Academic journal article Journal of Australian Political Economy

Stepping Stones to an Exclusionary Model of Home Ownership in Australia

Academic journal article Journal of Australian Political Economy

Stepping Stones to an Exclusionary Model of Home Ownership in Australia

Article excerpt

For the past thirty years, Australian governments and policy makers have largely placed private housing outside a welfare rubric. Discourses over home ownership affordability have focussed on the complex interplay of macroeconomics, fiscal, financial, urban planning and pension policies. The primary role that private housing plays as a vehicle for attaining a safe and secure shelter in the absence of a robust public housing system has been overlooked.

This has not always been the case. Supported by the labour-union movement and state governments, the Menzies government's pro-home ownership reforms in the 1950s were embedded in the context of social welfare provision (Castles, 1998; Ronald, 2008a; Forrest and Hirayama, 2014). Policies to promote home ownership were regarded as a means of increasing productivity, creating jobs and achieving greater equality in housing access for war veterans, the working class and the growing middle class (1). Households depended on systems of finance to purchase a home. However, government housing, financial and labour policies partly insulated them from the volatilities of the financial market and enhanced social security. These policies are referred to here as the 'social compromise' of housing (Castles, 1985), consisting of: rental controls, houses that were affordable in relation to household income (Bourassa et al, 1995), centralised wage regulations, full employment policies, regulated financial sector and direct loan subsidies through Commonwealth-owned and State-owned banks (Castles, 1997) (2). Elsewhere, these policies are described as the 'really big trade-off of the wage earner's model' (Castles, 1998; Castles, 1997) or the 'social project of

home ownership' of post-World War II (Forrest and Hirayama, 2014). The period from 1945 to 1956 was also the heyday of public housing provision to support those incapable or unwilling to enter the private housing market, particularly during the Curtin-Chifley Labor Governments (see Troy, 2012). Together, these policies promoted a partly-decommodified market that placed equal weight on the social provision of shelter, social security and economic growth via the housing construction sector. This created the conditions for a more equitable distribution of the private housing stock, leading to an increase in the proportion of owner-occupied dwellings from around 50% in 1947 to around 65% in 1961. In the same period, investment properties decreased from 41% to 27% (refer to Figure 3).

From the early-1960s, rates of home ownership stopped rising and remained stable until the mid-2000s (Yates et al., 2008:12). Scholars have generally interpreted this as a successful model of home ownership. Nonetheless, concerns about the sustainability of Australia's housing system have grown. The financial and housing market collapses in 2007-2008 in the United States (U.S.) and globally have markedly intensified these concerns. Home ownership rates in Australia fell by about 3% between 2007 and 2013 (Trading Economics, 2016). Numerous housing studies have established an emerging consensus: that Australia's model of housing provision is increasingly shaky and housing inequalities are increasing (see Yates and Bradbury, 2010; Yates et al., 2008; Smith and Searle, 2010; Wood and Ong, 2012; Mortensen and Seabrooke, 2008; Schwartz and Seabrooke, 2008; Forrest and Hirayama, 2014; Ronald, 2008a; Ronald, 2008b; Allon, 2008; Yates, 2011; Troy, 2012). Although written from various vantage points, these housing scholars tend to anchor the disjuncture point in the 1980s, following the financial deregulation of the Australian economy. This article suggests an alternative thesis: the model that facilitated widespread owner-occupancy in the 1950s began to erode from 1959 due to federal government policies that prioritised financial imperatives to the detriment of social goals.

These policies and market-driven changes gave rise to an exclusionary model of home ownership in Australia. …

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