Real Estate - Property Matters by Afra Raymond
PROPERTY MATTERS - Articles written by Afra Raymond

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Real issue is quantity of ownership not quality of housing

Published Thursday 29th January, 2004

How is our nation housed? Is our housing of adequate quality and quantity? Is it reasonable to expect present State Housing policies to produce an improvement in the areas of shortfall?

In terms of tenure, there are 3 types of housing in our country - owner-occupied, rented and of course, those persons who occupy land without the owner's permission, sometimes called squatters. We earlier referred to the squatting community as comprising an estimated 25% of the national whole and this proportion itself seems proof that the existing 'legitimate' housing market of homes for rent and sale is not working properly. Can we truly be on the path to 'developing nation status' if so many of our fellow citizens are unable to rent or buy their own homes? Is this the way we want it to be? What can we do to start improving that position?

Of course, one has to have a particular outlook in order to declare that a market is functioning in an inefficient fashion. It seems to be accepted, almost without question, that the more people owning their own home, the better the nation is doing. This is not necessarily the case since some of the most developed countries in the world have relatively low proportions of home-ownership and some very poor nations have a high incidence of home ownership. Rather than mode of ownership, the real issues seem to be the quality of housing and of course, the ability to move within the market. Mobility is key in a modern society, which places such a premium on the degree of choices the individual can exercise.

What is the standard and price of accommodation available to the new entrant to the job market? Is there adequate provision for elderly people in either the rented or for-sale market? How are our poorer citizens to be housed? If this is not properly addressed, we can expect a further expansion in squatting with consequent environmental degradation as well as the social fallout from widening inequality.

The long-time value systems, which provided a place for poor relatives in the homes of the better-off ones or older family with the younger generation is by and large finished. We are not claiming that those practices were perfect, but when we consider the limited resources available here say 50 years ago, they did allow a degree of mobility and possibility. The nation is today far wealthier and yet the evaporation of those practices has created new challenges as to how we house ourselves. How can we make best use of our resources to meet these?

Some of the critical policy initiatives would include -

  • Squatting - It has been established that the most significant source of wealth in most developing countries is the owner-occupied home. This seems to be a fairly obvious conclusion, given the relatively undeveloped state of the stock/investment market in societies like ours, but it is also true that a large amount of capital is trapped in properties without proper title since the owners cannot raise a loan on the value of their homes. Indeed, one could even argue that with no title the property is 'valueless'. The point is that proper title is essential in releasing value. We have also been recently reminded that our oil and gas resources have a finite life; reliable estimates are that peak production would be over within the next 20 years. If we are to survive as a viable society it is essential that we spawn small, viable non-oil businesses. Of course, readers of this section of the Guardian will be aware of the importance of the cost of capital in the success of a business. Squatter regularization, undertaken with the necessary infrastructural work, can create a source of cheap capital to seed the new generation of businesses the entire nation needs.

  • Rentals - The State policy on rented housing is unclear since there is little evidence of new units for rent being built and the existing rent control policy is badly outdated. Given the tendency towards new mega-projects and the lack of glamour attached to maintenance, it is understandable that the State has little appetite for building homes for rent, but there are other ways to support the provision of rented housing. Who is building decent housing for rent? Who can afford these? There do exist charities and religious bodies, such as the Salvation Army or the Anglican Church, which provide housing for homeless and elderly people without any financial support from the State. These bodies have the experience and credibility to provide a quality service to the needy and with real public/private partnership, there can be a significant expansion in the numbers of people housed for a relatively modest input of State funds.

  • Owner-Occupied housing - There is a series of State policies to boost this part of the housing market and these have involved a number of choices as to which parts of the market receive support. As mentioned above, there is an implicit assumption that this is healthy and this has in fact propelled policy formation in this area for some time.

The next article in this series will examine the State policies on the financing of Owner-occupied housing and the effect of these on the entire market.

Afra Raymond - Property Matters

How is our nation housed?

Is our housing of adequate quality and quantity?

Is it reasonable to expect present State Housing policies to produce an improvement in the areas of shortfall?