8 policies to make housing more affordable - Grattan Institute

Victoria is in the midst of a housing affordability crisis. Promisingly, the Premier has announced he’s developing a plan to fix it. But all too often, politicians talk a big game on housing and fail to deliver.

Dan Andrews has a chance to leave a lasting legacy. Here is what he needs to do to make housing more affordable.

First, and most important, he needs to take on the ‘not in my back yard’ (NIMBY) crowd by allowing more medium-density housing in established suburbs that are close to jobs and transport. These are the places more people want to live but can’t.

Second, he should expand the Future Homes initiative, a two-year pilot program that allows nominated high-quality designs for medium-density dwellings to be permitted automatically.

Third, he should ensure heritage protections are applied more discerningly. Neighbourhood character is important, but we can’t let our most desirable suburbs be frozen into open-air museums.

Fourth, we need more social housing – in addition to what’s being built under Victoria’s Big Housing Build.

Those four reforms would make housing more affordable in the long term. But the Premier should do four other things immediately to tackle Victoria’s dire rental crisis.

So fifth, we need to get more help to people struggling to pay their rent. The Premier should lobby Anthony Albanese to take the recent 15 per cent boost to Rent Assistance and turn it into at least a 40 per cent boost.

Sixth, to reduce homelessness, the state government should lease more private rentals and sub-let them to vulnerable Victorians.

Seventh, we need to take a closer look at short-stay accommodation. Owners of homes on Airbnb and other platforms should be encouraged to put their properties on the long- term rental market, say through lifting the rate of land tax on short-stays. This may hurt the tourism sector, but tackling the housing crisis needs to take priority.

And finally, eighth: the Premier should rebuff the Greens’ demands for a rent freeze. It’s a superficially attractive idea, but it would probably increase homelessness because people would ‘freeze’ into the place they are in, and so vacancy rates would stay ultra-low. And the evidence shows that rent freezes lead to dilapidated rental properties.

Dan Andrews has a golden opportunity to right decades of policy failure on housing affordability. Over to you, Mr Premier.

Trent Wiltshire

Migration and Labour Markets Deputy Program Director
Trent Wiltshire is the Deputy Director, Migration and Labour Markets, in Grattan Institute’s Economic Policy Program. He previously worked at the Victorian Department of Treasury and Finance, as Domain Group’s economist, and at the Reserve Bank of Australia.

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