Close to Home: Three perspectives on housing in Melbourne

Last week, the Wheeler Centre presented a discussion of the housing market in Victoria, hosted by Madeleine Morris. Our panellists – the Grattan Institute’s Transport Program director Marion Terrill, Ken Morrison CEO of the Property Council of Australia, and Jenny Smith CEO of the Council to Homeless Persons – discussed negative gearing, foreign investment and affordable housing shortages.

In an extension of the live discussion, Sophie Quick spoke to a landlord, a first home-buyer on the urban fringe and a community-housing renter about their experiences with the Melbourne housing market.

‘Most people would like to become owners at some point but for someone like me, it's just ridiculously unrealistic.’ 

Image: Fitzroy facades, by Hunting Glee (CC BY-NC 2.0)

The community-housing renter: Michael*, 38

Can you tell us about your housing history in Melbourne?

I grew up in the suburbs but I moved out of home when I was 15. I was a rebellious teenager, wasn’t getting along with my parents. I was sharehousing for a couple of years,  then things went a bit sideways and I ended up homeless, kind of on-and-off. Eventually I got back into housing with community housing. I’ve been living in a place that’s owned by a [non-profit housing organisation] in Fitzroy for about five or six years. It’s my own single bedroom place with a shared laundry.

Question Time: The Housing Market

As part of Question Time: The Housing Market, a panel of experts tackled questions on property booms, affordable housing and urban planning. Listen to the full conversation on our podcast.

How did you drop out of the rental market?

It was a drug problem that was the major catalyst. It got to the point where I wasn't kind of paying rent or I was always paying late, so I got a bad reputation. I was sleeping in my car for a while and sleeping rough for a long time, and staying at dodgy boarding houses and things like that for about eight years.

How hard was it to get back into housing after being homeless?

I was still homeless for quite a while after I dealt with the drug stuff. Being homeless didn't make it easy to stay off drugs and I struggled to get back into [private rentals] because I didn't have any references and I had bad credit. It was all pretty chaotic with work too. There were short periods where I was working full time and other times when I had less consistent jobs. During that time I did things like dishwashing, labouring, working with The Big Issue  and that kind of thing.

How did you get into your community housing place?

I applied for public housing in about 2005 or 2006. I’m probably still on the waiting list! Then a friend recommended this community housing organisation to me [while I was still sleeping rough] and within a month of contacting them, I got in somewhere, but it wasn’t a great place. There was a white supremacist skinhead with a knife fixation there, who was pretty scary. I moved through a couple of the dodgier properties and then eventually I moved into the place I’m in now after about a year. It was all pretty quick for community housing, so I was lucky.

I’ve looked into private rental more recently but there’s nothing really affordable. To live in a place I could afford, I’d have to go a long way out and probably not be close to public transport. I don’t have a car. I'm at uni now and it would be hard to get to uni and hard to get groceries and bring them back to my house and that sort of thing.

What did you think of the discussion of housing affordability on Tuesday night?

That figure about the number of vacant houses in Melbourne [almost 83,000 properties, according to the recent Propsper report] did seem pretty wasteful, pretty silly. Surely there's a way to incentivise people to put tenants in their properties. One thing that wasn't discussed was the [specific] shortage of one-bedroom places. A lot of public housing stock is designed for families but a lot of people who need homes are single. Another thing  [that wasn’t discussed] is the catch-22 with boarding houses. A lot of people with nowhere to go stay in boarding houses and they’re very expensive. It's dodgy accommodation but you’re paying for the fact that you can get in quickly and you don’t have the barrier of a bond or rent in advance. It’s very easy to get stuck paying high rent, which means you can’t save up for a bond.

What do you think is missing from the national conversation about housing affordability?

Most people would like to become owners at some point but for someone like me, it's just ridiculously unrealistic. I look at how housing prices are going up and it seems to me that renting long term seems to be pretty common, but it's not really represented like that at all. [Politicians] are still talking in an old-fashioned way, as though everyone is a home-owner or will be a home owner soon.


'It's always the Baby Boomers vs Gen Y ... I find it a bit of a beat-up on both sides.'

Image: St Kilda apartments, by Yun Huang Yong (CC BY 2.0)

The landlord: Fiona, early 40s 

Can you tell us about your housing history in Melbourne?

I came to Melbourne as a uni student. I did three years of typical uni student house-sharing. Then I did more house-sharing when I got a career. I probably rented my first apartment by myself in 2000. After that, I bought my first apartment [in St Kilda] with my husband. Then we bought a house around the corner, renovated it, then moved into the house and rented out our apartment for five years. We recently sold the apartment.

Did you find it hard to get into the property market?

Yes and no. The first time you do something, make a purchase, of that magnitude everyone has hesitations and finds it a bit confronting. But you have to do your homework and work out what you can afford, have a chat to your bank, work out all your finances, work out where you want to live and get out there and start looking. Getting a deposit is achievable if you just choose to have that as your goal and work for it.

What did you think of the discussion of negative gearing on Tuesday night?

I think people have to remember that, historically, [negative gearing] was [introduced] for a reason. Since the property boom, I think the main detractors from that argument are people who don't necessarily understand how it works. I negatively geared for the duration of the period when we were landlords and, to be honest, it didn't make a lot of difference. You do have expenses that pop up – replacing the hot water system, getting electricals done and they can be expensive. I also think, at the same time, we were providing a place for someone else to live, while they saved their money so they could get their place. It's sort of that cycle where you get something and then you put back in and someone else can get something out of it.

But the market is getting a little bit crazy. Now we have interest rates at a historical low. There should be no reason why people can't get in to the property market but because interest rates are so low, the price shoots up. I think it’s the pricing structure that needs to be reviewed. And real estate agents underquoting to get people in the door ... The other thing is stamp duty. That has to be looked at more than negative gearing because the government is getting a big swipe out of [property sales].

'[Millennials and Baby Boomers are] blaming each other when they should look at real estate agents and the finance industry and governments and point fingers that way. It feels like a great little distraction.'

Fiona

What did you think of the discussion last Tuesday around the lack of affordable housing?

I didn't realise the figures [around vacant rental properties] were that extreme but in the last decade, or last five years or so, there has been a lot of overseas investment and people parking their money here. It does seem a bit crazy when there's unoccupied dwellings and that many people on the street. It's a major disconnect in government policy. The amount of affordable housing or housing that's supplied by government for people who desperately need it - that needs to change, but I think that's a whole different argument. [The problem of ] homelessness has its own issues which are rooted in other areas. It's not necessarily connected to the housing affordability thing.

Do you think anything is missing from our national conversation about housing affordability?

It's always the Baby Boomers vs Gen Y. I find that wheeled out in the media a lot and I find it a bit of a beat-up on both sides. Often when you read property articles, you see younger people having a go at older people saying, 'I can't get into the property market because you guys are sitting on all these empty properties or you’re renting them and I can't afford to save for one because you guys have pushed up the price.' And the [response] is: ‘Well if you stopped living at home with Mum and Dad, and if you stopped wanting everything at a premium now and you learned to work for it and start [off living] in a dump...' I'd like to see some real facts behind those comments. It’s given both generations a bad rap. They're blaming each other when they should look at real estate agents and the finance industry and governments and point fingers that way. It feels like a great little distraction. 


‘Right now it seems that whoever has more, gets more.’ 

Image: the Yan Yean Reservoir, near Wollert, courtesy of Melbourne Water (CC BY-NC-ND 2.0)

The first home-buyer: Natalie, 41

Where are you living at the moment?

We’ve lived with my parents for a while and we’ve been in a rental property in [the northern suburbs], but we’re moving into our new house, which is getting built at the moment, hopefully at the end of next month. It’s in Wollert.

How hard has it been to get into the property market?

Really hard! My husband and I had been living overseas in Italy and we thought it would take one year but it’s taken four. Saving up to get a decent amount for a deposit was really difficult. We’ve had to make a lot of sacrifices. I have two kids and I had to go back to work earlier than I wanted to. A lot of banks knocked us back because I work in early childhood care and our wages aren’t high. I had to change my last job, which I loved, and move to another company that pays a bit higher. But now I have to do shift work and work during school holidays. 

Here, if you work hard, you should be able to own your own home. I'm feeling already that it's changing and that maybe in the future to buy a house will only be for the very privileged.

Natalie

What are the advantages and disadvantages of moving into this area?

I like the estate we’re moving to because it’s further away from the freeway. It’s family living and there’s a beautiful park here. It’s also very close to where I work and it’s close to my parents, who are my support network. You're not going to hear all that traffic and hustle and bustle out there. I Iived in Milan, a big city with 22 million people, and I don't miss that. I don't miss the pollution. My husband and I are sick of throwing money down the drain on rent, so getting our own property has been our biggest goal. I'm proud of what we've accomplished. It's the Australian dream, isn't it? Owning your own home - it's the security too.

There are disadvantages because a lot of people are moving into the area but [governments] can’t keep up with resources and services. It’s quite a long way to the closest police station and fire brigade. My husband will have to do at least an hour commute. There’s no railway line. And they need a lot more community support out here because people are under a lot of mortgage stress. I see it at the [childcare centre] where I work, and sometimes it’s pretty confronting. How many of our children are in long day care from 6.30am to 6.30 at night because both parents need to work to pay for their massive mortgages? You see things like family break-ups and domestic violence and I think a lot of it definitely has to do with financial stress. It’s scary because you think, ‘God I hope I’m not going to be one of them’ and they’re normal, everyday people.

Were you surprised by the panellists’ comments?

It freaked me out to hear how many vacant rental places there are and it’s terrible to hear how many homeless people there are – 23,000, in Victoria every night. I never saw people begging in Melbourne when I was younger, now you always see it when you go in closer to the city. When I first came back from overseas, it was a real eye-opener and I thought, that's not what Australia's about, it's really sad to see that we're going in that direction. Here, if you work hard, you should be able to own your own home. I'm feeling already that it's changing and that maybe in the future to buy a house will only be for the very privileged.

What do you think is missing from the conversation at the moment in federal politics about housing affordability?

This is supposed to be the lucky country and I still think it's better here, there's more opportunity than overseas. But right now it seems that whoever has more, gets more. The working class is always being penalised. 

Discussion

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