API Blog :: Have your say!

It’s almost impossible to accurately estimate the number of homeless in Australia. According to the 2006 census there were 105,000 – that’s 5100 more than recorded in the 2001 census, which found 99,900 were without a permanent abode.

BY CATHERINE CASHMORE

Of course there are many reasons individuals find themselves without shelter. Some come from abusive families, many being women and children, and some are what are commonly known as ‘couch surfers’ – sleeping a night here and there.

However as the price of housing increases, not to mention the shortage of affordable rental accommodation, we can expect an increasing number to join the queue. It’s inevitable, because although housing affordability has improved slightly throughout 2011 with marginal falls across our capital cities, subsequent interest rate cuts, with more predicted for later this year, will slowly swing the balance of power back into the hands of the vendor as part of the typical cyclical nature of the ‘property clock’.

The primary reason we have such a shortage of affordable housing is down to limited supply in the places people want, and more importantly, need to live – the city. Over 65 per cent of Australia’s population live in and around our major capitals. Australia is a mere teenager compared to Europe which has evolved with a network of smaller towns and cities to soak up a comparatively even spread of businesses and thus job opportunities. Due to a consistent underestimate of our growing population from those who plan for growth, we haven’t prepared effectively for the population surge. For example, unlike other countries, most of the job centres are centralised in and around the capitals. On the outskirts of the city where land is in abundance, the cost of housing is pushed up by limited land releases and hefty development overlays which are designed to compensate for the current lack of facilities such as schools, shops, parks, and transport – which are needed to create a much needed sense of community for those moving into the new estates. As a consequence housing in the areas stretching – in particular – beyond the train lines fails to attract the demand needed to produce an adequate turnover of stock or attract the surplus of buyers.

Consequently inner-city areas are growing in density with a dramatic increase in high-rise accommodation, often going against complaints from local councils and residents who protest in vain as their once leafy suburban localities start to evolve into something akin to Manhattan in New York – they no longer have a choice. Those that commute daily into the CBDs have to leave extra time to battle traffic, or accept standing room only on the local train/tram network. Many homebuyers have accepted the traditional Aussie house with a backyard for games of cricket and a family BBQ has been replaced with either a flat or small subdivision and courtyard at most. For those who want a larger property the compromise is usually a move into an outer suburban estate and accept being far from friends, family and work – as well as slower capital growth. Most first homebuyers stuck on the rental ladder are only able to afford to enter the housing market if they have either help from family/friends to raise a deposit, or meet someone with whom to combine wages and savings. Rents have increased over four per cent this year and it’s unlikely this will ease as the trend towards saving rather than spending continues to place a strain on affordability. And furthermore, it’s been predicted that by 2020 we’ll have a shortfall of 105,000 much-needed social housing homes.

Considering all this, it may surprise some to hear of the massive numbers of vacant residential s

tock in Australia. At the 2006 census around 10 per cent of housing stock was recorded as vacant. Due to difficulties in collecting the data, such as assessing which properties are reserved as holiday homes, temporary rental accommodation, or are simply in the process of renovation, it’s hard to correctly assess the numbers, however it’s fair to assess a significant minority have been abandoned altogether. Considering the stresses caused by a shortage of available accommodation outlined above, I doubt anyone would argue that wherever possible, vacant accommodation should always be used to house those who need it most. The problem isn’t limited to Australia. In the UK there are 930,000 empty homes – 350,000 of which have been vacant for six months or more. Therefore there’s been a massive innovation to bring derelict homes that have been acquired, but due to financial constraints sit vacant and unused, back to liveable condition. In some cases where families are unable or unwilling to renovate, grants have been offered by various government schemes to assist the process, and in some circumstances, properties have been re-acquired for the purpose of social housing.

More concerning however is a growing trend – particularly amongst Chinese investors – to acquire housing (in China and elsewhere, including Australia) as a safe place to bank funds with no intention of ever marketing for tenancy. For these investors, there’s little benefit in struggling to find a good tenant, it’s more important to keep the property in tip-top condition for when they decide to sell.

We should encourage investment in residential property, providing the consequence is an increase in the available rental supply, which can keep vacancy levels more in balance with affordability. However too many investors are using our precious limited housing supply merely as a ‘bank account’ with no intention of navigating the difficulties associated with finding an appropriate long-term occupant. There should be restrictions on this practice and also more energy focused on initiatives to make use of disused or neglected homes. Identifying where the derelict homes are would be the first step – thereafter perhaps government initiatives could be proposed to set a plan in place to encourage practical moves toward getting the home occupied. After all, it’s far more cost effective (and environmentally friendly) than building from scratch.

Property can be an excellent investment, however its primary purpose should never be neglected and therefore there should be a requirement on every homeowner, wherever possible, to ensure houses don’t remain vacant without valid reason for extended periods of time. Yes, we have a homeless issue in Australia, but we have arguably enough empty properties to provide housing for all. Let’s start making use of the thousands of homes that are left empty and abandoned and make 2012 a year of new positive initiatives for housing.

Catherine Cashmore is senior buyer advocate and property advisor for Elite Buyer Advocates. With extensive experience in all matters regarding real estate, Elite Buyer Advocates ‘move you ahead of the competition’, successfully purchasing and negotiating more than $100 million worth of property each year for their clients. http://www.elitebuyeradvocates.com.au/