government to make use of the largely untapped emissions reduction opportunities available within the sector.&nbsp;

GBCA CEO Davina Rooney&nbsp;Australia&rsquo;s property sector is already&nbsp;leading the way in carbon reduction&nbsp;and making commitments at COP26 can help the Australian Government build on this work.&nbsp;

Facilitating the transition of Australia&rsquo;s building sector towards an economy for the future is critical in improving and sustaining the future liveability, productivity and sustainability of our communities and cities.

Achterstraat concluded: &ldquo;With the right policy frameworks in place, we can minimise the costs of a transition&nbsp;to net zero emissions and create economic opportunities across all parts of industry, from sole traders and homeowners to large businesses.&rdquo;&nbsp;&nbsp;

Buildings account for more than half of the nation’s electricity consumption and are a major driver of ‘peak demand’

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Property industry to play a pivotal role in the race to net zero, says Property Council

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Brisbane is the only capital city tipped to buck the national trend of easing median house prices in real terms over the next three years, according to housing forecasters, BIS Shrapnel.
But its housing market outlook has warned of a looming oversupply of inner city Brisbane apartments.
The BIS Shrapnel Residential Property Prospects 2015 to 2018 puts Brisbane's estimated median house price in this year at $520,000, which researcher Angie Zigomanis said that was still below Brisbane's June 2010 peak in real terms. Coupled with low interest rates, Brisbane's affordability was at levels seen in the early 2000s.
A total rise of 13 per cent in the Brisbane median house price is forecast over the three years to 2018, while the median unit price is forecast to rise by a total six per cent. Its new dwelling supply overall, without any significant rebound expected in population inflows, was set to move the Brisbane apartment sector nto oversupply, "with some impact across the broader market."
But significantly, Brisbane is tipped to be the only capital city that will not experience a decline in median house prices in real terms in the next three years.
Nationally low interest rates will support further price growth in undersupplied residential markets in 2015/16, but the spectre of tightening interest rates and deterioration of affordability will create conditions for price declines in a number of cities from 2017, according to the forecaster.
"But doomsday predictions for the residential market are likely to be overblown.
"Although Australia’s residential property markets are forecast to steadily weaken from 2016/17, as a combination of rising supply and the prospect of a tightening in interest rate policy impacts on prices, any downturn will be similar in magnitude to that seen over 2011-2012."
According to the company’s Residential Property Prospects, 2015 to 2018 report, Sydney and (to a lesser extent) Melbourne have broken away from the other capital cities, with both estimated to have recorded double-digit percentage rises in their median house prices in 2014/15.
Solid population growth, reasonably positive economic conditions and an underlying dwelling deficiency have underpinned this rise, and affordability is increasingly becoming a concern. In contrast, weaker recent price growth in the other capital cities means that affordability is not as strained, and it is subdued local economic conditions and/or an underlying excess dwelling stock that have impacted the market.
Angie Zigomanis, said that although low interest rates will continue to support prices, it was the demand and supply balance across the states that will play a part in the rate of price growth in the coming years.
"Moreover, the boom in apartment construction over the past couple of years is creating a disconnect in the supply balance between detached houses and units, with a resulting difference in their price outlook."
“Most capital cities are building apartments at record rates, driven by investor demand,” said Zigomanis. “As these projects are progressively completed, strong tenant demand will be required to support rents and consequently values upon completion.
“However, we are seeing population growth nationally begin to slow. Net overseas migration has fallen from a recent peak of 235,700 persons in 2012/13, to an estimated 184,000 persons in calendar 2014.
"With the majority of net overseas migration classified as ‘long term overseas visitors’, that is, temporary but not permanent arrivals, this reduction will impact most on the rental sector. Moreover, this slowdown in net overseas migration is most evident in the mining boom states of Western Australia, Queensland and Northern Territory.”
He noted the detached house market is less reliant on tenant demand and more exposed to owner occupiers. Together with the stimulatory effect of variable interest rates at more than 40-year lows, this is expected to support median house prices in most capital cities over 2015/16.
The strongest conditions over 2015/16 are forecast for New South Wales, Queensland and Victoria, where BIS Shrapnel estimates the markets are in overall deficiency at June 2015. 
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Brisbane house prices to buck national easing trend: BIS Shrapnel 2018

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GUEST OBSERVER
We’ve put together a short guide to help you maximise the benefits of passive design solutions by understanding orientation in your home.
With a particular focus on light and wind, we break down each aspect and offer suggestions for a more environmentally friendly and comfortable home.
North
<ul>
<li class="p1">Mornings generally receive Northerly winds from the inland due to land breeze. During winter this is the dominant source of wind. In summer, Northerly winds can be quite hot.</li>
<li class="p1">Direct sunlight and an excellent source of passive heating.</li>
<li class="p1">Necessary to use shading methods, such as planting deciduous trees (which permit low-angle Winter sun through) or installing eaves and blinds.</li>
<li class="p1">Suitable for daytime, living and dining rooms or courtyards.</li>
<li class="p1">Ideal orientation of the home with the long side facing North, or 20-30° off from the center.</li>
</ul>
West
<ul>
<li class="p1">Be wary of hot Northwesterly winds in summer and cold Southwesterly winds in the cooler months.</li>
<li class="p1">Evening sun can be quite harsh and hot in summer.</li>
<li class="p1">Option to strategically plant trees and shrub to divert undesirable winds and provide shading in the evening.</li>
<li class="p1">Alternative is to place utility areas facing West (e.g. laundry, bathrooms, storage) which insulate and shade living areas.</li>
</ul>
East
<ul>
<li class="p1">Little to no Easterly wind all year round. Design should promote cross-ventilation from other rooms.</li>
<li class="p1">Direction of sunrise and cool morning light.</li>
<li class="p1">Suitable for kitchens, breakfast rooms or bedrooms, as morning light is beneficial to regulate our circadian rhythm (natural body clock).</li>
</ul>
South
<ul>
<li class="p1">Evenings generally receive Southerly winds from the ocean due to the sea breeze effect. Southwesterly winds in the cooler months can be quite harsh.</li>
<li class="p1">Indirect light, therefore requires little to no shading. Borrowed light methods include use of skylights or reflections off neighbouring buildings.</li>
<li class="p1">Should be properly insulated as there are minimal passive heating options. Active heating may also be necessary.</li>
<li class="p1">Suitable for bedrooms or artist studios, as South light produces cool and controlled colour values.</li>
</ul>
<a href="/images/2016/05/23/Screen%20Shot%202016-05-23%20at%2012.21.38%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/23/Screen%20Shot%202016-05-23%20at%2012.21.38%20PM.png" alt="">
Paul Osborne is founder, Secret Agent and can be contacted <a href="https://secretagent.com.au" target="_blank">here</a>.
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Orientation and your home: Secret Agent

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<img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Australia is a land of extreme weather. Events such as the 2009 Victorian bushfires, the 2011 Queensland floods and Cyclone Yasi in 2013 are stark examples of climate-related risks faced by Australian households. Many homes are built in high-risk locations including floodplains, coastlines and bushfire-prone land.
The Climate Institute has released a report detailing the critical role Australian housing plays in the economy, and the risks housing faces with a changing climate.
It also sets out the role of banks and insurers in promoting risk reduction and climate adaptation for Australian housing.
<h2>Built on sand</h2>
Housing represents many Australians' biggest financial commitment – including those who rent rather than buy. Housing accounts for up to one-third of the economy, through direct and indirect means and across sectors such as finance, insurance and construction. With population projections forecasting continued growth and attraction to risky locations, banks and other financial institutions have a crucial role to play in minimising the economic threat posed by climate change.
But while the role of land-use planning and insurance with regard to climate risks has been well documented, the role of banks as gatekeepers to housing finance has been largely overlooked.
As the Climate Institute’s report points out, banks have a “unique ability and incentive” to steer housing purchases, because they are the main providers of residential financing. As such, they have large financial liabilities if homes are lost to fires, floods or other climate effects.
There are a range of tactics banks might use to reduce or mitigate climate risk. For instance, they could favour lending on homes that meet specific risk-reduction requirements, such as raised floor levels for homes in flood zones, or fireproof construction materials in bushfire-prone regions. This approach could also be used in setting mortgage insurance premiums as well as the mortgages themselves. Another approach is to better apportion their exposure - by lending on a reduced percentage threshold of the total property value.
Westpac has a Climate Change Position Statement and both the Commonwealth Bank and NAB have committed in reducing carbon. But more needs to be done for housing.
If banks continue under a business as usual approach, they face the risk that many properties will be devalued over time, through continued exposure to extreme weather events. This represents a significant financial liability, especially when you consider that a home loan typically takes 30 years to play out – a similar time scale to the many climate impacts expected for Australia.
Banks are already making moves to restrict lending based on location.
But the report outlines several other things banks could do, such as:
<ul>
<li>
examine climate risk exposure in their current lending practices
</li>
<li>
use their role as financiers to support good policy, by engaging policymakers and financial regulators
</li>
<li>
encourage stakeholders, including the public, private sector and civil society sectors, to develop ways to minimise climate impact risks for housing
</li>
<li>
ensure losses are addressed in an equitable way.
</li>
</ul>
<h2>A climate insurance policy</h2>
The report also details how the insurance sector assesses risk to housing, and how it might improve its approach in the future, given the intersection of urbanisation, population trends and the trend towards living in climate-threatened areas.
The insurance sector has historically been seen as the messenger of housing market signals, because of its keen focus on assessing weather-related risk. But the 2011 Queensland floods highlighted many weaknesses in relying on insurance alone.
Many properties did not have adequate flood insurance, leaving many people without a home after losing their house to the floods. The Australian and Queensland governments and the private sector struggled to co-ordinate a cost-effective response, partly because of previous bad land-use planning decisions, but also because of the lack of adequate insurance cover.
A federal government levy helped the affected regions to “build better back”. Some chose to rebuild in the same high-risk locations.
Critically, gaps identified in building codes, land use and climate resilience still require a more co-ordinated response. The current Stage 2 coastal law reforms in New South Wales offer a potential example of how competing interests might be balanced.
At face value, this issue is a no-brainer. After all, risk mitigation is bread and butter for lending institutions and insurers, and we already know that extreme weather events are forecast to increase in frequency and severity. National resilience is required.
Quantifying this risk will be easier if financial institutions utilise access to relevant data on issues like coastal risk. Some of these data are becoming more freely available. Recognising the value of climate data is a trend that should continue. For a robust and resilient future, governments and the private sector should end their tango over who should pay for the information and agree that financial climate risks are best faced with eyes wide open.
Tayanah O'Donnell is research fellow, University of Canberra and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/tayanah-odonnell-122914" target="_blank">here</a>.
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How can your bank help reduce climate change risks to Australian homes?

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GUEST OBSERVER
Does the Australian government have the policy, organisational and conceptual capacity to handle the country’s A$6 trillion housing stock?
We ask this question in a newly released research report.
The answer is critically important to both household opportunity and prosperity, and to the management of our largest national asset. 
Australians’ wealth is overwhelmingly in our housing. As of late 2016, our housing stock was valued at $6 trillion. That’s nearly double the combined value of ASX capitalisation and superannuation funds. 
Clearly, the way the housing sector is managed has huge implications for household prosperity and opportunity. The public debate about high house prices, for example, reveals a gnawing anxiety that the distribution of housing as an asset has shifted too far in favour of a growing class of rentiers rather than households. 
Housing also has clear national economic implications. This relates both to its scale as an asset, and to the way it provides shelter for those most in need where that need is clear. 
Any misallocation of housing to low-productivity uses is potentially a major drag on the economy. This necessarily requires a wide understanding of productivity. 
How is Australian housing policy framed?
We asked whether there is a clear systematic policy framework through which the Australian government understands the dynamics of the housing system and its contribution to productivity. We might expect such a framework to be clear and prominent given recent public and policy attention to housing questions. 
To better understand the Commonwealth’s approach, we surveyed recent major housing policy reviews by the government. We assessed how housing was conceived in terms of its economic and social dynamics, its influence on productivity, and the role of policy in shaping these effects. 
There is no shortage of documentation to appraise. Our sample included the Henry Review of Taxation (2010), the National Housing Supply Council report series (2009-2013), the Productivity Commission inquiry into planning (2011), the COAG Report on Housing Supply and Affordability Reform (2012), the Financial System Inquiry (2014), the Federation Report on housing and homelessness (2014), and (albeit not a government report) the Senate Inquiry into housing affordability (2015). 
We also prepared an inventory of housing policy instruments operated by governments in Australia to understand how these were conceived within the policy reviews. We found 13 policy instruments that influence housing systems. These operate across housing, economic and fiscal policy and at multiple tiers of government. 
A picture of incoherent policymaking
We were surprised to discover that few of the major policy reviews provided a systematic framework for understanding the economic role of housing. 
There is thin evidence, at best, that these inquiries constructed or articulated a systematic conceptual understanding of the links between the housing system and economic productivity. 
Even the Productivity Commission’s inquiry into planning and zoning, which focused on housing affordability, did not offer a conceptual framework for understanding the influence of planning regulaton on urban or national productivity. 
Our review of these documents further shows there is no coherent framework articulating how policy objectives link to instruments and their effects. Housing policy, despite the $6 trillion value of housing, seems strangely incoherent. Australia doesn’t currently have a minister for housing.
The debate over negative gearing during 2015 and 2016 partly demonstrates our contention. During this period we counted at least six reports by non-government organisations articulating a view on the purpose and effect of negative gearing. Nowhere could we identify a government policy document articulating a clear, extended and analytically based position on this policy explaining its purpose and effects. 
Our search for an explanation of these gaps in policy was not exhaustive. But we did assess the current administrative orders for housing within the Australian government.
Responsibility for understanding housing issues is divided. The Department of Social Services is responsible for social housing, rent assistance and home ownership. The Treasury has responsibility for housing supply policy.
Elsewhere, the Reserve Bank deals with monetary policy and financial stability. The Australian Prudential Regulation Authority APRA manages macroprudential policy. And the Tax Office (ATO) administers tax concessions. The Productivity Commission offers occasional advice on housing.
Yet there appears to be no obvious co-ordinating point in government that oversees housing. No one authority is responsible for formulating a coherent systematic understanding of housing and its effects on productivity and Australia’s economy or society generally. The National Housing Supply Council established in 2009 partly filled this role, but was abolished in 2013. 
Further dispersion appears via COAG, which is convened by the Commonwealth government. COAG periodically marks out a housing issue, such as land supply, for discussion with state governments and to formulate policy recommendations. But COAG communiques are typically short political statements and not analytically founded. 
Within state governments, responsibilities for different aspects of housing are typically spread across several agencies.
What needs to be done?
Our report demonstrates weaknesses in Australia’s approach to housing and housing policymaking. There is evidence this is deliberate. For example, the Coalition members’ minority response to the 2015 Senate inquiry into affordable housing rejected almost all of its policy recommendations. Many of these would rectify some of the deficits we have identified.
The weak formal coordination in housing policy contrasts with other sectors such as energy, defence, biosecurity, disability, heritage, drugs and road safety, among others. Each has a dedicated national strategy articulating policy objectives, problem conceptualisation and coordination of policy instruments.
It is doubtful that housing is less significant to the nation, economically or socially, than these sectors. 
We recommend that the Australian government reflects on the position of housing within the architecture of government. The $6 trillion national asset that housing represents deserves much better understanding of its dynamics and effects on the national economy, including productivity.
We argue that Australia needs a federal minister for housing, a dedicated housing portfolio, and an agency responsible for conceptualising and co-ordinating policy. The current fragmented, ad-hoc approach to housing policy seems poorly matched to the scale of the housing sector and its importance to Australia.
<a href="https://theconversation.com/profiles/jago-dodson-2359" target="_blank">Jago Dodson</a> is Professor of Urban Policy and Director, Centre for Urban Research, RMIT University.
<a href="https://theconversation.com/profiles/sarah-sinclair-385470" target="_blank">Sarah Sinclair</a> is Lecturer in Economics, RMIT University.
<a href="https://theconversation.com/profiles/tony-dalton-135425" target="_blank">Tony Dalton </a>is Emeritus Professor, Centre for Urban Research, RMIT University.
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Who’s responsible? Housing policy mismatched to our $6 trillion asset

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GUEST OBSERVER
There are many hidden costs and inefficiencies in housing markets. Blockchain is poised to transform that.
An emerging technology, blockchain, could transform the way we buy and sell real estate by doing away with the hidden costs and inefficiencies of our housing markets.
Blockchain is an online ledger that records transactions. It’s capable of recording the movement of any kind of asset from one owner to the next.
It’s public and isn’t owned by any one corporation, there are no charges to record transactions. Its openness ensures the integrity of transactions and ownership, as everyone involved has a stake in keeping it honest.
This means there are fewer intermediaries; less middle-men who increase the costs and time to complete a transaction.
There are risks associated with the system as it’s only as strong as the code that supports it, which has come under attack in the past. Despite this, examples from overseas show it is possible to apply this technology successfully to our housing market.
Problems in how the property market is run
For buyers able to find the right property, secure a mortgage and save a deposit, they must also pay for a range of so-called “hidden costs”. These are additional payments associated with the transaction over the cost of the home itself. Many legal and title-related costs would become near-obsolete in a blockchain system.
The combined costs of title registration, title insurance, and legal fees associated with register the property transfer approach A$1,000 on the average Australian house. Costs continue to rise as the prudent buyer undertakes further due diligence, through building inspection documentation, previous sales records and so forth.
On top of the financial cost, it then typically takes over a month to settle a real estate transaction in Australia. The blockchain system can speed things up, as currently tedious checks undertaken by hand, move to an automated system overseen and approved by the relevant stakeholders.
There is also the risk that land titles offices with a single database simply get things wrong too. In 2016 it was reported that 300 incorrect certificates had been issued in NSW, with 140 of those being recent property buyers affected by government plans for major motorways in Sydney’s west.
There are now concerns that the system’s quality could be compromised in several states, including NSW and South Australia, as land titles offices become privatised.
A blockchain real estate market
If blockchain were applied to the property market in Australia, every property would be encoded with a unique identifier. Property IDs already exist in most land registry systems, so these would need to be migrated to a blockchain.
Next, the blockchain ecosystem then needs to have defined who the people behind the transaction are, those stakeholders that include the owner, lender, and government.
Transactions of property are conducted via “smart contracts” – digital rules in the blockchain that process the agreement and any specified conditions. Buying and selling could still take place via agents, or the smart contract can be advanced to incorporate the sale rules and make this decision automatically. The blockchain for each property grows as transactions are added to the ledger.
A housing market without agents, conveyancers and a land-titles office may seem decades away, but a handful of countries have already piloted blockchain land registration system.
In Australia, our current land titles system is among the world’s best, but it is not infallible. A range of hidden taxes and transaction costs increase market inefficiencies.
And while the electronic system Property Exchange Australia or PEXA, has brought us to the point of a near paperless property market, it’s still an intermediary between the parties and the record of the transfer in the Torrens system - our current land title system.
The added advantage of a blockchain system is in eliminating risks, in particular the risk of records being accessed fraudulently and altered or deleted because it is a permanent and immutable record. This means that a huge amount of computing power would be required, probably along with some collusion, and the alteration is easily detected across the ledger. That’s not to say the blockchain system is perfect.
Blockchain’s advantage in restricting any changes to historical records becomes a disadvantage when incorrect or fraudulent entries are added. Digital currency managers, Ether and Bitfinex, learned this the hard way through cyber attacks.
Last year these attacks siphoned off over US$50 million in ether tokens from The DAO, the largest crowdfunded venture capital fund. This breach led to a controversial split of Ether into two separate active digital currencies.
Only months later, Hong Kong-based crytocurrency trading firm, Bitfinex, had the equivalent of US$68 million stolen by hackers in a security breach reminiscent of the hack that bought down Mt Gox in 2014. It is little comfort to cautious market regulators that the thieves behind these attacks can not spend it without revealing their identity on the blockchain.
These hacks demonstrate that blockchain systems are only as secure as the code which supports them. As a nascent technology, its cracks are detected only when they are exposed.
Where blockchain has worked before
Sweden became the first western country to explore the use of blockchain for real estate in July last year. At the time, the Swedish Land Registry partnered with blockchain startup ChromaWay to test how parties to a real estate transaction – the buyer, seller, lender, government – could track the deal’s progress on a blockchain.
Other countries at the forefront of blockchain for real estate include The Republic of Georgia, Honduras, and Brazil which announced a pilot program earlier this month. While this might seem like a disparate list, it’s in these countries where the long-term potential of a blockchain for real estate are most significant.
Systemic corruption and insecure database management in these countries, and many other emerging economies, is seen as a major constraint on growth and prosperity. Why would you invest in a house, or any other asset, if there is a distinct possibility that the record of your ownership could simply disappear?
With ever increasing demands for improvements to transaction efficiency and local real estate industry giants like CoreLogic appointing research teams dedicated to new technology applications, it might not be long before we see a real estate blockchain system in Australia.
Danika Wright is a Lecturer in Finance, University of Sydney and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/danika-wright-121868">here</a>.
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How the blockchain will transform housing markets: Danika Wright

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GUEST OBSERVER
Few older Australians actually live in non-private housing such as nursing homes. Data from the 2011 Census reveals that 94% of Australians who are 65 or older still live in private housing. More than half live with a partner and another quarter live alone.
Life expectancy is nearly double what it was a century ago. And since the 1950s, a new group of young-old has evolved. These people are fit and healthy, and have little need for specialised housing.
This does not mean, however, that Australia’s current housing options are future-proofed for its ageing population. Architects, developers and clients should be designing new homes that have the agility to adapt to suit the changing needs of occupants. With the number of people aged 65 and above expected to more than double by 2055, homes being built now for young families may eventually be accommodating empty-nester couples or singles.
<h2>Why the need for change?</h2>
Building agility into a house design is not difficult. Zoned houses or houses that can be easily subdivided should be encouraged within planning frameworks along with designs that allow easy retrofitting with technology, devices or design strategies to support ageing in one place.
With housing affordability at crisis level, agile housing designs would enable more efficient use of housing stock as children leave home and occupants find they have rooms to spare. Houses designed to be easily subdivided into two dwellings would benefit older people by providing an income stream or space for a carer.
Alternatively, retirees may downsize as they become empty nesters. But this isn’t happening enough.
A significant majority of Australians live in detached suburban houses of three or more bedrooms. More than half of the detached houses in the inner and middle suburbs of Sydney and Melbourne are occupied bypeople aged 50 and above.
A recent review into downsizing outlined the complex reasons behind housing choices.
Even though family houses are not necessarily well suited to retirees, are retirement villages releasing family homes back to rental or buyers’ markets? Not many. Currently, only around 200,000 of the 3.3 million Australians aged 65 and above live in retirement villages.
Some are located in sea-change locations and others are in suburban locations where land is more affordable. Only now are higher-density, high-rise retirement villages in central city locations springing up.
<h2>What are the options?</h2>
Canada’s laneway housing is an interesting precedent that Australia might consider to increase housing options and densification close to services. The NSW model of granny flats is one that all states could adopt.
Australian examples of co-housing are beginning to appear based on the European model of shared ownership and equity. Co-housing is collaborative housing in which residents actively participate in the design and operation of their neighbourhoods in an attempt to balance privacy with community.
Well-located, well-designed apartments close to community facilities are another option for Australia’s ageing population. Apartment choices should ideally be available across suburbs to enable people to stay within the community they know if they wish. These may become the Naturally Occurring Retirement Communities (NORC) of tomorrow.
NORCs are well recognised in the US but less so in Australia. There are early examples in Australia, where concentrations of aged people living in a community are linked to a virtual network of support, based on a membership fee.
Spaces should be accessible and adaptable. Housing requires changes as physical functioning declines with age.
However, design is not necessarily just about wheelchair accessibility but also how the community and houses can work for the frail elderly, particularly in terms of mobility and safety. This needs some forethought when designing houses to ensure bathrooms, entries and kitchens are suitable for retrofitting.
Accessibility also needs to be considered when designing public buildings and spaces. Unfortunately, the Australian Standard on Design for Access is based on empirical data for 18-to-60-year-olds. It is not necessarily suitable for the very old and frail.
Both public and private spaces should cater for the rich diversity within Australia’s ageing population. A useful concept developed in Canada is the 8 80 Cities. If a city is designed to suit the needs of eight- and 80-year-olds then it will suit all people.
As mobility reduces, proximity becomes more important. Services and civic infrastructure are becoming increasingly centralised. The corner shop, the local council and other services are being grouped into larger entities. Housing suitable for the aged should be focused near these centres, and mobility to and from them should be considered as this is important for those who can no longer drive.
Access to parks and recreation facilities within distances that the frail elderly can manage is also ideal – with seating en route and well-lit paths, which are safe from cars and safe for mobility scooters and walkers.
With a booming life expectancy, there is a need for collective, intergenerational discussion and ideas about how to better design housing in Australia’s communities and cities.
 
Clare Newton is associate professor in Learning Environments, University of Melbourne and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/clare-newton-10370" target="_blank">here</a>.
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How can we best design housing for Australia’s ageing population?

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GUEST OBSERVER
On January 1, 2017 the age pension will undergo significant changes.
Changes to the assets test, which determine who can receive a pension and how much, could see 166,000 pensioners receive an increase in their entitlements. But many people will also have their pensions reduced and others will become ineligible entirely. 
These headline numbers are just the start, however. Changes to the pension will affect the way people plan and behave – incentivising certain types of homeownership and debt, potentially impacting younger generations.
<h2>What are the asset test changes?</h2>
The government decides who is eligible to receive the aged pension, and how much they are entitled to, by looking at their assets and income. From January 1, the maximum assets you can own to receive a full pension is being increased, for homeowners and non-homeowners, singles and couples. This will allow a larger group of people to claim a full pension. 
<a href="/images/2016/11/24/Screen%20Shot%202016-11-24%20at%209.05.26%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/24/Screen%20Shot%202016-11-24%20at%209.05.26%20AM.png" alt="">
For those who don’t qualify for the full pension, there are even more changes. For every A$1000 of assets owned above the threshold the entitlement will reduce by A$3 per fortnight, up from A$1.50 under the current system. As a result, the threshold to qualify even for the partial pension is being reduced as well.
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The increase in the rate that the pension is reduced, as well as the reduction in this top pension threshold, could result in some 88,000 missing out on the pension entirely, and some 225,000 seeing their pensions reduced. 
The reason given for these changes is that the federal government wants to make the age pension system more equitable. But, even though some will qualify for slightly more age pension, the overall effect will be to cut down on pension spending. 
We saw this in an earlier change made in January this year when defined benefit pensioners found their income test concession was slashed to 10%, reducing their pension entitlements. Now, this change will reduce the entitlements of “asset rich” pensioners. 
<h2>Why this could affect behaviour</h2>
For people approaching pension age, the latest changes to the asset test has changed their incentives. It is possible that those in pre-retirement phase may now decide to tailor their investments and lifestyle so that they will qualify for some age pension. 
Consider this matter in light of what behavioural experts call prospect theory, which suggests that people place a higher value on what they might lose than what they might gain. In this context, people might be so worried about losing a part of their age pension that they may make decisions that reduce their total income. 
This behaviour has already been observed, anecdotally, by many financial advisers, when clients tell them that they want to qualify for age pension regardless of how small the amount might be.
<h2>Think of the assets</h2>
Overall, if prospect theory holds, the short term incentives of the assets test will see pensioners “use up” their assets to fund their lifestyle choices and gain eligibility for the pension.
This could take the form of any combination of spending more on lifestyle, buying a more expensive home (homes are not included in the asset test), or even giving away assets (assets given away five years or more before pension age are not counted in the asset test). These are all ways of reducing the amount of assessable assets, thereby qualifying for the aged pension. 
This incentive will be especially strong for those in the middle or near the upper asset threshold, as they will gain $3 in pension per fortnight (or $78 pa) for every $1,000 of assets they “use up”. Or, in other words, they will achieve a 7.8% pa gain for “using up” $1000 in assets. This is an almost unheard of return in an age of low rates.
<h2>The secondary impact</h2>
The impact of these changes wouldn’t stop at running down assets, however. Many pensioners will want to remain at their standard of living and so will likely turn to debt. Some will use the equity in their homes to secure a reverse mortgage. Or, if they do qualify for age pension, they may take a loan from Centrelink. Both of these could result in debt left to an estate, reducing inter-generational transfers.
In addition, it is likely that instead of downsizing to a smaller and more appropriate housing, and thereby releasing surplus funds which then become assessable under the assets test, pensioners are likely to remain longer in their larger homes. This will restrict the supply of established homes for younger people to buy. Hence, demand and supply forces may result in prices for established houses to continue to increase.
Warren McKeown is teaching fellow, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/warren-mckeown-7085" target="_blank">here</a>.
 
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Changes to the pension asset test will ripple through the economy

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GUEST OBSERVER
Whether house prices have been inflated by limited supply, or because of transfers to investors and homeowners, government policy is now trapped in a vicious cycle.
The wealth accumulated in our houses has become a central part of the retirement system, and the government itself can’t afford for prices to fall.
Generous tax subsidies and asset test concessions on the family home have incentivised the accumulation of wealth in property and fuelled demand pressures in the housing market for decades.
Government assistance to home buyers and owners is provided in the form of the First Home Owners Grants, stamp duty concessions, and the family home’s exemption from capital gains tax, land tax, as well as the pension and other assets tests. These subsidies and concessions combine to make wealth accumulation in the family home more attractive than other assets.
In many real estate markets, land supply constraints and planning controls can limit urban sprawl while housing demand pressures continue to intensify. Hence, cities such as Sydney have become “pressure cookers” where the subsidies result in rising house prices in the face of land supply constraints.
<h2>The policy-price cycle</h2>
The family home has become a cornerstone of the Australian retirement system. Sustained house price increases have allowed government income support to be set at historically low levels in Australia compared to other countries with lower home ownership rates such as Sweden and the Netherlands. This is based on the assumption that the low-income elderly will be housing asset-rich, and can therefore can get by on smaller pensions.
Indeed, in an era of ageing populations, governments have been encouraging older Australians to tap into their store of housing wealth to fund their own retirement and ease intergenerational fiscal tensions. For instance, the Productivity Commission’s aged care equity release scheme recommends elderly home owners draw down against their housing equity to meet aged care costs.
Of course, this only works if house prices continue to rise.
If house prices fall, the cycle gets broken and the family home may no longer be an adequate base for supporting the retirement needs of the wider population. In the event of a long-term decline in house prices, individuals would require greater income support from governments as their personal asset base weakens. This would in turn perpetuate a rise in government social security expenditure.
<h2>Over the long term</h2>
But even if house prices weren’t to decline, there is a paradox at play in this system. In order to maintain a healthy housing asset base for retirees, house prices must remain high. So the policy-price cycle is aimed at sustaining home ownership as a key pillar of the welfare system. However, it has also resulted in housing wealth becoming increasingly concentrated in the hands of smaller subgroups. Notably, housing equity is getting concentrated in the hands of older generations.
<a href="https://www.propertyobserver.com.au/images/2017/04/6/image-20170403-16550-3uf443.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/04/6/image-20170403-16550-3uf443.png" width="600" height="330">
Author’s own calculations from the Australian Bureau of Statistics Surveys of Income and Housing. Author provided
As these charts show, the intergenerational housing wealth gap has widened in the last two decades. In 2011, the median housing equity of home owners aged 45-64 years was nearly double the value held by the 25-44 year olds. The share of the population’s housing equity held by those aged 45-64 years has widened between 1990 and 2011 at the expense of those aged 25-44 years.
This means the system could potentially unravel in the long term. If large numbers of young people continue to face price barriers to home ownership, the home ownership pillar within the welfare system will be weakened as the future population of home owners shrinks.
In the short-term a significant group of millennials will miss out on the benefits of home ownership. But in the long term, unless governments address some fundamental structural problems currently entrenched within our tax-transfer system, there is a significant weakness in our social welfare system built on housing.
 
Rachel Ong is deputy director of the Bankwest Curtin Economics Centre, Curtin University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/rachel-ong-113482" target="_blank">here</a>.
 
 
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Governments are trapped in a vicious cycle of housing policies and prices: Rachel Ong

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The Productivity Commission report favouring “greater competition, contestability and user choice” in social housing has caused concern among advocates for low-income tenants.
The report is an interim output from an ongoing review of the nation’s human services – including public hospitals, dental services and palliative care, as well as state-provided or regulated housing. The commission’s “pro-competition” statement, although a provisional finding, could presage a shake-up in the delivery of housing services for Australia’s most disadvantaged groups.
Critics have characterised the report as a charter for “privatisation” of public housing. While somewhat diminished, state-owned-and-managed housing still accommodates around 700,000 of our most vulnerable citizens.
This explains the fears that commission-inspired “reforms” could involve the forced sale of public housing to vulture capitalists unconstrained by enforceable obligations to provide tenant services or to maintain, upgrade and retain housing stock for its current purpose.
We need only look to Germany – so often referenced as a private-renter-friendly country – for an example of how a botched divestment of social housingto for-profit companies can lead to public authorities being forced to buy back stock.
However, rather than pushing towards an entirely marketised and deregulated framework underpinned by the profit motive, the commission report’s soberly couched analysis appears focused on how to make the existing social housing system work more efficiently and effectively to deliver established obligations.
The authors, for example, contend that:
"… there appears scope for improvement in the way social housing is delivered that could lead to better outcomes for tenants in the social housing system, as well as for people outside the system who are unable to access the support they need."
They rightly note that all is far from well with the status quo:
"Due to … funding pressures and demographic changes, the quality of the service received by social housing tenants has deteriorated … Additional maintenance expenditure as part of the Australian Government’s 2008 stimulus package has not alleviated deteriorating quality standards in public housing."
<h2>Towards a multi-provider system</h2>
The policy aspiration for a “contestable” social housing system has, in fact, been a mainstream orthodoxy for quite a while.
Indeed, it formed the centrepiece of Tanya Plibersek’s groundbreaking 2009 speech, Room for More. As Labor’s federal housing minister, she argued for a move away from the domination of social housing by large “monopolistic” state authorities and towards a “multi-provider” system. Under this vision, not-for-profit community housing providers would be supported to grow to a scale enabling them to both complement and compete with public housing entities.
Post-2009 developments have included some expansion of community housing. Part of this has been through the transfer of tenanted public housing properties.
Even so, community providers control only around a fifth of all social housing in 2016. They remain very much minority players in most states.
The Productivity Commission’s enthusiasm for greater contestability might result in a recommendation that state governments should consider further large-scale public housing transfers to community providers. Some contend that this amounts to damaging privatisation no less than if the recipients were for-profit companies.
In my view, this argument is highly questionable. Instead, community housing providers might legitimately position themselves as “the reform alternative to privatisation”.
In principle, greater competition, contestability and choice could be fostered within social housing in other ways. While observing that “allowing community housing providers to manage social housing appears to have had benefits, both in Australia and elsewhere”, the commission also notes:
"For-profit providers could introduce further contestability and choice."
In the absence of a new public subsidy, though, it’s debatable whether many companies needing to deliver shareholder returns would see the firmly regulated management of public housing as an attractive proposition.
Mid-1990s attempts by Queensland’s Borbidge government to outsource public housing to for-profit companies soon fell by the wayside. Similarly unsuccessful in the mid-1990s was the UK government’s effort to outsource the entire council housing service, under Housing Management Compulsory Competitive Tendering. Again, the inherently low returns from providing minimally subsidised services to poor people – as well as the complexity of social housing management – meant the UK program failed to attract the expected interest of for-profit companies.
A close reading of the commission’s report suggests anyway that the authors are at this stage more inclined towards diversifying social housing through boosting its community housing component than through a predominant role for private for-profit entities:
"Transferring the management of more properties to non-government providers could deliver more options for tenants who are offered a choice of housing provider."
Such a direction would, nevertheless, “not preclude the management of properties remaining with the public provider, if they were best-placed to provide the service”.
<h2>Obstacles to accountability</h2>
However, any reforms based on deciding which provider is “best-placed to provide the service” face a serious obstacle: the available data on the cost of social housing provision and service outcomes are woefully inadequate. This is true at the aggregate level and for individual social landlords.
Our research confirms that the capacity for quantifying management expenditure in public housing has decayed over recent years.
A fundamental problem has been the states’ and territories’ failure to honour a 2009 commitment to enhance and standardise their housing service accounting procedures. The financing of public housing services remains equally opaque. Only by repeating a major research exercise last undertaken in 2007 could we quantify the relative financial (un)sustainability of each state and territory housing authority.
In any event, diversifying social housing on a larger scale would call for Commonwealth government leadership in strengthening the regulatory framework and making it truly national. This would be needed to ensure effective monitoring and enforcement of responsibilities and obligations transferred to non-government providers. Indeed, the Productivity Commission report highlights the need for accountability:
"Improving the accountability of service providers could improve a range of attributes of social housing."
This supports the case for extending the current system for regulating community housing providers to cover public housing services.
In all of this, it is vital to keep in mind that Australia’s social housing system remains grossly underfunded. Currently available resources are inadequate even to properly maintain the existing portfolio, let alone to underpin the new supply needed to keep pace with growing need.
Any efficiency gains flowing from Productivity Commission-inspired managerial reforms will make only a tiny dent here. A commitment to overcoming this problem is a prerequisite if, in line with the report’s stated aspirations, the most disadvantaged are to have any real choice.
Hal Pawson is associate director - City Futures - Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/hal-pawson-147969" target="_blank">here</a>.
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