The right home, at the right time, the right place, and the right cost

| January 30, 2017

People over 65 without homeownership are at the mercy of a steadily increasing rental market. Abby Bloom explains why government and policymakers urgently need a plan for inclusive, intergenerational housing.

“If you are an older Australian, renting your home on a one-year lease, you are effectively homeless”.

“When the rent goes up, I can make up for it a bit on food because my daughter will bring care packages from church which give you 8 or 9 meals for the freezer…”

The unrecognised crisis in housing

The Sydney Morning Herald reported recently that the median house price in Sydney has reached $1.2 million Australian, or US$ 900,000, and the median apartment price topped $880,000 (US$650,000). That makes Sydney the second most expensive housing market in the world – behind only Hong Kong, whose stratospheric housing prices have long led the world. In 8 years housing prices in Sydney have increased 98%; by contrast the CPI has barely exceeded 2% in any year during that same period, and interest rates have been hugging all-time lows. Young “first home buyers” have watched ‘the Australian dream’ – a detached home on a quarter acre block – slip further and further from their grasp. Not surprisingly, the number of first home buyer loans approved in Sydney (NSW) in the first 10 months of 2016 was 9.2 percent lower than that recorded over the same period in 2015, and the number of loans approved in October was the lowest ever recorded.

Housing affordability now tops the list of priorities of both Australia’s federal and state governments. Australian government officials are scouring the world, examining solutions enacted elsewhere, while economic policymakers have stuck steadfastly to the mantra that increasing supply is the all-purpose solution to the housing crisis. Other policy experts caution that special groups rightly deserve special protection. The list includes “key workers” (teachers, police, firefighters); first home buyers”; and those on welfare or extremely low incomes, who have swelled the waiting lists for Government subsidised housing to between 80,000 and 160,000, depending on whose statistics you trust.

But one very large and growing group of Australians has been forgotten by government and policymakers alike: people over 65 who, unable to have achieved homeownership, are at the mercy of a steadily increasing rental market. While the cost of keeping a roof over one’s head in Sydney has galloped away from wage earners, the situation is worse still for retirees, who depend on their savings and investments. The cost of housing has moved one group closer to homelessness: for those relying strictly on the government’s pension (Social Security), and in particular older women living alone in rented accommodation.

Yet only one minor policy document released in 2016 by the planning authority the Greater Sydney Commission has singled out seniors as a group already falling dramatically behind as a result of the explosion of housing costs in Sydney. Our research provides evidence that some in this silent minority, too proud to complain let alone mobilise, are skimping on basic needs like food, heat, and power in order to keep a roof over their heads.

The widening affordability gap for seniors

The housing affordability crisis in Sydney has been building for some time, and despite the occasional prediction of a bubble that must burst, prices continue to rise. In fact, in the 5 years between December 2011 and December 2016, the median house price rose 69.3 percent. Experts attribute the increase in large part to the lowest interest rates on record. A shortage of supply is also a major factor: housing starts faltered after the Global Financial Crisis finally hit Australia hard in about 2010. But demand has far exceeded supply due to other factors. Two major drivers are the demographic blip of Baby Boomers’ children, and the Australian propensity to benefit from tax incentives favouring property investment.

Sydney is feeling a housing squeeze for other reasons. Like Vancouver, Australia, and particularly Sydney, is very attractive to students, migrants, and investors from Asia as a place to secure a permanent home – English-speaking, multi-cultural, good education system, stable government, very high quality of life, reasonable proximity to Asia, and comparatively open to new migrants.

In response to the demand for affordable homes, a spurt of apartment construction has occurred in proximity to transport hubs around Sydney. Sprawling new suburbs of family homes are rapidly replacing pastures and farms – reflecting the development of the New York suburbs post WWII. None of these new dwellings adhere to recommended guidelines for accessibility, an essential feature for older people and people living with disabilities. And in spite of the surge in supply, underlying factors have continued to propel housing prices: in the single year 2016 Sydney’s cost of housing rose over 16 per cent, defying all predictions of a slowing or collapse.

The ageing of Australia, and Sydney, isn’t news: for decades demographers have forecast it. But medical advances and other factors have accelerated the rate of increase: in the 40 years between 2002 and 2042, people over the age of 65 will nearly triple as a proportion of the population, from 13 per cent to 42 per cent of the population. Most people over the age of 65 will be relying on savings, retirement plans, or government welfare.

With the demographic facts of ageing staring government, policymakers and planners in the face for many years, the failure of government to identify and plan for “seniors” is an inexcusable oversight.

Approximately 20 per cent of Australians over the age of 65 require some assistance – paid or volunteer carers, aides, or helpers – to perform one or more activities of daily living. But the majority of seniors require this assistance at home, not in a nursing home. Given the size and growth of Sydney’s older population, it is a remarkable oversight to omit carers and aides from the list of ‘key workers’, the very low paid workers who provide assistance to older residents in their homes or in residential aged care. On extremely low wages, often with no benefits, most of these workers cannot afford to own their own homes either. As the cost of housing drives them further and further out to the less expensive outer suburbs of Sydney, they can ill afford the cost of travelling long distances to care for the ageing core of Sydney who are concentrated in the older coastal suburbs.

The inadequacy of the pension hits renters, and hits older women hardest

In 2016 The Longevity Innovation Hub, in collaboration with Australia’s oldest charity, The Benevolent Society, and the think tank Per Capita, we examined the “affordability” of Australia’s national aged pension, the equivalent of Social Security in the US. In Australia, the aged pension, which is set at a national level, had been adjusted only for CPI (not the real rate of increase in the cost of rental housing). The research combined quantitative analysis of economic data and focus group interviews with older Australians in several states.

The research provided evidence that the aged care pension is entirely inadequate to support quality of life for those without any other income. Those in the most dire straits were those older people who rented their accommodation. Older women renters are especially vulnerable, because they are more likely to live longer, on their own, thereby shouldering the full cost of rental housing for an extended period of time.

We heard stories of people who went without hot water or heating for 6 months of the year to cut down their energy bills so they could pay their rent. We heard from seniors who divided single-serve frozen meals in three, to last for three days instead of one. One participant confessed that the only reason she came to the focus group session was because lunch was provided, and she was always on the lookout for free food because she faced a trade-off between eating and replenishing her medications.

Policy failure = policy opportunity

The state’s Treasury recently acknowledged the inexorable ageing trend of Sydney and surrounds. At the same time, solving the housing affordability crisis has become one of its major priorities. Treasury’s own economic data show that many of us will spend almost as many years in “retirement” as we will have spent in the productive, paid workforce. We will live long enough to accrue multiple chronic conditions, and many of us will require accessible housing. Single women of the boomer generation in Australia will almost all outlive whatever meagre retirement savings they have accumulated, and will then rely on the (inadequate) government pension and other government-funded services like healthcare, home care, and rental subsidies, and on charities for food and clothing.

So how is it possible that neither elected officials, nor government policymakers (with the exception of the Greater Sydney Commission), or planners, even mention people over 65’s – seniors – as a substantial group deserving of consideration in planning the future of Sydney?  Why has the concept of ‘universal’ design – minor adjustments to accommodate people with mobility issues – not been recommended, let alone embraced? Affordable housing, like townhouses built over several levels, suit neither older people nor people with common disabilities.

In its stewardship role Government has a license to plan for the future of an inclusive city, one which acknowledges, embraces, and literally accommodates diversity in age as well as culture, language and income. Sydney and its residents stand to benefit both economically and individually from “inclusive, intergenerational housing”.

Travelling widely to inspect how, and with what results, other global cities have tried to solve their affordable housing crisis is valuable, with three caveats:

First, examine the evidence that specific approaches have in fact produced the results intended before adopting them. Second, as always in social policy, a solution must be specific to the history and circumstances of a nation, or in this case, a city. Sydney never has been and never will be London. Third, do not try to construct a single solution. Complex problems like a housing crisis are never amenable to simple solutions. Successful results are most likely to flow from a menu of models, mechanisms, and sources of funding that leave opportunities for innovation and citizen participation.