Between 2001 and 2010 roughly 1.7 million Australians dropped out of home ownership and shifted back to renting. More than one-third did not return by 2010. These statistics, from the Household, Income and Labour Dynamics in Australia (HILDA) survey, reflect increasingly insecure jobs, the prevalence of marital breakdown and lone person households, widening income inequalities and the high levels of debt accompanying spiralling real house prices.
Rather than climbing a ladder of housing opportunity that heads in an upward direction only, a growing number of Australians are precariously positioned on the edges of home ownership. We can think of the edges of ownership as a permeable, contested border zone between owning and renting, where households juggle their savings, spending and debt as they attempt to retain a foothold on the housing ladder.
And according to new research comparing Australia with the UK, policy settings play an important role in determining who can and can’t manage to stay in the home ownership game.
The research used three panel surveys – the HILDA survey, the British Household Panel Survey (BHPS) and its successor Understanding Society. We tracked the ownership experience of 1,907 Australian and 674 British individuals that began periods of home ownership between 2002 and 2010 (a period that covers the enormous disruption caused by the global financial crisis). In each year we have recorded their tenure status.
The figure below shows the proportion of people exiting ownership year on year as a spell of ownership lengthens (the maximum spell length in this study being 8 years). For example, 8% of those Australians that had managed to sustain three consecutive years of ownership shifted into the rental sector in the following year. In contrast, 6% of British home owners transitioned into rental housing after three successive years of ownership.
Despite the turbulent British housing market conditions, and a more serious economic recession following the global financial crisis, Australians’ experiences of home ownership appear more precarious. In fact, in all but one year the exit rate is higher in Australia. For a randomly selected Australian moving into home ownership between 2002 and 2010 the chances of “surviving” as a home owner beyond seven years are only 59%. The chances of “survival” are somewhat higher at 68% in the UK. The edges of ownership appear more permeable in Australia.
Exit rate Australia and UK, 2002–2010
Authors’ own calculations from the 2002–10 HILDA Survey, 2001–08 BHPS and Understanding Society wave 2.
For a minority of individuals in the surveys, labour market mobility might be a factor encouraging a temporary shift out of ownership, as people relocate to take advantage of job opportunities. However, it is clear from the data that the majority of moves out of home ownership are related to financial stress. For example, 15% of those Australians leaving home ownership reported difficulties in paying utility bills in one or more years before exit, while only 7% of those with enduring ownership spells reported such difficulties. 9% of departing Australians fell behind on their mortgages, but only 2% of those with enduring ownership spells testified to such difficulties. Similar patterns are revealed in the British data.
This is no surprise. What is striking is that financial stress is more likely to cause a loss of home ownership status in Australia than it is in Britain – a puzzling feature of the findings which cannot be explained by differences in the personal characteristics of Australian and British members of the panels. If, for instance, ownership reached further down the Australian income distribution we might expect more insecure housing experiences among Australian home buyers. But controlling for these possible differences does not explain our results.
Why is Australia different?
There are instead signals in the data which suggest institutional differences across the two countries are at play. There are two factors that could disproportionately draw marginal Australian owners into the rented sector, while propping up the ownership ideals of their British counterparts.
First, and most obviously, the rental sectors of the two countries are quite different, and appear to have a different function at the edges of ownership. The higher likelihood of exit from ownership in Australia may reflect the role of the larger unregulated Australian private rental sector in “oiling the wheels” between renting and ownership. The size, geography and diversity of the Australian private rented sector make it relatively easy for households to adjust housing costs to income by moving before mortgage stress becomes excessive.
Arguably, therefore, renting performs a risk management role, offering temporary, relatively easily accessible, refuge for those on the edges of home ownership. From this perspective, the earlier exit of Australian households who experience financial stress may be seen as the product, in part, of a well-functioning housing system in which the rented sector offers a general safety net. This does occur in the UK, but to a much more limited extent, via a small social rented sector which offers a ‘soft landing’ for households with some very specific (largely health-related) housing needs.
Second, however, there are differences in the two countries’ social security systems. Historically, British home owners with particular financial needs (such as the loss of all earned income) have been eligible for what is now known as support for mortgage interest (SMI). This may postpone or prevent the need to sell up. There is no such safety net for mortgagors in Australia.
Whether, in the long run, either institutional “solution”(growing the rental sector or subsidising mortgagors at risk of arrears) is satisfactory is a topic for policy makers to discuss.
Other options include shared ownership and equity share, which, if provided at scale could offer an escape valve for financially stretched home owners, perhaps improving on the diversity offered by the Australian private rental sector.
On the other hand, if households in either country have the need or appetite to swap the costs of owning for those of renting or shared ownership regularly or routinely, then it must be time to consider the financial instruments that might enable them to do so without incurring the massive transactions costs, and domestic upheaval, of selling up and moving into a rental property.
Authors: Gavin Wood, Professor of Housing at RMIT University, Melek Cigdem-Bayra, Research Fellow at RMIT University, Rachel On, Principal Research Fellow, Bankwest Curtin Economics Centre at Curtin University, Susan Smit, Honorary Professor of Geography at University of Cambridge.
ASIC has announced that Consumers are now able to easily compare the cost between renting and buying household goods, such as electrical appliances and furniture, by using ASIC’s MoneySmart new ‘Rent vs buy’ calculator.
ASIC Deputy Chairman Peter Kell said the new calculator developed in partnership with the Department of Human Services (DHS) will enable people who are considering a consumer lease to make an informed decision.
‘As part of ASIC’s ongoing work to enhance Australia’s financial literacy, this tool will assist people in understanding the real costs of consumer leases and compare them to other options,’ Mr Kell said.
‘Consumer leases may seem like an attractive option as the upfront costs are low, however, the ongoing payments can quickly add up.
‘ASIC continues to monitor firms offering credit to low income consumers to ensure they comply with responsible lending obligations. We have and will take action where we see vulnerable consumers at risk of inappropriate lending.’
A consumer lease is an agreement where an individual hires household goods, such as electrical appliances and furniture. The consumer receives the item straight away and makes regular payments until the term of the agreement finishes.
Under a consumer lease, a consumer does not have the right or obligation to purchase the goods at the end of the lease agreement, despite having often paid much more than the original purchase price of the goods.
‘It is not uncommon for consumers to pay three or four times more than the purchase price of the leased goods. In some cases it can be up to six times,’ Mr Kell said.
‘When entering into a lease, consumers need to consider the total cost, not just the monthly or fortnightly payments.
‘We encourage people to compare leases with other options such as buying the item outright, using another form of credit or interest-free deal, or seeing if they’re eligible for a no-interest loan.
‘Always carefully read the terms and conditions of any financial agreement and understand what you’re getting yourself into before signing the dotted line.’
Last weekend the Property Council and the Real Estate Institute of Australia released a consultants’ report that tried to show renters would pay much more if generous tax concessions to landlords were wound back. So interesting to read an article by John Daley and Danielle Wood published by The Australian, Friday 3 July, and posted on the Institute website entitled “Rent rise fears are overstated”
With increasing public scrutiny of negative gearing and the capital gains tax discount at a time of rising budget pressures, the industry’s response was textbook: release an “independent” economic report alluding to frightening economic impacts and wait for an unquestioning media to breathlessly report them. As spooked tenants were rolled out lamenting hypothetical rent rises of $10,000 a year, no doubt the big developers congratulated themselves on a job well done.
But these misleading claims shouldn’t go untested. The report does not support the headline-grabbing $10,000-a-year rent rises. Rather, it suggests the immediate removal of negative gearing is likely to result in a portion of the average $9500 net rental loss being added to rental prices — without any attempt to define how large that impact may be.
The report’s use of the $9500 figure is highly misleading. This amount is the average loss deducted from tax for people with negatively geared investment properties. The report assumes these landlords will try to pass on some fraction of their higher tax costs by pushing up rents. But will they succeed? Many other landlords with investment properties that are profitable and therefore don’t qualify for negative gearing won’t be paying higher taxes. Tenants will try to beat rent rises by threatening to move. So competition in rental markets will limit material rent rises.
In any case, current rents are ultimately a consequence of the balance between demand and supply for rental housing. In property markets — as in other markets — returns determine asset prices, not the other way around. Rents don’t increase just to ensure that buyers of assets get their money back.
Some investors may sell their properties if tax concessions are less generous. This may reduce house prices, but it will not increase rents. Every time an investor sells a property, a current renter buys it, so there is one less rental property and one less renter, and no change to the balance between supply and demand of rental properties.
Claims that removing negative gearing will push up rents often rest on a folk memory of increasing rents in Sydney between 1985 and 1987. But as proper examination of that history shows, real rents didn’t increase in Melbourne, Brisbane and Adelaide. Other factors drove the Sydney rent rise.
The industry report argues negative gearing boosts the supply of new rental properties. But 93 per cent of all investment property lending is for existing dwellings. As the report itself points out, the main constraint on the supply of new housing is land release and zoning restrictions, not the profitability of developments. Providing tax concessions in this supply-constrained environment mainly just bids up prices for the limited new supply.
The other argument the industry advances is that “ordinary Australians” use negative gearing. Once again the numbers it uses are highly misleading. Its report shows that those with taxable incomes under $80,000 claim most tax benefits from negative gearing for property — 58 per cent of the rental losses. But people who are negatively gearing have lower taxable incomes because they are negatively gearing. Correcting for this by assessing income before rental loss deductions shows that less than one-third of rental losses are claimed by people with incomes below $80,000.
In other words, taxpayers with incomes more than $80,000 — the top 20 per cent of income earners — claim almost 70 per cent of the tax benefits of negative gearing. For capital gains, taxpayers with incomes of more than $80,000 capture 75 per cent of the gains. If we are trying to look after middle-income earners, then general changes to income tax rates would be fairer than allowing negative gearing for a small proportion of middle-income earners.
So why are the Property Council and the Real Estate Institute making such claims? Presumably because reforms would reduce the price of assets held by their members. They have a strong incentive to obscure how these tax benefits impose costs on other taxpayers, push home ownership further out of reach for young people and distort investment decisions.
Australia is one of few developed nations to allow full deductibility of losses against wage income. As other countries realise, negative gearing distorts investment decisions by allowing investors to write off losses at their marginal tax rate but pay tax on their capital gains at only half this rate. Investors who hold off selling until they are retired pay even less tax on their capital gains. As a result, investors favour assets that pay more in the way of capital gains and less in terms of steady income. It also makes debt financing of investment more attractive. It all leads to the leveraged and speculative investment of the Sydney property boom.
As well as restricting the deduction of investment losses against wage and salary income, the capital gains tax discount should also be reduced. The industry report argues capital gains should receive a discounted tax treatment to ensure the inflation component of gains is not taxed. But with inflation rates low relative to investment returns, the 50 per cent discount overcompensates most investors. The discount magnifies the tax advantages of capital gains over other investment income.
Yet despite the compelling arguments for change, it seems the industry’s aggressive lobbying efforts will be rewarded. The Treasurer and the Finance Minister have both defended negative gearing arrangements by warning, against all credible evidence, that change would bring higher rents. The message to lobby groups is clear: if you pay enough to “independent” consultants you may be able to buy favourable policy outcomes, irrespective of the costs to the community.
In monthly terms, the trend estimate for Australian retail turnover rose 0.2 per cent in May 2015 following a 0.3 per cent rise in April 2015. In year-on-year terms, the trend estimate rose 4.4 per cent.
In seasonally adjusted terms there were rises in food retailing (0.7 per cent), household goods retailing (0.9 per cent) and other retailing (0.3 per cent). There were falls in department stores (-1.4 per cent), clothing, footwear and personal accessory retailing (-0.8 per cent) and cafes, restaurants and takeaway food services (-0.2 per cent).
In seasonally adjusted terms there were rises in New South Wales (0.7 per cent), Queensland (0.2 per cent), Western Australia (0.2 per cent), the Australian Capital Territory (0.9 per cent) and Tasmania (0.6 per cent). South Australia (0.0 per cent) and the Northern Territory (0.0 per cent) were relatively unchanged. There was a fall in Victoria (-0.1 per cent).
Online retail turnover contributed 3.1 per cent to total retail turnover in original terms.
Data from Roy Morgan Research shows that within two months of its local launch, over a million Australians across 400,000 households had signed up to Netflix, the latest Streaming Video On Demand (SVOD).
Netflix launched in Australia on March 24, although some estimates say over 200,000 of us may have previously signed up to the service, using geo-blocks to stream US or UK content. Officially, in April, 766,000 Australians in 296,000 homes were subscribed. By May, this had grown to 1,039,000 in 408,000 households.
The $40 billion US giant has clearly taken an early—and perhaps insurmountable—lead in the new world of on-demand subscription television in Australia, securing over ten times more subscriptions than its nearest (and locally owned) competitors.
By May, just 97,000 Australians were subscribed to Presto, from Foxtel and Seven West Media; 91,000 had Stan, which Nine Entertainment and Fairfax Media launched in January; 43,000 had Quickflix, the long-established ASX-listed former DVD-delivery service (just like Netflix once was); and 40,000 had Foxtel Play, the streaming version of its Pay TV.
Number of Australians in May 2015 with streaming TV subscription service
Source: Roy Morgan Single Source, May 2015 n = 2,088 Australians 14+
The question is will the numbers flatten or decline as the introductory free trials end—or really rocket up now the latest season of Game of Thrones has finished on Foxtel? On the other hand the anti-piracy legislation now passed by the Government may just accelerate the rate of take-up.
From The Conversation. In recent weeks, there have been signs sentiment may be changing around the contentious policy of negative gearing.
There are well-rehearsed arguments on both sides. Critics argue that the deduction of property losses from other sources of income (such as wages) is a tax shelter that imposes an unfair burden on other taxpayers. Defenders of the policy suggest that it is used by prudent savers to “get ahead”, and by high income individuals to lower unduly high tax burdens that blunt work incentives.
However, these arguments are tax policy concerns since taxpayers can negatively gear other financial investments such as shares. There are housing policy specific issues that instead warrant a focus on housing; three deserve particular attention.
The first is a familiar refrain. Given a fixed supply of land, negative gearing advantages property investors who are better able to out-bid other land users. Part of the tax break gets shifted into higher land and housing prices; some other users of land – first home buyers, for example – are “crowded-out”.
But a second reason, related to so-called tax “clientele effects” has been rarely mentioned. It is a more nuanced influence, yet it is important to an understanding of the supply side effects of reform in this area.
The Australian private rental housing stock is relatively large by international standards and mostly held by “mum and dad” investors. There are not enough high tax bracket investors willing and able to hold all the housing in this tenure. Lower tax bracket investors must be enticed into the market. These investors are often retirees looking for secure, regular flows of income, and are attracted to those segments of the market where rental yields are relatively high.
On the other hand, the appeal of property investment to the high tax bracket investor is that they can negatively gear the asset’s acquisition, yet an important part of the returns (capital gains) are lightly taxed compared to other types of investment income. The consequence is that high tax bracket investors crowd into segments of the market offering high capital growth but low rental yields. Low tax bracket investors concentrate in segments offering high rental yields but lower capital growth.
The removal of negative gearing is then likely to have supply side impacts that are not as straightforward as has been suggested in some of the media commentary. To be sure some high tax bracket investors will withdraw and as price pressures ease and rental markets tighten, rental yields will rise.
But those higher rental yields will prompt some growth in the number of low tax bracket investors, and especially so in today’s low interest rate environment. As low tax bracket investors face tighter borrowing constraints, the overall supply side impact will be negative. But it will not be the collapse in supply that some fear.
The third reason for change with respect to negative gearing and housing is perhaps the most important in the current context. The share of investment property loans in total debt has tripled from one-tenth to three-tenths in a little over two decades. Investors now take up a higher share of the value of new loans than do first home buyers.
According to the Australian Bureau of Statistics, investment housing accounted for 40% of the total value of housing finance commitments in April 2015. Of the dwellings that secured housing finance commitments within the owner occupation sector, only 15% was attributable to first home buyers. The presence of housing investors on such a large scale is a potential source of instability, especially if highly geared.
In their seminal research, the late Professor John Quigley and his colleague Karl Case note that when markets slump home owner behaviour differs from that of other investors.
They can “consume” the housing they have bought – by enjoying the surroundings and the comforts of home – and provided mortgage payments are met, they are invariably willing to “sit out” the slump. This can be an important source of stability in housing markets.
But property investors have not bought a dwelling to live in it. When prices slump some if not many will cut their losses and seek a safe haven for their capital elsewhere, especially if they are highly geared. Our research finds that negatively geared investors are more likely to terminate rental leases than equity-oriented investors. The former are also prone to churn in and out of rental investments as they refinance to preserve tax shelter benefits.
When large numbers of indebted investors come to bank on continued house price gains, and low interest rates, the resilience of housing markets is undermined. Phasing out negative gearing should be a priority for a housing policy fit for the 21st century.
Authors: Gavin Wood, Professor of Housing at RMIT University and Rachel Ong, Principal Research Fellow, Bankwest Curtin Economics Centre at Curtin University
From The Conversation. The widening cracks in Australia’s housing system can no longer be concealed. The extraordinary recent debate has laid bare both the depth of public concern and the vacuum of coherent policy to promote housing affordability. The community is clamouring for leadership and change.
Especially as it affects our major cities, housing unaffordability is not just a problem for those priced out of a decent place to live. It also damages the efficiency of the entire urban economy as lower paid workers are forced further from jobs, adding to costly traffic congestion and pushing up unemployment.
There have recently been some positive developments at the state level, such as Western Australia’s ten year commitment to supply 20,000 affordable homes for low and moderate income earners. Meanwhile, following South Australia’s lead, Victoria plans to mandate affordable housing targets for developments on public land. And in March the NSW State Premier announced a fund to generate $1bn in affordable housing investment.
But although welcome, these initiatives will not turn the affordability problem around while tax settings continue to support existing homeowners and investors at the expense of first time buyers and renters. Moreover, apart from a brief interruption 2008-2012, the Commonwealth has been steadily winding back its explicit housing role for more than 20 years.
The post of housing minister was deleted in 2013, and just last month Government senators dismissed calls for renewed Commonwealth housing policy leadership recommended by the Senate’s extensive (2013-2015) Affordable Housing Inquiry. This complacency cannot go unchallenged.
Challenging the “best left to the market” mantra
The mantra adopted by Australian governments since the 1980s that housing provision is “best left to the market” will not wash. Government intervention already influences the housing market on a huge scale, especially through tax concessions to existing property owners, such as negative gearing. Unfortunately, these interventions largely contribute to the housing unaffordability problem rather than its solution.
But first we need to define what exactly constitutes the housing affordability challenge. In reality, it’s not a single problem, but several interrelated issues and any strategic housing plan must specifically address each of these.
Firstly, there is the problem faced by aspiring first home buyers contending with house prices escalating ahead of income growth in hot urban housing markets. The intensification of this issue is clear from the reduced home ownership rate among young adults from 53% in 1990 to just 34% in 2011 – a decline only minimally offset by the entry of well-off young households into the housing market as first-time investors.
Secondly, there is the problem of unaffordability in the private rental market affecting tenants able to keep arrears at bay only by going without basic essentials, or by tolerating unacceptable conditions such as overcrowding or disrepair. Newly published research shows that, by 2011, more than half of Australia’s low income tenants – nearly 400,000 households – were in this way being pushed into poverty by unaffordable rents.
A factor underlying all these issues is the long-running tendency of housing construction numbers to lag behind household growth. But while action to maximise supply is unquestionably part of the required strategy, it is a lazy fallacy to claim that the solution is simply to ‘build more homes’.
Even if you could somehow double new construction in (say) 2016, this would expand overall supply of properties being put up for sale in that year only very slightly. More importantly, the growing inequality in the way housing is occupied (more and more second homes and underutilised homes) blunts any potential impact of extra supply in moderating house prices. Re-balancing demand and supply must surely therefore involve countering inefficient housing occupancy by re-tuning tax and social security settings.
Where maximising housing supply can directly ease housing unaffordability is through expanding the stock of affordable rental housing for lower income earners. Not-for-profit community housing providers – the entities best placed to help here – have expanded fast in recent years. But their potential remains constrained by the cost and terms of loan finance and by their ability to secure development sites.
Housing is different to other investment assets
Fundamentally, one of the reasons we’ve ended up in our current predicament is that the prime function of housing has transitioned from “usable facility” to “tradeable commodity and investment asset”. Policies designed to promote home ownership and rental housing provision have morphed into subsidies expanding property asset values.
Along with pro-speculative tax settings, this changed perception about the primary purpose of housing has inflated the entire urban property market. The OECD rates Australia as the fourth or fifth most “over-valued” housing market in the developed world. Property values have become detached from economic fundamentals; a longer term problem exaggerated by the boom of the past three years. As well as pushing prices beyond the reach of first home buyers, this also undermines possible market-based solutions by swelling land values which damage rental yields, undermining the scope for affordable housing. Moreover, this places Australia among those economies which, in OECD-speak, are “most vulnerable to a price correction”.
While moderated property prices could benefit national welfare, no one wants to trigger a price crash. Rather, governments need to face up to the challenge of managing a “soft landing” by phasing out the tax system’s economically and socially unjustifiable market distortions and re-directing housing subsidies to progressive effect.
A 10-point plan for improved housing affordability
Redirect the additional tax receipts accruing from reduced concessions to support provision of affordable rental housing at a range of price points and to offer appropriate incentives for prospective home buyers with limited means.
Implement the Henry Tax Review recommendations on enhancing Rent Assistance to improve affordability for low income tenants especially in the capital city housing markets where rising rents have far outstripped the value of RA payments.
Continue to simplify landuse planning processes to facilitate housing supply while retaining scope for community involvement and proper controls on inappropriate development
Require local authorities to develop local housing needs assessments and equip them with the means to secure mandated affordable housing targets within private housing development projects over a certain size
While not every interest group would endorse all of our proposals, most are widely supported by policymakers, academics and advocacy communities, as well as throughout the affordable housing industry. As the Senate Inquiry demonstrated beyond doubt, an increasingly dysfunctional housing system is exacting a growing toll on national welfare. This a policy area crying out for responsible bipartisan reform.
From The Conversation. Housing affordability continues to be an issue of importance to voters, with a recent Fairfax-Ipsos poll showing 69% of Australian capital city residents disagree that housing is affordable for prospective first home buyers.
Different countries have adopted varying approaches to improve access to affordable housing – with governments playing a central role in ensuring people are adequately sheltered, as well as being encouraged to buy housing where possible. In many countries there is an underlying desire by households to own their own home, although renting is the norm in others.
More than 84% of households in Berlin rent their home. exilism/Flickr, CC BY-NC-ND
In each case there are specific and sometimes unique-to-that-country approaches that have helped address the issue of affordability. Here’s five.
Government intervenes in the rental market
In some countries there is a general culture of renting for accessing accommodation, rather than assuming all households should achieve home ownership. At times, renting is cheaper than buying. In Germany most households (54.1%) are renters due to the long-term intervention in the marketplace by the government, as well as the accepted culture that renting is suitable over the long-term. In Berlin a total of 84.4% of all households rent. Providing this amount of rental accommodation is a major challenge without substantial government intervention and/or provision of housing.
Federal Statistics Office Germany, 2011
For example, in Germany a housing allowance was paid to approximately 783,000 households in 2012, equating to 1.9% of all private households. However most of this funding was allocated to single person households (57%) unable to compete in the open housing market with multiple income households.
Federal Statistics Office Germany, 2011
Other countries have acknowledged the gap between (a) the maximum amount of rent a tenant can pay and (b) the minimum level of rent a landlord will charge. For example in the US, this gap is bridged by the widespread use of a voucher system which subsidies the payment of rent to private landlords. This system is funded by the US government and ensures tenants can access a minimum quality of affordable housing.
Government provides affordable housing
In Singapore there is a high level of government intervention in the market with the HDB (Housing and Development Board) providing approximately 80% of all housing in the country. Approximately 90% of households in Singapore own their own home and there are also grants for first time buyers and second time buyers in Singapore.
In Hong Kong about 29.7% of residents live in PRH (public rental housing) provided by the Hong Kong government. In Scotland a large proportion of the supply of affordable housing is undertaken by housing associations and local authorities. This collectively equates to about quarter of total housing accommodation in the market. However the recent trend for many countries, including Australia, has been the provision of less direct housing by governments.
Housing Statistics for Scotland, 2011
Cities embrace higher density housing
There are numerous examples of global cities making better use of limited inner-city land supply by encouraging higher density living in high rise units or condominiums, especially in Asian cities including Hong Kong, Macau and Singapore. The provision of affordable housing for purchase or renting is therefore more likely to be achieved in these circumstances due to minimal land use and higher densities. However high-rise living is not commonly accepted in many European cities or in locations with a resistance due to cultural preferences for detached housing.
Public transport allows residents to commute to less expensive housing
The main driver of where a household lives is the need to be close to their workplace. As more affordable housing is usually located away from the central business district, households can buy cheaper homes but the trade-off is additional commuting time to work. When this extended commuting time (e.g. up to 2 hours each way) is combined with improved transport infrastructure such as in Japan, it is possible to access affordable housing in outlying satellite towns and cities where land is more affordable. Therefore governments which improve road and public transport infrastructure also increase access to affordable housing.
(Japan Guide, 2000)
Multiple person households are encouraged
Lower demand can be achieved by limiting population levels and underlying demand for housing. But while this may not be an option for many governments, another option is to encourage multiple person households which otherwise would remain as single person households. According to the ABS (2012) in 1911 the average persons per household was 4.5, decreasing to 2.7 persons per household by 1991.
The recent ABS data relating on online business shows that whilst the total number of active businesses fell, online revenue grew by about 8%, compared with 4% the previous year. The number of firms fell from 770,000 to 757,000 (reflecting tough trading conditions, see our SME surveys). However overall internet generated income rose from $246 billion to $267 billion, which is about 15% of GDP.
Collection of data included in this release was undertaken based on a random sample of approximately 6,640 businesses via online forms or mail-out questionnaire. The sample was stratified by industry and an employment-based size indicator. All businesses identified as having 300 or more employees were included in the sample. The 2013-14 survey was dispatched in late October 2014.
The survey shows a significant rise in a social media presence up 18%, but this compares with a massive 44% increase in the prior year. We also see a rise in orders placed via the internet (up 4%), and fulfilled via the internet (up 10%). Almost all firms have broadband access.
Finally, average annual income for a small firm was more than $4,000, compared with a medium firm of $17,000. Larger firms generated more income, and the four largest employers generated on average $3.6 million.
Commerce through the internet is both mainstream, and likely to grow further, supported by the deeper penetration of smart phones and tablets, which enhance customer convenience, and innovation in terms of products and services. See our recent post. Many firms now see online as just another channel to market, but there are industry variations.
We see, for example that Information, Media and Telecommunications are some of the most active, whilst in finance and insurance, only 60% have a web presence, and 30% have a social media presence.
