Here are five ways governments can intervene in the market to create affordable housing

More than 84 per cent of households in Berlin rent their home. Image: exilism/Flickr, CC BY-NC-ND.

Housing affordability continues to be an issue of importance to voters in many regions. Different countries have adopted different approaches to improve access to affordable housing – with governments playing a central role in ensuring people are adequately sheltered, as well as being encouraged to buy housing where possible. In many countries there is an underlying desire by households to own their own home; in others, renting is the norm.

In each case there are specific approaches, sometimes unique-to-that-country, that have helped address the issue of affordability. Here are five.

1. Government intervenes in the rental market

In some countries there is a general culture of renting for accessing accommodation, rather than assuming all households should achieve home ownership. At times, renting is cheaper than buying.

In Germany most households (54.1 per cent) are renters due to the long-term intervention in the marketplace by the government, as well as the accepted culture that renting is suitable over the long-term. In Berlin a total of 84.4 per cent of all households rent. Providing this amount of rental accommodation is a major challenge without substantial government intervention or provision of housing.

 

Source: Federal Statistics Office Germany, 2011.

 

For example, in 2012 the German government paid housing allowance to approximately 783,000 households, equating to 1.9 per cent of all private households. Most of this funding (57 per cent) was allocated to single person households, who are unable to compete in the open housing market with multiple income households.

Source: Federal Statistics Office Germany, 2011.

Other countries have also acknowledged the gap between

(a) the maximum amount of rent a tenant can pay, and

(b) the minimum level of rent a landlord will charge.

In the US, for example, this gap is bridged by the widespread use of a voucher system ,which subsidies the payment of rent to private landlords. This system is funded by the US government, and ensures tenants can access a minimum quality of affordable housing.

2. Government provides affordable housing

In Singapore there is a high level of government intervention in the market, with the Housing and Development Board (HDB) providing approximately 80 per cent of all housing in the country. Approximately 90 per cent of households in Singapore own their own home; there are also grants for first time buyers and second time buyers in Singapore.

In Hong Kong, about 29.7 per cent of residents live in public rental housing (PRH) provided by the government. In Scotland, a large proportion of the supply of affordable housing is undertaken by housing associations and local authorities. This collectively equates to about quarter of total housing accommodation in the market. 

Source: Housing Statistics for Scotland, 2011.

However – the recent trend for many countries, including Australia, has been the provision of less direct housing by governments.

3. Cities embrace higher density housing

There are numerous examples of global cities making better use of limited inner-city land supply by encouraging higher density living in high rise units or condominiums, especially in Asian cities including Hong Kong, Macau and Singapore. The provision of affordable housing for purchase or renting is therefore more likely to be achieved in these circumstances, due to minimal land use and higher densities.

However, high-rise living is not commonly accepted in many European cities, or in locations with a resistance due to cultural preferences for detached housing.

4. Public transport allows residents to commute to less expensive housing

The main driver of where a household lives is the need to be close to their workplace. As more affordable housing is usually located away from the central business district, the trade-off is cheaper homes but additional commuting time.

When this extended commuting time – of up to 2 hours each way – is combined with improved transport infrastructure such as in Japan, it is possible to access affordable housing in outlying satellite towns and cities where land is more affordable. In other words, governments which improve road and public transport infrastructure can also increase access to affordable housing.

Source: Japan Guide, 2000.

 

5. Multiple person households are encouraged

Lower demand can be achieved by limiting population levels and underlying demand for housing. But while this may not be an option for many governments, another option is to encourage multiple person households which otherwise would remain as single person households.

According to the Australian Bureau of Statistics (2012), in 1911 the average persons per household was 4.5. By 1991, that had decreased to 2.7.

Source: Wikipedia, compiled from various sources.

The Conversation

Richard Reed is chair in property & real estate at Deakin University, Melbourne.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

A helpful and informative guide to London, for the benefit of the New York Times editorial board

The sun rises over quaint old London town. Image: Getty.

It’s like with family members you hate: it’s fine for you to slag them off, but if anyone else has, you’re up in muted, backhanded arms about it.

Yesterday, the world’s number one London fan the New York Times tweeted a request for experiences of petty crime in the city. This was met by a deluge of predictably on-brand snark, like “Sometimes people scuff my leg and only apologise once”, and “Dicks who stand on the left-hand-side of tube escalators”. This served the dual purpose of uniting a divided London, and proving to the NYT that we are exactly the kind of chippy bastards who deserve to constantly lose their phones and wallets to petty crime.

By way of thanks for that brief endorphin rush, and in hopes of leading things in a more positive direction, I’d like to offer the Times this uplifting guide to London, by me, a Londoner.

I take my London like I take my coffee: on foot. If you are with someone special, or like me, like to reimagine your life in the format of Netflix dramady as you walk alone on Sundays, I can highly recommend the Thames Path as a place to start.

Kick things off next to Westminster, where we keep our national mace in the House of Commons. Useful though the mace might prove in instances of street theft, it is critical that it is never moved from the House. It acts as a power source for our elected representatives, who, if the mace is moved, become trapped in endless cycles of pointless and excruciatingly slow voting.

Cross Westminster Bridge to the Southbank, where in the manner of a spoiled 2018 Oliver Twist, you can beg for a hot chocolate or cup of chestnuts at the Christmas market for less that £8. Remember to hold your nose, the mutton vats are pungent. Doff your cap to the porridge vendor. (LOL, as if we make muttons in vats anymore. Box your own ears for your foolishness.) Then buy some hemp milk porridge, sprinkle with frankincense and myrrh, and throw it at the pigeons. There are thousands.

In the spring, head a little further south through Waterloo station. If you pass through the other side without getting ABBA stuck in your head, Napoleon’s ghost will appear to grant you three wishes.

Proceed to the Vaults, which is like the rabbit warrens in Watership Down, but for actors and comedians. No-one knows the correct way in, so expect to spend at least 45 minutes negotiating a series of increasingly neon graffiti tunnels. Regret not going to art school, and reward yourself upon your eventual entry with a drink at the bar. Browse the unintelligible show programme, and in no circumstances speak to any actors or comedians.

When you emerge from the Vaults three days later, turn back towards the river and head east. Enjoy the lights along the Thames while you pick at the spray paint stains on your coat. 


After about 20 minutes, you will reach the Tate Modern, which stands opposite St Paul’s Cathedral. Close to sunset, the sky, water, and cathedral might turn a warm peach colour. The Tate remains grey, coldly confident that for all its brutalist outline, it was still fantastically expensive to build. Feel grateful for that loose knit jumper you stole from the Vaults, and go inside.

Spend two minutes absorbing the largest and most accessible art, which is in the turbine hall, then a further hour in the museum shop, which is next to it. Buy three postcards featuring the upstairs art you skipped, and place them in your bag. They will never see the light of day again.

Head further east by way of Borough Market. Measure your strength of character by seeing how many free samples you are prepared to take from the stalls without buying anything. Leave disappointed. Continue east.

At Tower Bridge, pause and take 6,000 photos of the Tower of London and the view west towards parliament, so that people know. Your phone is snatched! Tut, resolve to take the embarrassment with you to your grave rather than shame Her Majesty's capital, and cross the river.

On the other side of the Bridge, you could opt to head north and slightly east to Shoreditch/Brick Lane/Whitechapel, where you can pay to enjoy walking tours describing how some pervert murdered innocent women over a century ago.

Don’t do that.

Instead, head west and north. through the City, until you reach Postman’s Park, which is a little north of St Paul’s, next to St Bartholomew's hospital. Go in, and find the wall at the far end. The wall is covered in plaques commemorating acts of extraordinary and selfless bravery by the city’s inhabitants. Read all of them and fail to hold back tears.

Then tweet about it.