Media Releases
May 11, 2011. CHCWA welcomes stock transfer to community housing providers
THE Community Housing Coalition of WA welcomes the promised transfer of 35 per cent of the Department of Housing's housing stock to the Community Housing Sector by 2020 under the Affordable Housing Strategy 2010 to 2020 titled ‘Opening Doors to Affordable Housing,' released today.
According to Colin McClughan, CHCWA's Executive Officer, the transfer of stock will ensure the growth of the sector and enable Community Housing Organisations to leverage the stock to provide additional affordable dwellings as long as the announced timelines are met. "This will go a long way towards alleviating the critical affordable housing shortage in WA," he said.
"We also welcome the suggestion that financial assistance will be provided to low-to-moderate income households entering private rental accommodation through a revamped or extended Bond Loan Assistance Scheme or similar program," Mr McClughan said.
Other initiatives announced in the strategy that CHCWA supports include the move to examine new community land trust arrangements for possible implementation in WA.
"The trusts are widely used in New South Wales and other countries and they ensure adequate protection is afforded to landowners and residents in park homes and affordable lifestyle/retirement village concepts," Mr McClughan said.
"The move by Keystart to explore the possibility of financing credit-worthy projects undertaken by not-for-profit housing organisations and private developers where funds for social and affordable housing projects are not otherwise available through commercial sources is another initiative that CHCWA welcomes," he said.
The Strategy says LandCorp and the Department of Housing, while operating under commercial principles, will demonstrate new innovative land and housing options to consumers and the wider market, in line with Government objectives.
"CHCWA supports Landcorp and the Department of Housing's aim to promote appropriate product mix and diversity of housing options within creative built-form projects that are commercially viable and lead to more affordable entry points and solutions for consumers," Mr McClughan said.
For more information, telephone CHCWA's Executive Officer, Colin McClughan
on 0400 227 542.
Letters to The Editor
02/08/2010 - Sent to the West Australian Newspaper referred to the article: "$7.4 million bill for trashed housing"
13/10/2010 -Sent to the West Australian Newspaper referred to the article: "Home Prices to soar on back of new boom"
09/11/2010 - Sent to the West Australian Newspaper referred to the increase of interest rates
05/01/11 - Sent to the West Australian referred to the article "Builders offer freebies in sluggish market" - not published
16/02/11 - Letter to the Premier re NRAS
15/03/11 - Sent to the West Australian referred to the article "Buy a humble house for starters: Premiers" -not published
02/08/2010
Sent to the West Australian Newspaper referred to the article: $7.4 million bill for trashed housing
Dear Sir,
It is unfortunate that at a time when housing unaffordability has reached crisis levels in Western Australia that this newspaper chooses to focus on the damage caused by a small percentage of public housing tenants to their own homes.
No sensible person would excuse such behavior but, as your editorial states, mental illness, drug and alcohol problems and overcrowding play a significant part in creating the problem. Moreover, the Department of Housing acknowledges that most of the money it spends on repairing damage is recouped from the offending parties.
Public housing is rightly referred to as tax payer funded but it should also be noted that the Australian tax payer pays tens of millions each year to allow for negative gearing on investment properties and capital gains exemptions on the sale of property in the private market.
Western Australia has some of the lowest levels of social and affordable housing in the developed world. The Community Housing providers that my organisation represents work hard every day with limited resources to help house the people that have been marginalised by WA's housing boom. Arguably, the fact that so many people are struggling to access affordable accommodation in a state as wealthy as this is the real story here.
Yours etc
Colin McClughan
Executive Officer
Community Housing Coalition Western Australia
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13/10/2010
Sent to the West Australian Newspaper referred to the article: Home Prices to soar on back of new boom
Dear Sir
I refer to the headline on the front page of today's West Australian, "Home Prices to soar on back of new boom"
The overall tone of the article suggests that rising property prices should be a cause for celebration. Indeed, house price moderation in recent months has been described as a ‘winter of discontent' and predicted price rises as an ‘improvement.' In short, the basic message is that property price increases are fundamentally positive.
This analysis is curious for several reasons. First, why is that when it comes to the cost of all other goods and services in the economy, it is generally accepted that low rates of price inflation are desirable but the same is not true for housing? Indeed, controlling inflation rates is a critical function of central banks everywhere, including the RBA. Imagine if it were predicted that the price of a litre of milk or a loaf of bread were to increase by 20 per cent in the next three years. Would such news be greeted as a sign of a healthy economy in the same way rising house prices are?
Second, WA has a major deficit of affordable housing. In fact, housing in this state relative to average incomes is among the most expensive in the world. Social Housing waitlists have more than doubled since 2004 in no small part due to rapid increases in house prices and rents during the same period. Another period of soaring house prices will, inevitably, make a bad situation worse in this regard. The Community Housing organisations that the Community Housing Coalition of WA represents will be put in the unenviable position of facing increased demand for their services without a commensurate increase in revenue to meet that demand.
Third, the debt burden for those who do buy - first time buyers in particular - will become even more onerous as they take out bigger loans to achieve the Australian dream of home ownership. Australia already has very high rates of household debt. A large proportion of the population is experiencing mortgage stress or is at risk of falling into mortgage stress as interest rates increase or their personal circumstances change. Further increases in the average house price to average income ratio will make matters significantly worse in terms of household debt levels.
Finally, we need to heed lessons from overseas about the damage that can be caused by overheating housing markets. Only recently, countries like Spain, Ireland and the US have experienced serious housing busts after long periods of stellar growth. Australia may be different but we must not be complacent.
Yours etc
Colin McClughan
Executive Officer
Community Housing Coalition Western Australia
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09/11/2010
Sent to the West Australian Newspaper referred to the increase of interest rates.
Dear Sir
Against the backdrop of a housing system that is characterised by chronic unaffordability and unprecedented levels of mortgage debt, the incidence of rising home foreclosure rates ( West Australian 9/11/10) in WA is alarming.
The dream of home ownership is deeply ingrained in Australian culture as people seek to provide as stable a home as possible for themselves and their family. However, as the price of housing has skyrocketed over recent years, in order to acquire a mortgage, and then to meet the monthly repayments, thousands of householders have risked extending themselves beyond their capabilities.
Overly liberal lending practices by banks and other lending institutions coupled with Federal Government initiatives such as the first home owner's grant- and last year's ill conceived first home owner's boost - have helped create a constituency of home owners that are particularly vulnerable to rising interest rates, higher utility bills and other factors such as illness or relationship breakdown that adversely affect their disposable income.
Mortgage delinquency and foreclosure rates in Australia are very low by international standards. That should not make us complacent. Average home loans- and thus the debt burden placed on house buyers- have increased significantly in recent years. According to the Australian Bureau of Statistics, the average home loan for owner occupiers in WA has increased from $213,000 in September 2006 to $282,000 in September 2010. Moreover, there has been a significant increase in the number of homeowners acquiring loans with high loan to value ratios which push up the cost of monthly repayments. The fact that the number of foreclosures is rising tells us that the ability of households to make the necessary budgetary adjustments to meet their financial commitments when their circumstances change cannot be taken for granted. The projected interest rate increases alone would see average monthly mortgage payments increase by hundreds of dollars.
Community housing providers have been for some years now dealing with the dark side of WA's ‘housing boom.' As the sector's representative body, we would urge the Government to monitor the issue very closely and make provision for those who may fall foul of rising interest rates or other unforeseen economic circumstance that could see them come to rely on our services.
Yours etc
Colin McClughan
Executive Officer
Community Housing Coalition Western Australia
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05/01/11 - not published
Dear Sir,
I refer to the article "Builders offer freebies in sluggish market"; West Australian 5/1/11.
The article contains reference to possible state government plans to introduce a "First Homebuyers Grant". The Community Housing Coalition of Western Australia believes that the introduction of such a grant would be a mistake for several reasons:
First, first home buyers grants are inflationary. They make houses and land packages more expensive and increase the level of debt taken on by purchasers. 2009's Commonwealth sponsored First Home Owners Boost (FHOB) provides ample evidence of this: In October 2008, the month the FHOB was introduced, the average loan size for a first time buyer in WA was $266,400. By November 2009, the month before the FHOB expired the average loan size for a first time buyer had increased to $300,800[1].. This trend was mirrored by upward movement in house prices throughout Australia during the same period. In other words, a scheme designed to increase affordability in the housing market had the opposite effect at considerable cost to the Australian taxpayer.
Second, the scheme is unnecessary. House prices are falling. The average first home owner loan in WA has fallen from $298,900 in December 2009 to $277,600 in October 2010[2]. This demonstrates, along with various other housing market data and indicators that prices in the first time buyer section of the market are dropping. The fact that builders are now offering swimming pools and other sweeteners to create demand shows that prices are still too high. Some vendors know this and are dropping their asking prices in response to changing market conditions. If other vendors want to sell they will follow suit. After a long period of unsustainable house price rises, the market should be allowed to correct without interference from government.
Finally, any First Home Owners Grant is likely to cost millions of dollars. Western Australia has among the lowest percentage of social and affordable housing stock in the developed world at just 4% of total housing stock. There are as many as 55,000 West Australians, many of whom will never realistically be in a position to purchase a home in the private market, languishing on ever growing social housing waitlists. Helping people like these by investing in the social, affordable and community housing sector, the sector that the Community Housing Coalition of WA represents, would make for a much more effective use of taxpayers' money than a state funded First Home Owners Grant and I would urge government to follow this course of action instead.
Yours etc
Colin McClughan
Executive Officer
Community Housing Coalition Western Australia
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16/02/11
Letter to the Premier re NRAS
Honorable Colin Barnett MLA
Premier of Western Australia
24th Floor
197 St George's Terrace
Perth WA 6000
16 February 2011,
Dear Premier,
The Community Housing Coalition of Western Australia (CHCWA) is the peak body for community housing providers in Western Australia. CHCWA's primary role is to support the development of community housing in WA, working with Federal, State and Local Governments to increase the provision of community housing, assisting providers to tackle homelessness, and by providing a range of training and development opportunities designed to enhance the Community Housing Sector's ability to deliver quality outcomes.
As you will be aware, Federal Government recently announced that it plans to cut funding to the National Rental Affordability Scheme (NRAS) by $264 million. This means that the scheme, which was originally designed to produce 50,000 new dwellings for people struggling to access secure housing at market rates throughout Australia, will now only produce in the region of 35,000 dwellings.
By any fair national or international comparison, Western Australia suffers from a chronic shortage of social housing with the total amount of housing that could be considered social amounting to less than 4% of the total housing stock. Western Australia's housing recent "housing boom" has resulted in tens of thousands of low and fixed income West Australians struggling to access and maintain stable accommodation and thrown into sharp relief the inadequacy of the state's social housing volumes. Public housing waiting list applications have risen almost 68 per cent in the past four years, with 24,640 applications for public housing by the end of September, compared with 14,668 in October 2006.
Withdrawing support for NRAS will stymie the good work that is being done by Community Housing Providers and other key government stakeholders to address the State's social housing deficit. This cut will severely threaten plans of housing providers who have developed their operations to utilise the scheme. Moreover, it casts further uncertainty on the future of NRAS and undermines potential investor support for future market-based affordable housing initiatives.
The concept of NRAS draws heavily on schemes of a similar nature in other jurisdictions which have proven very successful. The low income housing tax credits program in the United States, initiated during the presidency of Ronald Reagan and designed to encourage private sector investment in increasing levels of rental housing stock for low income Americans, has delivered 1.9 million affordable homes to rent, much more than the entire public housing stock built in the US over the past 70 years. Its success is due largely to the longevity of the scheme.
We would ask that your government make representations immediately to the Federal Government to reverse these cuts to NRAS and safeguard its future and the future of other schemes designed to encourage market based affordable housing initiatives.
Yours etc
Colin McClughan
Executive Officer
Community Housing Coalition Western Australia
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13/05/11
Dear Sir,
I refer to yesterday's comments by the Premier in relation to first home buyers.
The simple truth is that WA's booming economy is not the only reason that WA house prices have risen so rapidly in recent years. Such growth has been made possible by successive Federal government policies which actively encourages Australians to treat housing as an asset class rather than a source of shelter. Since the 1990s negative gearing and other tax incentives have contributed to a situation where young home buyers have had to compete with property speculators for a limited supply of properties. Coupled with the liberalisation of lending practices by banks and other lending institutions- in line with global trends- property prices relative to average incomes have risen to levels never seen before in Australia.
The consequences of such policies are very worrying. First, Housing affordability rates have crumbled as more and more people have been priced out of the market. Second, those who do buy are going deeper in to debt to do so. Reflecting larger mortgages, home loan interest payments are now a higher proportion of income than when housing interest rates peaked at 17 per cent in 1989. Having a whole generation of Australians carrying such a heavy debt burden does not represent successful economic or social policy.
Finally, high house prices put upward pressure on rents which has massively damaging consequences for low and fixed income Western Australians for whom rented accommodation is often their only option. This is evidenced by skyrocketing demand for public and community housing and the rise in the number of people living in private rental accommodation struggling to make ends meet.
The state government is to be commended for the initiatives planned in the Affordable Housing Strategy Document and the Community Housing sector looks forward to playing its part in tackling the affordability crisis. Premier Barnett might also look to bring his influence to bear on ending policies at a Federal level which contribute to excessive speculation in the property market and diminish affordability for those who require stable affordable shelter.
Yours etc,
Colin McClughan,
Executive Officer
Community Housing Coalition