Over the past 30 years our lives at work have been changing radically, just as our housing system has been changing too. In both cases stability and predictability are giving way to flexibility – and that has generally meant less security and, increasingly, greater inequality. These changes are not a coincidence, both are driven by the same macroeconomic emphasis on deregulation; and increasingly insecurities at work are reinforcing problems in our housing system. In Australia, the link between employment and housing is particularly important. For much of the twentieth century we had a unique approach to jobs and housing that focused on what we might call pre-distribution rather than re-distribution. By regulating financial and labour markets Australia gave households more equitable access to jobs and housing without as much need for government spending.

In housing strong regulation of banks (including public ownership of banks), land release policies and preferential policies for home buyers all contributed to a high rate of home ownership (the most secure form of tenure) and low rate of private renting (the least secure). In employment, a formal commitment to full employment and centralized wage fixing gave workers, especially those with less bargaining power, a bigger say. In both areas, most of those policies have been dismantled.

The last 30 years have seen a dramatic increase in ‘non-standard’ forms of employment. This includes part-time jobs, and casual and contract employment. There are some real advantages to these changes for many – they allow workers to combine work and other commitments (like caring for family), and can mean more control over the work we do. But there is growing evidence that for many these changes just mean less security and less bargaining power.

The days of full employment have long since gone. Australia’s unemployment rate barely rose above two per cent for the three decades following WWII, it has barely fallen below five per cent since. Underemployment is also on the rise; more and more of those with a job want more hours than they are offered. And because jobs are more ‘flexible’, they are also less stable, meaning we often cannot be sure if we will still have a job in six months’ time. When you combine these trends with falling union membership it is hardly surprising that wages are barely growing, despite steady economic growth. Flat wage growth is now one of the major drivers of rising inequality.

We are now witnessing an increase in the ‘gig economy’, where workers are employed on a very short term basis. The typical examples are the rise of Uber to replace taxi drivers, and of Airtasker to source all sorts of jobs from ‘handy person’ work to editing and graphic design. A similar trend has emerged in housing as well – through AirBnB. Because all of these examples use the internet to change the way we do things, the gig economy is often linked to debates around automation, and the potential for automation to significantly reduce the number of jobs.

The gig economy and automation, however, are distinct trends. As Jim Stanford from the Centre for Future Work has argued, in most gig jobs new technology plays a relatively minor role, focused largely on connecting buyers and sellers. The handy person does much the same thing they did before. The Uber driver still drives a car to pick you up and drop you off. The service itself is almost identical – what has changed is the way we connect workers and consumers. This is quite different to changes in manufacturing, where the nature of the work itself has changed dramatically as computers and robots replace people.

So why are gig jobs growing so quickly if they involve so little change? One explanation is that these online platforms circumvent the rules we have developed to regulate labour and housing markets. Airtasker workers and Uber drivers are legally independent contractors (although this is increasingly being challenged). They pay all their own overheads and have to manage all their own cash flow. If you are only doing this on the side for a bit of spare cash, that’s fine, but if it replaces more stable jobs, then it is a problem.

So what does all this have to do with housing? Well it is driving some of the growing inequalities and insecurities we see in the housing market. As more and more people work in less stable jobs – either on short-term contracts, or as casuals or in the ‘gig’ economy – so they can find it harder to access stable housing. First, without a stable job it is difficult to get a mortgage, which means you cannot buy a house. Australia now has one of the highest household debt to GDP ratios in the world, driven almost entirely by mortgage debt. And unlike most other similar countries, debt is still rising after the financial crisis. Expensive housing and high debt make insecure work a much bigger problem.

Insecure work is just as much a problem for renters. If your income fluctuates every week then you are forced to manage your finances much more actively to ensure you can cover the rent in periods where you have fewer hours or no work. Low paid and underemployed workers are more likely to have insecure forms of employment, and also have less of a financial buffer when things get tight. It is not surprising this leads to a growing number of people scarifying essentials to pay the rent. The new world of insecure employment is also creating problems for the other policies we have to help those in need. Many government payments are highly targeted – meaning only those on low incomes get help, and that support is withdrawn as you start to earn income. This creates two big problems. Often working an extra shift leaves you with not much extra cash, because benefits are withdrawn at much higher rates than apply for taxation. Second, it can be hard to predict what you will earn, and government systems are often slow in responding. This can mean you lose benefits based on previous earnings just as you lose shifts – leaving you with no money, or even a debt.

For those in social housing, the problems are potentially even worse. Because governments have invested so little in social housing, while the demand for social housing has been growing, access is now very tightly targeted. Indeed, the main way governments have used to ‘reduce’ public housing waiting lists has been to make it harder to get on the list, not to provide more housing. As a consequence, only those on very low incomes generally qualify. If you are in social housing and you start to earn more, then you risk losing your home.

The strong eligibility rules are less important in a world of stable full-time jobs. If you get a new full-time job it will pay a reasonable wage and you know it will be fairly stable, so you can afford to move into other forms of housing. But in the new world of insecure work you might get a good contract and then find yourself without enough income soon after. If you lose your house in the process – forcing you into a much more expensive and less secure private rental market – then that is a huge loss. So big a loss, in fact, that many tenants might avoid initially taking work (especially if it is short-term, casual or contract). Ideally, those small ‘gigs’ would give people experience and connections to get more work. But our social housing system is not designed for the new world of work.

The problems of integrating ‘targeted’ social housing and insecure work are so bad that governments have been forced to try new things. One of the reasons for new models of housing for key workers is precisely this problem. The state government has been exploring other options too – it knows it is a problem – but the whole structure of housing provision is so deeply based on targeting it often ends up making things worse.

None of this is to argue that we can or should return to the pre-reform days of the 1960s. But the combination of changes in employment and housing are proving unfair and unsustainable. A gig economy of short term contracts might be feasible if people were guaranteed secure and affordable housing as a right. Strong targeting of social housing can make sense in a world of secure full time jobs. Taken together, however, insecure employment reinforces the worst aspects of our expensive and insecure housing system. For now, the fight for more secure work and a fairer housing system are bound together.

The densification of Australian cities has been heralded as a boon for housing choice and diversity. The up-beat promotion of “the swing to urban living” by one of Australia’s leading developer lobby groups epitomises the rhetoric around this seismic shift in housing. Glossy advertisements of new opportunities for luxury living in our city centres and suburbs adorn the property pages of our newspapers – indeed whole supplements seem to be devoted to this marvellous new way of living. Brochures boasting breathtaking city views from upper storeys, gushing marketing puff about amenity, life style and ‘liveability’ – the later often boasting the benefits of adjacent public infrastructure investments (but please don’t mention ‘value sharing’). Ritzy computer-aided impressions of attractive younger people, occasionally clutching a smiling infant, are prominently put forward as the image of all thing new, urban and desirable. Long gone are the days when the manifestations of property marketeer’s imaginations were restricted to images of low density master planned estates on the urban fringe. We hardly ever hear about these nowadays.

There is obvious truth in the claims that housing choice and diversity have indeed widened in the last few decades as a result. The tatistics clearly show a much greater spread of dwelling options in our cities – with apartments now accounting for 28 per cent of all homes in Sydney and 15 per cent in Melbourne. As the accompanying maps show, while the bulk of recent growth in the apartment stock in Melbourne and Sydney are clearly in and around the inner city, even the more distant suburbs have witnessed an increase in higher density residential development.

For many, the opportunity for urban living in inner city location is clearly a preferred choice for the stage in their life when apartment living in an upcoming and ’vibrant’ neighbourhood is a real attraction. High density urban renewal has been a boon for hipsters and students alike.

But the issue of choice really needs to be unpacked carefully. For many others, the “swing to urban living” is more a necessity than a positive choice. True, the surge in apartment building has put a large number of properties onto the market to rent or to buy that are clearly cheaper than houses in the same suburb. From that point of view, they have added to the relative affordability of living in these neighbourhoods. However, affordable to whom is an open question – $850,000 and upwards for a standard two bedder in Waterloo, South Sydney, and $500,000 or more in Melbourne’s Docklands for a similar property, and rent levels to match, are not exactly a cheap option for anyone on a low income.

But other than in the prestige areas, where higher income down-sizers and pied a terre owners can be enticed to buy in some comfort, much of what is being built is straightforward “investor grade product” – flats built to attract the burgeoning investment market. It can be argued that the investor has always been a major target of apartment developers, even in the 1960s and 1970s when strata units became common, particularly in Sydney. But it is even more so today.

Despite the clamour to control overseas investors perceived to be flooding into the country, the bulk of investors in the apartment market are home grown. We don’t need to rehearse the debates on the factors that have fuelled this splurge, but clearly, the development industry has been savvy to the possibilities of this market. In the last decade, backed by state planning authorities and politicians desperate to claim they have ‘solved’ housing affordability by letting apartment building rip, developers have moved into this market on an unprecedented scale. The figures bear this out: for the first time, Australia recently built more apartments that houses, and the majority end up for rent.

In the rush, we, the housing consumers, have been offered a motley range of new housing with a series of escalating problems to address. Leaving aside the issue of amateur management by owners’ bodies in charge of multi-million dollar assets, problems of short-term holiday lettings and neighbour disputes that turn sour, there are more serious concerns over build quality, defective materials and fire compliance. A history of deregulation of the building industry – moves toward complying development approval for high rise, self-certification of building components, complex design and non-traditional building methods, relaxation of defect rectification requirements, long chains of sub-contractors, poor oversight by local planners and authorities, and cheap or non-compliant fittings and finishes, plus the rush to get buildings up and sold off, has left the apartment market wide open for poor quality outcomes. Not to mention the fly-bynight ‘phoenix’ developers who vanish as soon as the last flat is occupied, never to be found when the defects bill come in. The lack of consumer protection in this market is astounding – even the average toaster comes with more consumer protection – at least you can get your money back if the product fails!

These particular chickens will surely come home to roost in lower end of the market that will never attract the wealthy empty nesters or cashed-up professionals with the resources to maintain their buildings in good order. In Melbourne, space and design standards, including windowless bedrooms, have come under critical scrutiny, as has site cramming, with tall apartment blocks cheek-by-jowl in overdeveloped inner- city precincts. At least NSW has State Environment Planning Policy 65, which provides guidelines for space and amenity standards, and the BASIX environmental standard, prevent the more egregious practices.

But the problems of density are likely to be most felt in the many thousands of new units now adorning precincts around suburban rail stations and town centres, built under the uncertain logic of ‘transport orientated development’, often replacing light industrial or secondary commercial development. They attract a mixed community of lower income renters, many from recently arrived immigrant groups, and marginal home buyers – often first timers. Many have young children – the only option for young families to buy or rent in otherwise unaffordable housing markets. Overall, though, renters predominate.

What will be the trajectory of these blocks, once the immediate gloss wears off and those who can move on do so? You only have to look at the previous generation of suburban walk-up blocks in these areas to find the answer. Far from bastions of gentrification, the large multi-unit apartment building in lower value locations will drift inexorably into the lower reaches of the private rental market – if they are not already there. Town centres like Liverpool, Fairfield, Auburn, Bankstown and Blacktown in Sydney point the way. Indeed, the cracks in the density juggernaut are already showing in many of the more recently built blocks in these areas – literally, in many cases.

The inexorable logic of the market will create suburban concentrations of lower income households on a scale hitherto only experienced in the legacy inner city high-rise public housing estates. With the latter being systematically cleared away, the formation of vertical slums of the future owned by the massed ranks of unaccountable and profit-driven investor landlords is a racing certainty. The consequences are all too easy to imagine.

The call for greater regulation of apartment planning, design and construction is now being heard in some quarters – as the 2015 NSW Independent Review of the Building Professionals Act highlighted.1 But don’t hold your breath for rapid progress. No one wants to kill the goose that’s laying so many golden eggs for the development industry and government alike – especially in inflated stamp duty receipts. The market has a habit of self-regulating on supply, of course, and the current evidence of a marked downturn in apartment building is a clear sign of that. But don’t expect the market to self-regulate on quality, at least with the current highly fragmented, confusing (not least to builders and bureaucrats), under-resourced and largely unpoliced regulatory system that is supposed to oversee such development. The legacy of this entirely avoidable crisis is completely predictable, but will be for future generations to pick up.

Over the last five years Australian cities have witnessed a massive boom in apartment building, coinciding with an explosion of online holiday rental listings vial platforms such as Stayz and Airbnb. This has created a perfect storm.

Rising complaints about tourists in residential apartments and homes prompted a NSW Parliamentary Inquiry into the Adequacy of Regulation of short Term Holiday Letting (1). Since the Inquiry concluded in mid 2016, Sydney’s Airbnb listings alone have grown from around 15,648 in January 2016 (2), to reach a total of 24,038 homes by April 2017 (3). Over approximately the same time, 24,469 new apartments were completed in Sydney (4). These figures are not connected, but highlight the changing ways that homes are being designed, financed and used in high density urban and suburban settings.

The proliferation of online holiday rentals in particular have not been planned for, as highlighted by the NSW Parliamentary report which found current planning regulations “fragmented and confusing”. Short term rental accommodation is not defined under NSW planning legislation, and the legality of a range of “home-sharing” practices now enabled by online platforms such as Airbnb remains unclear.

In addition to traditional short term holiday lettings (whole dwellings which are solely reserved for holiday accommodation), online platforms allow the listing of primary residences when occupants themselves are travelling, as well as rooms, and shared rooms.

The permanent or frequent letting of whole homes is regarded to be most problematic, but holiday rentals have long operated in coastal towns and in tourism regions, typically without the need for special planning approval. The sudden appearance of tourists in urban and suburban buildings and neighbourhoods, particularly in inner Sydney and Melbourne, has attracted
particular public attention.

Echoing concerns in high density cities of Europe and North America, residents complain that tourists generate increased noise, rubbish, traffic and parking congestion and are prone to loud and drunken behaviour. There is also wider disquiet about the increasing presence of visitors, an intangible transformation of local neighbourhoods. This impalpable change— described by some scholars as tourist-driven gentrification, arises when permanent homes are converted and residents displaced by holiday accommodation.

The conversion of permanent rental housing supply to short term accommodation has been endemic in New York, London, Berlin, Barcelona, San Francisco and Vancouver. In these cities governments have cracked down heavily on Airbnb and other online platforms to prevent affordable and rent controlled units in particular from being used for holiday accommodation. We don’t have nearly as much affordable housing to protect in Sydney, although the sell off and subsequent listing on Airbnb of former public housing in Millers Point was particularly poignant.

Our own analysis shows that general pressure on already tight rental vacancy rates in high demand suburbs of inner Sydney will be exacerbated if online holiday listings of whole homes continue to grow (5). Our study found that in central Sydney frequently available Airbnb homes amount to around one and a half times the rental vacancy rate (the proportion of rentals available for local households to rent at any one time), and nearly four times the number of rental vacancies in the Waverly Council area, which includes Bondi.

In a city trying to beat its affordability crisis by building new supply, it seems counterproductive to be leaking existing or new housing stock into the holiday rental market. But rather than launch a New York style crack down, the NSW Government has opted to tread lightly for now. The NSW Government’s long awaited response to the Parliamentary Inquiry has promised “broad consultation” involving industry and the community. This consultation, supported by an “options paper” will identify “appropriate regulations” that enable the sector to “continue to flourish and innovate whilst ensuring the amenity and safety of users and the wider community are protected”.

It appears likely that the “options” will involve amendments to planning laws to clarify that principle residences can be rented for up to a specified number of days without the need for further planning approval, and that short-term letting of rooms where hosts remain present will also be permitted. Short term letting of empty houses (i.e. homes which would otherwise be vacant) may also be permitted with no or minimal need for planning approval, subject to “impact thresholds”.

The main shift in the Government’s position appears to be recognition that strata communities need more tools to manage short term rental accommodation in all its forms. The cautious approach may also reflect the fact that internationally, attempts to regulate online holiday rentals have had limited success. Despite New York’s ban on short term holiday rentals, which now extends to the advertisement of these properties, Airbnb listings in that city have continued to grow.

However, in some cities, and usually following legal action, Airbnb has agreed to help implement local rules, for instance, by collecting and remitting applicable tourist taxes, or by blocking bookings once a threshold is reached. Such an arrangement has been introduced in London, where Airbnb has established a “day counter” which automatically restricts bookings beyond a 90 day calendar year threshold, unless the host has obtained planning permission to operate a holiday rental property.

It is too early to know whether this action will operate to curb London’s growing conversion of permanent rental accommodation to tourist accommodation or simply result in landlords turning to other online platforms (such as homefromhome.co.uk), but the intervention represents an important first step.

The NSW Parliamentary Inquiry and Government response also anticipate greater use of voluntary and industry codes of practice as well as market based forms of regulation (for instance, where users rate each other). Airbnb itself is piloting a “Friendly Building Program” in the US, where owners’ corporations are able to take a percentage of income from Airbnb bookings and set specific policies (such as blackout dates).

Market based regulations and voluntary codes may be feasible in a sector which is highly conscious of branding and public image. The NSW Government’s default position appears to rely on existing local government powers to act in relation to noise or other complaints, while potentially empowering strata communities to set and enforce their own rules.

However, these individualized and market-based approaches may undermine strategic planning strategies designed to cluster tourist accommodation near facilities, services, and attractions. Nor do such approaches address the potential impacts of short-term rentals on the availability and cost of permanent rental housing. The NSW Government hasn’t said much about housing affordability, promising only to monitor the issue with reference to national visitor survey data which record accommodation trends.

In a country and city gripped by a crisis in affordable housing supply, the omission of any concrete commitment to defend permanent rental housing from conversion to holiday accommodation, and indeed to protect renters themselves from sudden eviction, at least in high demand urban locations in and around Sydney, is a key concern. It would seem that regulators in NSW and many other states in Australia are out of sync with their international counterparts, who have made a clear distinction between
home sharing and the loss of rental supply from their permanent rental
markets.

I love Sydney. Even though I am Melbourne raised and eschewed Sydney as a good Melbourne boy should I fell in love in 1985 and moved there in 1986. I rented a 3 bedroom federation cottage in Birchgrove with harbour views from the kitchen sink, I caught ferries to work and play, it was 22 degrees in the middle of winter. I left Melbourne in snow and the train brought me up on a full moon with dazzling views of a frozen highlands. It was fun and I could afford it. Not anymore.

Sydney had the glitz and glamour, but now had high culture and a decent football team (AFL of course), great food, good nightlife, new horizons. Sydney felt right, but my Sydney didn’t really extend beyond Ashfield to the west, North Sydney to the north, the airport to the south and all the way east to the ocean. I am a bit of a snob when I define my Sydney. It’s viewed through a lens from a different time. When I lived there the bulk of the lower-priced rental was actually in the inner city. This has, of course, changed, and low and moderate income households don’t rent—or live—where they used to.

I left Sydney in 2002. We could never afford home purchase, my parents were ageing and we figured we’d seen Sydney at its best. Fifteen years in midlife was great but how would the rest pan out? Overall the move has been good, we’ve paid off a house we now own, have good friends, we now have grandchildren that add extra spice. Would that have been possible if we’d stayed in Sydney?

True the humidity of Brisbane and those extra few degrees sometimes get to me and the food and culture up here improves without reaching that international standard, so every time I fly in to that big bold beautiful city that Sydney is, my heart still skips a beat as I take in the glorious vistas and I wonder… Then I realise we were paying $250 per week for a two-bedroom shop top flat in the heart of Enmore. While not flash it was well located; while noisy it had 50 restaurants within 200 metres, public transport on tap and a gastro pub across the road. It had room for our cat and even a small plot of backyard and a part of a garage. What would it cost now?

Well, based on our recent Rental Affordability Index (RAI), we would need a household income of $150,000 per year for the rent in that area to be moderately affordable, and that would mean the rent for our old flat would be about $800 per week. Sydney has become ridiculous.

This RAI showed what we all thought wasn’t possible, that rental affordability in Sydney has deteriorated further. All renters on average sit right on a threshold. The entire city, accounting for the incomes of all renters and the prices of current rents, is effectively unaffordable. You really need to be earning over $150,000 a year as a household to rent a two bedroom flat at anything like an affordable level. Even then you must pitch outside what I think of as Sydney. Not till you reach Canterbury, Parramatta, or Epping does it get affordable even with a household income of $150,000.

The average household income in Australia is around $85,000 per year. At that income only postage stamp areas in the Blue Mountains and beyond Richmond show affordable three bedroom rentals. Parts of Liverpool and on that radius are affordable for two bedroom properties, but we are into two hour commute country.

For pensioner couples trapped in the rental market virtually nothing in NSW is affordable to rent. They will be paying up to 65 per cent of their income to secure rental dwellings. Sydney is not alone in this regard, but fares the worst among our capital cities.

The RAI this year introduces some new features to our interactive map. The overall average data shows how close to the affordability threshold all dwellings in Sydney and many parts of NSW are, but the real story of rental affordability only comes out when one plays with income levels, household configurations and when you look over time.

The map is still being made freely available for public use and it’s a great tool that demonstrates rental affordability for any area we have data and that includes all of NSW.

Interestingly, Hobart is the second least affordable capital city. This is due to lower income levels relative to rents in Tasmania. After that Brisbane and Adelaide have moderate affordability, while Melbourne has the best rental affordability of all east coast capitals. Perth has been improving but just to reinforce the point, no capital city in Australia has any rental housing that is affordable for pensioners, low income working households and many, many others.

I have been using the RAI, especially the interactive map, to look at the Productivity Commission’s (PCs) recent Inquiry Into Human Services, specifically the social housing part of this report. The PC recommends (among other things) increasing CRA by 15 per cent for the most disadvantaged, supplemented by a similar payment from states. That amounts to about a $10 per week increase in CRA for a pensioner or pensioner couple.

A pensioner couple has an income of $45,000 per year, and this would lift that income by $520. Even if their income was added to by an additional $4,500 per year, bringing it to $50,000 (and more than doubling CRA), this would not lift them out of rental stress in Sydney.

Renters in the rest of NSW do not fare much better. For people with an income of $50,000 per annum most of the coastline in NSW remains unaffordable. Affordability wise, Coffs Harbour and the north coast look like Sydney. At $70,000 per year areas around Newcastle and Nowra and regional areas even on the coast become affordable but as we all know, peoples’ incomes in these areas are lower than those in Sydney.

This is a crucial point: affordability is relative to peoples’ capacity to pay. Some regional cities and towns (parts of the north coast are a case in point) have high rental costs in absolute terms. But even in areas where rents are lower, if the majority of the workforce is employed in, say, the service sector, even relatively modest rents will be unaffordable. The RAI is a new tool. At National Shelter we use it to raise the profile of rental housing affordability in the media. But it has also become a tool that people can utilize to look at affordability in their own area. Use the link, play with the variables and see what stories you can tell with it. I am going to use it to model the PC inquiry recommendations and take snapshot maps to show how little $10 a week will help in Australia’s rental market.

People make a lot of sacrifices to live in Sydney but the current rental market means more than sacrifices, it means genuine hardship, poverty and exclusion. People do without medicine, without food, without petrol, can’t register their car, pay insurance or fix broken appliances. The relative cost of rents, especially in Sydney, now generates real poverty and homelessness. This tool doesn’t fix that, but it does illustrate it. And getting that message through is vitally important.