The ‘Old’ Australian Dream

1st Response to the inquiry into housing affordability and supply in Australia

Occubuy’s recommendation 6

For many Australian’s, The Great Australian Dream is to own their own home. Yet for millions, homeownership will remain a dream that does not become reality. Jason Falinski and theHouse of Representatives (Government) has acknowledged that under current circumstances, the majority of Australians will rent for a lifetime. The home-owning democracy that once was, is no longer, as house prices and rent prices continue to rise. Australians are now unable to escape the affordability crisis.

Falinski in his foreword presents two tribes with opposing arguments

1. Home ownership is an overstated social good – people should concentrate on securing long term-rentals

2. Home ownership has significant positive externalities that provide real social benefits.

Those that believe that homeownership is an overstated social good aren’t aware of history.

Post-WWII, Australia has built one of the most ‘prestigious’ nations upon a strong home-owning foundation. Not only does it provide personal security but it has many positive externalities that provide real social benefits. The OECD states that satisfactory housing is a critical element in meeting our basic needs and that the notion of ‘home’ is more than just a dwelling with four walls and a roof.

While the forward has found it impossible to bring these two tribes together, I believe Occubuy can result in a solution for both parties. One that doesn’t have to affect current tax systems and one that doesn’t need government intervention or an updated planning system (at this stage).

The Occubuy model allows for ‘longer term’ (greater than 2 years) secure rental contracts that lead to  homeownership. Unlike the build-to-rent programs where developers look to capitalise on unaffordable home buying, Occubuy’s objective is to get the renters to own their homes as soon as possible. ‘Occubuyers’ (the tenants) are not focused on the asset speculation as they are not wasting additional money on rent, and they are hedged with their credits against negative price action.

The asset owner in the pilot program (that we are waiting to commence) is indifferent to asset movements, therefore creating a unique relationship whereby both parties are looking for the same outcome. Real Estate up until now has been a win-lose scenario and to solve the problem we are looking to take this competitive element out of the sector. As John Engeler once advised us, this problem will only be solved with ethical landlords and that is what Occubuy will help facilitate with our technology and business model.

In line with recommendation 6, Occubuy will develop a scheme that facilitates private sector partnerships to deliver discount-to-market, rent-to-own affordable housing. This housing will offer even more than just stability and security, but the opportunity to thrive in the future. The main solution for us is to reduce the amount of money spent on paying rent, to save for a deposit much sooner. As emphasised in the inquiry, a need for transformation of wages into capital will be solved through the Occubuy credits.

It has been quite apparent to us through this first part of the inquiry and through speaking to those within the sector, that the government has identified supply as the major problem & increasing the number of housing developments will put less stress on the supply-demand curve.

The inquiry compares our situation to Singapore, having increased homeownership and supply as well as Europe’s empowering community framework. In both cases we are compared to locations that have high-density populations. Australia has the highest level of land per citizen, yet we are focused on restricting our urban sprawl with increasing CBD density. This is because of the lack of accessibility and efficient transport links to cities as citizens are forced to overpay for housing closer to work and other utilities. Therefore, supply and infrastructure together is part of the long-term solution.

While developing new dwellings is important for the economy to expand and grow with population increases, it doesn’t solve the crisis today. With building and material costs increasing, there is going to be additional stress on the development sector. Therefore, the solution cannot rely solely on this. Developers have been told to brace for their projects being delayed by up to two years and costs blowing out by at least 20 percent as the strong demand and chronic shortage of skilled labour and materials intensifies.

Like Allan Kohler we believe, “the supply of housing does need to be considered, but the fact that house prices have gone up at the fastest rate in history in the past 18 months while there has been zero immigration and an oversupply of houses suggests that other things are perhaps more important.”

Occubuy will develop properties to ensure they will be secure and safe for tenants, and will allow for a sustainable strategy. However, our hybrid solution on allowing for acquisitions within the market are critical. 

With the big push and capital going towards the build-to-rent sector, we see developers and landlords having no other option but to allocate their stock to an Occubuy solution for their clients. As the market will start to expect this type of democracy within the housing sector. 

Property owning does not only provide the (Maslows) necessity of shelter but also a way to unlock the character, ambition, and intelligence of people… the ownership dividend. Greater participation in society, innovation, and character-building is the result of owning your home, the key to continuing to drive The Australian economy to greater prosperity.

Occubuy will make Australia the world’s greatest home-owning democracy again.

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