The Politics of Changes in Housing Supply and Tenure: Illustrations from Australia and the Netherlands

Almost regardless of the welfare system and market context, the changing housing landscapes in Western countries show similar trends. Drawing on the experiences of Australia and the Netherlands, there is decreasing access to homeownership and social renting, increased reliance on private renting in combination with growing housing shortages and affordability problems. Similar challenges, leading to increasing housing supply targets, do not necessarily elicit the same policy responses becayse countries’ actions often follow their historical pathways. Australia maintains largely market-oriented policies, while the Netherlands has made a U-turn away from the market.

Declining homeownership: demand-side support

For decades, Australia and the Netherlands subsidised homeownership through income tax concessions for existing homeowners, which dwarfed demand-side assistance for first-time home buyers. Demand subsidies to households have generally fallen out of favour in both countries since the 2010s.

Governments have often implemented programs of indirect support, such as mortgage guarantees and property transfer tax concessions, hoping to cut obstacles to homeownership for first-time buyers in both countries. In Australia and the Netherlands, the ‘bank of mum and dad’ often facilitates access to homeownership. While beneficial to some, this results in increasing inequalities.

Growth and fragmentation of renting

In advanced economies, private renting has generally been increasing as homeownership has become less accessible and social renting has been decreasing.

Our two countries have somewhat differing trends, reflecting past policies and current views about the role of governments. The Netherlands has the highest rate of social housing in Europe. Australian social housing has dwindled in number in the 2000s.

Private rental has gained greater political visibility in the 2000s in both countries. In the Netherlands, private renting has increased from 11 to 14% in the past twelve years. In Australia, private renting has increased steadily over the 2000s to 28% of households. Private rental housing is seen by many as an investment.

Both countries want to develop their ‘affordable’ rental sectors. Attempts to develop commercial provision of affordable rentals have centred on larger cities with more difficult rental markets. This is the target of the nascent build-to-rent sector in Australia. In the Netherlands, the attempt to stimulate the market by reducing rent control was short lived, with recent policies moderating this.

Despite uncertainties about the aim of policies towards an affordable rental sector, governments have taken up this concept in their strategies to increase supply.

New supply as a solution to housing affordability problems: targets and implementation

The current policy mantra in Australia and the Netherlands, as in the UK, is that housing shortages underlie affordability problems. Explanations of shortages include planning regimes that ‘over-regulate’, with national governments conveniently often pointing the finger at lower levels of government.

Successive Australian federal governments have said they lack constitutional authority and housing supply is primarily an issue for the states/territories. In the Netherlands, against a volatile political backdrop, a need for 1 million new homes by 2030 was signalled about five years ago. As in Australia, meeting this target involves negotiation with lower levels of government.

Within the targets set in both countries, there are sub-targets for social and affordable rental housing. There are many practical difficulties in meeting these new supply targets. In Australia, the required average annual target of 240,000 dwellings has not been achieved in any year post-1985. In the Netherlands, new construction has been far below the required 100,000 units per year in recent decades.

Land availability is critical to meeting supply targets. In Australia, the debate is about how to change planning regimes to increase supply in established urban areas while protecting greenfield sites. In the Netherlands, debate about land availability focusses on inner city densification. These concerns mirror controversy about building on the green belt in the UK.

Speeding up the construction process to meet targets has risks, with quality issues coming into play alongside the problem of developers building for the rental rather than owner-occupier market.

The current orthodoxy in Australia and the Netherlands, as in the UK, is speeding up new supply to meet a shortage of dwellings, which underpins affordability problems. At this stage, the targets appear ambitious and national governments lack control over many of the factors that encourage greater supply.

Policy dilemmas: tenure, affordability and supply

Despite differing historical approaches to housing policy in Australia and the Netherlands, the end result, as in the UK, is remarkably similar. Political debates in all three countries currently call for substantially more housing as demand surpasses supply, causing prices and rents to increase and reinforcing housing unaffordability.

The comparison has relevance for UK policy makers in a febrile environment where there are daily calls to ‘do something’ to fix the ‘housing crisis’. There is no silver bullet to address this complicated problem. The comparison between countries highlights, however, some clear dilemmas that policy makers are likely to confront.

The first is the aim of policies on housing going forward—what would ‘good’ look like? Clearly, Australia and the Netherlands, but also the UK, are betting on an ambitious increase in their housing supply targets to improve the situation. Even if the supply targets were achievable, the question is whether and to what extent the achievement of the targets would temper prices. The answer is not straightforward, given economic and political reliance on house price rises.

Another way to think about the housing shortage is to view it from a distributive angle and consider ‘under-used’ housing, such as vacant housing, short term rentals such as Airbnb and 'empty nester' housing. The Australian government enables tax-free extra pension savings for downsizing homeowners. In the Netherlands, municipalities test ‘new’ types of allocation systems in social renting for empty nesters to move on and free their homes for larger households.

While policy debates have centred on supply and affordability, the reality is that, in both countries, as in the UK, the losers are often younger people who end up more precariously housed, which contributes to longer-term inequalities. Policy dilemmas should centre on an assessment of who wins and who loses, in both the short and longer term, from cumulative housing tenure change beyond the 2020s.