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February 14, 2007
In days gone by there was good public housing for those on low incomes, such as the working poor, unemployed or single parents. No more. There is a now a desperate shortage with little public housing being built, and people relying on the private rental market for rental properties.
Ross Bateup
Rising prosperity means a shortage of rental properties as investors invest elsewhere for better returns and new homebuyers entering the property market. We are in our 16th year of continuous growth in the economy since the recession of the early 1990s. Keep the economy growing for long enough, unemployment comes down, house prices increase and rents continue to rise. Hence the housing affordability crisis.
The effects of the growth iareuneven. As Ross Gittens points out in the Sydney Morning Herald:
You can see it in the differing rates of unemployment around the country: 3 per cent in Western Australia and 4 per cent in Queensland, compared with 5 per cent in NSW and Victoria and getting on for 6 per cent in South Australia and Tasmania.
So there is a need for public housing and emergency housing. The common view is that markets should set house prices and rental demand.
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The up-side of it is that it is getting young families back to rural areas.