Five things to fix the housing crisis

When the Reserve Bank announced its latest decision not to cut interest rates, governor Michelle Bullock told homeowners struggling to pay their mortgages that “some may ultimately make the difficult decision to sell their homes”. Three weeks earlier, the Commonwealth Bank announced profits of $9.1 billion for 2023-24. This is the housing crisis in 2024. Millions of households are struggling to pay rising rents and mortgage repayments, while profits soar for the banks and wealthy landlords.

This dire situation for workers, students and the poor can seem uncontrollable, the result of market forces that we have no power to shape. But here are five things we could do to fix the housing crisis now.

1. End tax concessions to investors

The federal budget is estimated to lose $165 billion over the next ten years in tax concessions to investors. The negative gearing and capital gains tax exemptions subsidise rich landlords by allowing them to write off interest payments and agent fees from their income tax and walk away with tax-free profits when they sell.

When interest rates rise, a working-class family that owns only their own home bears the full cost of increased mortgage payments, while the government gives rich investors a subsidy by allowing them to claim the increased payments off their income tax. The tax concessions also drive up house prices by helping wealthy investors to outbid those trying to buy a home to live in. This entrenches the power of a tiny section of society whose main interest is for house prices to rise as high as possible so they can make a bigger profit when they sell.

Ending the tax concessions to wealthy landlords wouldn’t cost a cent; instead, it would mean billions of extra dollars that could be used to build housing and result in cheaper house prices overall.

2. Freeze and cap rents

More than 30 percent of Australian households now rent, and an increasing number of people have no prospect of ever buying a home. Renters are at the mercy of price-gouging landlords who have increased prices to record levels over the past three years. The median price in Sydney is now $750 a week, up more than 11 percent in a year, and there are no properties in the entire country that are affordable for a person on Newstart or the Disability Support Pension.

Instead of letting landlords fleece more money from people’s need for a home, the government could intervene to freeze rents for two years and limit future rent increases. This has been done before, when the federal government introduced rent and eviction controls during the Second World War. And such measures are popular, with 60 percent of people surveyed by the Guardian in 2023 supporting a rent freeze.

3. Build public housing

Over the past 40 years, governments across Australia, both Labor and Liberal, have gutted public housing. Years of underfunding and sell-offs have reduced public housing to only 4.2 percent of all housing stock, while the number of people urgently needing this housing has increased by 50 percent in just the past three years. There are hundreds of thousands of people on waiting lists across the country who face a ten or twenty-year wait for a property.

Building the 950,000 properties that the City Futures Research Centre estimates are required to satisfy demand would also put downward pressure on rents generally, as hundreds of thousands of tenants exited the private rental market. It would also be a step towards asserting that the government has a responsibility to meet people’s most basic needs and weaken the dominance of the market and profits as the sole determinants of whether a person has a home to live in.

This would cost a lot, hundreds of billions of dollars, but the money is there. For instance, ending Labor’s commitment to building nuclear submarines would free up an estimated $500 billion, more than enough to build all the needed homes.

4. Seize the empty homes

A recent survey by Prosper Australia estimates that in Melbourne alone, there are 100,000 empty or underused properties, enough to house those on the public housing waiting list in Victoria twice over. It is a scandal that amid a housing crisis, wealthy investors can let homes sit empty, waiting for house prices to go up while people sleep on the street. But this is the madness of allowing the market and profit to determine whether people have a home, instead of building and distributing housing based on people’s needs.

The only concern for rich property owners is how much money they can make, not whether the property gets used for its obvious purpose—to provide shelter. If investors can buy low and sell high, why deal with the inconvenience and expense of making the property liveable or dealing with tenants who cause wear and tear to their asset? These empty properties should be taken from the wealthy and used to house those living on the streets, or at the very least they should be taxed so much that they are forced either to rent or to sell the property.

5. Build a fight to end the crisis

Albanese is not going to fix the housing crisis, nor are the state Labor governments, and appealing to them to do the right thing won’t get us anywhere. They are impervious to moral or rational arguments. The suffering of families living in their cars, parents skipping meals so they can make rent or mortgage payments, or thousands living on the streets has done nothing to tweak their consciences. The politicians won’t listen because they are there to protect the power and profits of the people they truly represent, the developers, the banks and the rich, not to ensure that government provides for people’s needs.

Fixing the housing crisis would mean taking on the power of big business and the rich. We need to force the government to act, whether they want to or not. We can’t rely on a clever negotiating strategy or having the balance of power in parliament; we already saw that didn’t work when the Greens capitulated and passed the Housing Australia Future Fund, despite not having won any substantial changes to a policy that will not fix the crisis.

Instead, we should look to what has worked in the past: the eviction riots of the 1930s that brought workers and the unemployed together to fight the landlords and their bailiffs; the Builders Labourers Federation in the 1970s, militant workers who used the power of the strike to protect working-class housing.

They showed that workers, students and the poor can challenge the power of the developers, the landlords and the politicians who do their bidding. We should take inspiration from their struggles when thinking about the kind of movement needed to end the housing crisis today.