What does housing affordability mean? Why does it matter and how do we fit in?

In recent years housing affordability, housing crisis, home ownership and homelessness have become daily statements and rhetorics in news reports, social media posts and community conversation. But what does this mean, both specifically for the individuals we hope to support through Mortgage Mates, and also the wider community?

Mortgage Mates has been created to support individuals in the upper end of the rental market, currently unable to afford their own home. This may include individuals aged 18-39 who are reliant on a partner to afford a property at current prices, to individuals aged over 55 who have experienced a life change such as the break down of a relationship. For us, housing affordability looks at the number of people unable to own their own home, who may otherwise chose home ownership as their housing option.

A question that has been raised is does this even matter? Does home ownership need to be a housing choice for someone who has recently secured employment? Should a person who has separated from their partner, be able to chose to re enter the housing market after selling the marital home? Should a social housing tenant, currently seeking assistance with unemployment be able to aspire for home ownership one day?

Mortgage Mates believe so, and as we will explain below, this isn’t simply because it benefits the individuals we are helping to co-own but also the wider rental community.

There is a positive impact on the whole of housing continuum that comes from increased home ownership. By transitioning individuals from upper level rental housing to co-ownership, we will be able to influence a freer rental market, with a reduced competition in the sector. This, we believe, will lead to a reduction in rental cost for individuals who’s current circumstances mean rental housing is the only housing option they currently have.

For individuals aged 18-39 there are 6.5 million people potentially priced out of the home ownership market in Australia.

This is due to a number of factors, but, primarily, it is because the cost of housing far exceeds the income received by the average Australian. Melbourne and Sydney are two of the most expensive cities in the world with the average median house price often tipping above a million dollars, and all major cities in Australia are considered unaffordable.

How have we reached a position, where 6.5 million people is no longer a shocking figure? Where it has become acceptable that for some people we believe home ownership will never be an opportunity for them, and that receiving rental accommodation is something they should be accepting of, and potentially grateful for?

In 2016, over 116000 individuals had no safe, secure or suitable accommodation to call home. In part, the cause of this is the lack of affordable social housing, but secondly to this, is the lack of affordable private rental accommodation available to low income earners (Centrelink or Wage dependent. with a significantly competitive rental market there is competition from individuals with a higher income and additional references.

Anglicare’s Snapshot on housing affordability found that currently there are two properties affordable and suitable to a single person on Newstart Allowance in Australia. The reason for this is as follows: why would a landlord chose to a) rent a property at a rate affordable on Newstart when they can charge increased rent for some one on a higher income b) why would they chose to rent to a person on Newstart when they can rent to some one on a wage, which is perceived as safer and more secure and c) is this a landlords problem when primarily rental properties are a financial asset to the landlord?

A recent report by Shelter WA states ‘More than one in three households in Western Australia’s top five electorates for rental stress are struggling in housing they can’t afford, electorate data released today shows.’ In addition Kate Colvin (Everybody’s Home campaign) commented ‘the narrow focus on real estate prices for young home-buyers means that 72,000 Western Australian households in rental stress are being forgotten by governments at all levels,’. (http://www.shelterwa.org.au/72_000_west_australians_in_rental_stress?fbclid=IwAR1IeI3Bl6VOWFLdTt9pRrgFZcFOpmP8EX2e_PIqmL2YW1R8ch0UdJ4Lu5M)

This piece highlights that a lack of home ownership is directly impacting the rental market in Australia, increasing affordability on all levels.

If we don’t start to understand the cause of the housing affordability crisis, at either end of the spectrum (and how one element can fundamentally impact the other), we will never be able to ensure housing choice is a positive option for every Australian.

We believe Mortgage Mates, is one way in which we can ensure each Australian has the opportunity to have housing choice- either because an individual can directly change their housing option through co-ownership, or because the rental market has become more affordable due to the reduction in private renters competing for properties.

Mortgage Mates believes it should be unacceptable, that the average cost of a property in Sydney sits at over 1 million dollars, and that a single person should be required to earn an income sufficient to meet the mortgage on the price of these homes. By co-owning with another person, we are reducing risk, reducing cost and increasing housing security and opportunity for those we work with.