Which just leaves the question of why there is no revival of this sort of conservative social-democracy? There is plenty of history to build on, plus what I'm sure is a keen electoral base to mobilize, but no takers in the political class beyond a teal or two.
"The home is the foundation of sanity and sobriety; it is the indispensable condition of continuity; its health determines the health of society as a whole."
If I understand it in summary, post WWII governments invested in housing construction for the primary intent of getting first home buyers and commission housing tenants into home ownership.
Almost everyone was the winner because it generated economic activity and increased home ownership.
Unfortunately why I don't think this strategy will work in contemporary times is:
- As stated in the article, post WWII stimulated unprecedented rates of economic activity in the western world.
- This provided migrants and citizens with jobs and income purchasing power for the homes being built.
- Land was cheap and in abundance.
In 2024 we have so many economic and societal issues that were not the case in 1947. We are a victim of our own success and the system has fundamentally changed to be barrier to home building/supply:
- Locationally advantaged land prices are mostly unaffordable and highly fragmented.
- Building and planning laws over-regulate the market. There needs to be regulation, but at what point does the 'red tape' become overbearing?
- State planning systems favour not-in-my-back-yard decisions over inner metropolitan expansion.
- We are subject to wilder inflationary pressure that has presently made building almost unaffordable. Like WWII there is huge immigration but not skilled workers for a highly regulated building environment.
- Income to house price ratio has not kept pace.
- Like red tape, ‘green tape’ is now emerging as a development stopper. Some of which is not unfounded but it fundamentally slows building or increases prices to the point it is not viable.
Governments have massively failed to invest in housing supply since Menzies. The private market has done a good job at doing virtually all the heavy lifting as a result of this failure. Post pandemic trends to liberal immigration and smaller household sizes (with associated rising housing costs/shortages) is making governments panic about their political security under public pressure. I’d die to be wrong, but this mess isn’t going away any time soon. It will certainly get worse if negative gearing support for private investors is watered down or stripped away completely.
Melbourne had this problem & imposed a levy on Council rates, but it wasn't hefty enough to encourage owners to rent them out to long-term tenants.
Other countries have tried doubling the Council Rates also. And of course there's thousands of Airbnb homes listed which stand empty most of the time. The owners want to keep their "investment" neat & clean. It's immoral really when we have over 100k homeless.
A note on the build quality of public housing: That issue is also a matter of political will. Some estates were very well built and have held up today. The problem is that state government, quite deliberately I must surmise, do not adequately fund maintenance. They would rather see old & young live amongst mould and decay than do the bare minimum that even private landlords are supposed to do.
@Cameron, what’s your thinking on why neither side of politics, at least at a federal level, is getting in behind the idea of more Cth government delivered public housing?
Is it because they view it as the role of the States and CHPs, who one could argue have the most recent and relevant experience?
If you take that view, then is it simply a matter of allocating capital to the States and CHPs to get it done?
You’re also then one-step removed from the delivery risk - and therefore political risk that other commenters have mentioned.
I nice bit of historical research. I was not aware of the attitudes expressed at that time. Menzies did a great job in building the houses and had the good sense to sell them off at an advantageous price to the purchaser who then took on the maintenance and enjoyed the capital appreciation. An excellent model. There would be less capital appreciation if this sort of program was pursued with vigour. The relationship between house prices and incomes would not have blown out so much if the program had persisted.
Which just leaves the question of why there is no revival of this sort of conservative social-democracy? There is plenty of history to build on, plus what I'm sure is a keen electoral base to mobilize, but no takers in the political class beyond a teal or two.
"The home is the foundation of sanity and sobriety; it is the indispensable condition of continuity; its health determines the health of society as a whole."
https://www.menziesrc.org/the-forgotten-people
This is very informative thanks Cameron.
If I understand it in summary, post WWII governments invested in housing construction for the primary intent of getting first home buyers and commission housing tenants into home ownership.
Almost everyone was the winner because it generated economic activity and increased home ownership.
Unfortunately why I don't think this strategy will work in contemporary times is:
- As stated in the article, post WWII stimulated unprecedented rates of economic activity in the western world.
- This provided migrants and citizens with jobs and income purchasing power for the homes being built.
- Land was cheap and in abundance.
In 2024 we have so many economic and societal issues that were not the case in 1947. We are a victim of our own success and the system has fundamentally changed to be barrier to home building/supply:
- Locationally advantaged land prices are mostly unaffordable and highly fragmented.
- Building and planning laws over-regulate the market. There needs to be regulation, but at what point does the 'red tape' become overbearing?
- State planning systems favour not-in-my-back-yard decisions over inner metropolitan expansion.
- We are subject to wilder inflationary pressure that has presently made building almost unaffordable. Like WWII there is huge immigration but not skilled workers for a highly regulated building environment.
- Income to house price ratio has not kept pace.
- Like red tape, ‘green tape’ is now emerging as a development stopper. Some of which is not unfounded but it fundamentally slows building or increases prices to the point it is not viable.
Governments have massively failed to invest in housing supply since Menzies. The private market has done a good job at doing virtually all the heavy lifting as a result of this failure. Post pandemic trends to liberal immigration and smaller household sizes (with associated rising housing costs/shortages) is making governments panic about their political security under public pressure. I’d die to be wrong, but this mess isn’t going away any time soon. It will certainly get worse if negative gearing support for private investors is watered down or stripped away completely.
Excellent article.
What do you think about the vast number of EMPTY HOMES in Australia?
The 2021 Census revealed over 1m empty dwellings.
( https://www.abs.gov.au/statistics/people/housing/housing-census/2021 )
Melbourne had this problem & imposed a levy on Council rates, but it wasn't hefty enough to encourage owners to rent them out to long-term tenants.
Other countries have tried doubling the Council Rates also. And of course there's thousands of Airbnb homes listed which stand empty most of the time. The owners want to keep their "investment" neat & clean. It's immoral really when we have over 100k homeless.
Thoughts welcome.
A note on the build quality of public housing: That issue is also a matter of political will. Some estates were very well built and have held up today. The problem is that state government, quite deliberately I must surmise, do not adequately fund maintenance. They would rather see old & young live amongst mould and decay than do the bare minimum that even private landlords are supposed to do.
@Cameron, what’s your thinking on why neither side of politics, at least at a federal level, is getting in behind the idea of more Cth government delivered public housing?
Is it because they view it as the role of the States and CHPs, who one could argue have the most recent and relevant experience?
If you take that view, then is it simply a matter of allocating capital to the States and CHPs to get it done?
You’re also then one-step removed from the delivery risk - and therefore political risk that other commenters have mentioned.
I nice bit of historical research. I was not aware of the attitudes expressed at that time. Menzies did a great job in building the houses and had the good sense to sell them off at an advantageous price to the purchaser who then took on the maintenance and enjoyed the capital appreciation. An excellent model. There would be less capital appreciation if this sort of program was pursued with vigour. The relationship between house prices and incomes would not have blown out so much if the program had persisted.