Housing affordability and the empty homes scandal

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Housing affordability in world capitals. Photo of Melbourne’s Southbank by Ashley Rambukwella flickr CC https://flic.kr/p/KfdUMR

The inspiration to start writing (again) about housing affordability came from left field. I was sitting back enjoying an American roots band, The Brothers Comatose, at the Blue Mountains Music Festival in Katoomba. Lead singer and front man Ben Morrison introduced the band, saying they were from San Francisco but maybe not for long. “The price of houses is crazy there (man) and most of the musicians I know are moving out because they can’t afford to live in the area.”

“Maybe we could move here,” he suggested, and the audience groaned, knowing that housing affordability is just as big a problem in Sydney and surrounds as in San Francisco, Vancouver, New York or Paris.

“Can we sleep on your couch?’’ he jested, before doing what musicians do to avoid thinking about the cost of living. Great band, by the way (check out this bluegrass old-style tune around one microphone).

Morrison’s complaint rang true – I did a modicum of housing affordability research which quickly showed that the median price of a house in San Francisco’s Bay area clipped $US1.5 million in the fourth quarter of 2017. The California Association of Realtors Housing Affordability Index shows that it would cost $US7, 580 a month to service the mortgage. The average monthly rent for a two-bedroom apartment is $US3, 441.

Housing affordability is a myth in Vancouver, Canada’s biggest West coast city. The 14th annual Demographia affordability study ranked Vancouver the least affordable among 50 American and Canadian cities. Internationally, it is ranked the third least affordable city among 293 locations around the world (Sydney was 2nd). The British Columbia Provincial Government has made several attempts to rein in the city’s galloping real estate prices, including a 15% tax on foreign nationals purchasing metropolitan real estate. Another new measure attempts to tackle a problem that plagues Sydney and Melbourne, Australia’s housing affordability problem cities.

The BC government conducted a survey which found that 8,481 houses in Vancouver were unoccupied during a six-month period. That’s 4.6% of the housing stock. Now the government is going to levy a tax on people who own houses and don’t occupy or rent them. The tax will be calculated at 1% of the assessed value. So the owner of a two-bedroom condo in Vancouver valued at $900,000 and deemed to be unoccupied will pay the BC government $9,000 a year.

Meanwhile, the housing boom in Vancouver is on the downturn, according to the Vancouver Courier, and they should know. Still, with a median house price around $3 million (Dec 2017) and condos going at $1 million apiece, it’s maybe time for that bubble to lose some air.

Meanwhile Down Under, house prices keep rising

Melbourne and Sydney made into Demographia’s top 10 list of the least affordable cities in the world. Sydney’s median house price of $1.11 million assured it of that invidious claim. Demographia ranks middle income affordability using a price-to-income ratio. Anything over 3 is rated unaffordable. On this basis, some of the world’s most affordable towns included Youngston, Ohio (1.9), Moncton, New Brunswick (2.1) and Limerick, Ireland (2.2). There are no affordable Australian cities on Demographia’s watch.

The least affordable city is Hong Kong (19.4) then a gap to Sydney (12.9) and Vancouver (12.6). Melbourne (9.9) is slightly more unaffordable than the aforementioned San Francisco (9.1).

Studies have shown that Melbourne is one of the big culprits in hiding empty houses among its residential property stock.

Australia’s 2016 Census showed that 11.2% of Australia’s housing stock was described as unoccupied on Census night. Empty property numbers were up 19% in Melbourne and 15% in Sydney compared with the 2011 Census. This growing anomaly is a global trend in the world’s biggest cities which have allowed rapid apartment developments.

Just why 1.089 million houses and units were unoccupied on Census night is hard to explain. But it probably suggests the owner/s were not in need of rental income and would rather keep the place in mothballs for use when the wealthy owners or friends and relatives visit (for the Australian Open, Melbourne Cup or the Grand Prix) or are relying on capital gain without the need to bother with tenants.

Hal Pawson of the University of NSW wrote in The Conversation that the spectre of unlit apartments in Melbourne’s night sky prompted the Victorian government to introduce an empty homes tax. Like Vancouver, this is levied at 1% of the property’s value. Similar taxes have been introduced in Paris and Ontario. Mr Pawson, Associate Director – City Futures – Urban Policy and Strategy, City Futures Research Centre, Housing Policy and Practice, UNSW, (try getting an acronym out of that. Ed.)  says the Melbourne tax only applies to inner city and middle suburbs and, there are ‘curious’ exemptions for foreign nationals with under-used second homes.

The flaw in the scheme is that it relies on self-reporting. Pawson says the lack of reliable data on empty homes is a major problem in Australia.

Census figures substantially overstate the true number of long-term vacant habitable properties because they include temporarily empty dwellings (including second homes).

Prosper Australia uses Victorian water records to estimate that about half of Melbourne’s census-recorded vacant properties are long-term “speculative vacancies”. That’s 82,000 homes. A similar “conversion factor” to Sydney’s census numbers would indicate around 68,000 speculative vacancies.

Labor Opposition shadow Treasurer Chris Bowen has proposed a national tax on homes left empty for six months or more.

Pawson says these “cruel and immoral revelations” come at a time when 400 people sleep rough in Sydney every night and hundreds of thousands more face overcrowded homes or unaffordable rents.

He says Australia has a bigger problem in terms of under-utilised occupied housing. Australian Bureau of Statistics survey data shows that, across Australia, more than a million homes (mainly owner-occupied) have three or more spare (read unused) bedrooms. A comparison of the latest statistics (for 2013-14) with those for 2007-2008 suggests this body of “grossly under-utilised” properties grew by more than 250,000 in the last six years.

While authorities are grappling with the issue and how to perhaps tighten foreign ownership laws, the ANZ Bank did its own survey. Foreign buyers were playing an increasing role in spurring demand for new houses and apartments, it found. The ANZ analysed Reserve Bank data to conclude that in 2015-2016, foreign investors bought between 30,000 and 60,000 dwellings in Australia. This equates to 15% to 25% of all new dwellings, 80% of which were apartments, which can be bought ‘off-the-plan’.

There is good reason to suspect that the new apartment markets in Hong Kong, Vancouver, London, Paris and other desirable world capitals are underwritten to some extent by foreign nationals (including Australians).

The problem which could arise, say in the case of a global recession, is what happens in cities like Melbourne and Brisbane where foreign investors have bought up to 35% of new stock, if these owners are forced to sell.

Not to worry, most big box discount stores will give you a large cardboard box in which to live. The dumpster bins behind shopping centres have perfectly good food that’s just been chucked out because it has passed the use-by date.

Trust me.

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Travel safe this weekend, people

What rhymes with rhinitis

Taken with a Nikon D3s and 14-24 lens. 7 shot HDR at f/5.6. www.elviskennedy.com
Photo Elvis Kennedy https://flic.kr/p/a3EtMY www.elviskennedy.com

The proper term for what ails 4.6 million Australians is ‘seasonal allergic rhinitis,’ more commonly known as hay fever. The latter name has stuck, even though scientists have known that grass pollen was the key culprit since the late 1800s.

I surely don’t have to tell you this is one of the worst springs on record for seasonal allergies. But I will.

If you live in Melbourne and suffer from asthma and seasonal allergies, this has been and still may be a life-threatening year.

American and UK media outlets pounced on Melbourne’s “thunderstorm asthma’’ story – six dead and five more on life support, brayed NBC, portraying it as a ‘freak’ event, though Melbourne has previously had four storm-induced asthma outbreaks. The city’s emergency services were swamped, with 8,500 receiving hospital treatment.

NBC (and other media outlets) explained that the storm caused saturated ryegrass pollen grains to ‘explode and disperse’ over the city. About a third of patients reported never having had asthma before. Inter alia, about half of asthmatics have allergic rhinitis or vice versa.

The Telegraph in the UK tracked down the Melbourne scientist who discovered and named the phenomenon in 1992 (when two people died after two consecutive storms). Cenk Suphioglu, from Deakin University, said authorities should be ready to issue public alerts during such events as Melbourne is a well-known allergy hotspot. Previous epidemics occurred in 1987, 1989 and 2010.

So I thought it was (again) time to start taking seasonal hay fever seriously. Like so many of Australia’s rhinitis sufferers, I reach for the antihistamines too late – the pollen has already got to me, hence tissue boxes placed strategically around the house. If we could all be bothered, the early warning systems are in place to take prophylactic action.

Melbourne University botanist Associate Professor Ed Newbigin said in August that hay fever sufferers were set for a worse-than-usual season.  He told ABC Rural a wet winter had contributed to spring growth in grasslands across western Victoria.

These grasslands released “huge amounts of pollen” when flowering and this is then carried to the city by northerly and north-westerly winds.

website, a free service provided by the University of Melbourne and the Asthma Foundation Victoria. This useful website now also includes pollen count forecasts for Brisbane, Canberra and Sydney. Pollen is measured as grains of pollen per cubic metre of air.

Dr Newbigin told FOMM yesterday pollen counts range so widely there’s nothing he can call a ‘norm’. Pollen count ranges are 0-19 (low), 20-49 (moderate), 50+ (high) and 100+ extreme.

A pollen count of 19 to 25 grains can make a sensitive person feel rather unwell. So Melbourne’s extreme count of 154 on Sunday November 6 explains a lot about the pressure on hospital emergency departments.

It starts with itchy eyes and sneezing

Allergic rhinitis symptoms are caused by the body’s immune system mistaking inhaled pollen for a virus, hence chronic inflammation of the eyes and nasal passages.

Symptoms include sneezing, runny, itchy, stuffy nose, itchy, watery and red eyes, itchy ears, throat and palate, headache and a “woolly headed feeling.” Allergic rhinitis predisposes people to sinus infections and poor quality sleep, leading to day-time fatigue.

Writer Suzanne Moore, a new convert to the World of Snot described her world of misery well in The Guardian.

“Wearing my sunglasses indoors, struggling to tear into some new drugs, my daughter looks alarmed.”Mum, what are you doing? You look like a crackhead.”

“I know I look stupid; I feel even more stupid. Hay fever does that.

“Apart from turning your body into a snot factory, you feel perpetually fogged up; not really there at all. It’s a miserable thing.”

So do you find it just a tad worrying that medical science still does not have a cure for seasonal allergic rhinitis? We sufferers form an orderly queue at our local chemist shop, ready to try anything new.

The best known relief remedies are, in no particular order, antihistamines, nasal sprays, steroid sprays, and, for the determined, few, a series of injections designed to desensitise the sufferer.

The newly afflicted Suzanne Moore says 20% of people in the UK are affected by allergic rhinitis. Allergy UK says Brits spend close to a billion pounds on treatments.

The one in five Australians affected spend a total of $120 million a year in over-the-counter remedies, so one could be forgiven for thinking there is no real incentive to find a cure.

The preferred treatment for someone who suffers acute attacks of allergic rhinitis is to start the patient on a preventative (corticosteroid) nasal spray before the onset of the hay fever season (in Australia September-December).

Some will go further to lead a normal life. As a lad, West Tigers prop Tim Grant took on serious treatment. The Sydney Morning Herald revealed that after he was diagnosed as a 12-year-old with a grass allergy, the NRL star endured three years of injections to build up his immunity so he could train and play.

Rhinitis rare in the 19th century

In the 19th century hay fever was regarded as something that afflicted the aristocracy, possibly because the landed gentry could afford to consult the best physicians. Without exception, they prescribed rest and recreation by the seaside or at an alpine lodge in Europe. John Bostock, a British physician, spent most of his life studying an ailment which befell him in June every year from the age of eight. An article in the Journal of the Royal Society of Medicine says a speech by Bostock in March 1819 about summer catarrh is the first description of hay fever as we know it. The condition was so rare in pre-industrial revolution Britain it took Bostock nine years to find 20 other people to put under the microscope. Bostock experimented on himself with remedies and tonics including bleeding, vomiting, opium, mercury, cold bathing and digitalis, all to no avail.

It may come as no surprise to find that Canberra is the hay fever capital of the country, given the woolly-headed thinking emanating from Parliament House. Scientists attribute this status to the diversity of plants in the Australian Capital Territory which produce allergen-laden pollen.

One in 5 people living in the ACT reported suffering from long-term allergic rhinitis, followed closely by Western Australia, Victoria and South Australia. The lowest rates occur in Queensland and New South Wales (half that of the ACT). Dr Newbigin has previously said that as the planet warms and the population grows, it will be important for allergic rhinitis sufferers, health experts and city landscape planners to be aware of what environmental change may mean for population health in allergy hotspots like Canberra.

A map (below) usefully identifies where in Australia you are more likely to be afflicted. That’s not to suggest you should move to a low-allergy location. Some 95% of sufferers are allergic to grass, so their symptoms are destined to return, wherever they live.

But as John Updike once said, I moved to New England partly because it has a real literary past. The ghosts of Hawthorne and Melville still sit on those green hills. The worship of Mammon is also somewhat lessened there by the spirit of irony. I don’t get hay fever in New England either.”