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Tasmanian Housing Update, August 2018 Full Report

Introduction

Tasmanian Housing Update, August 2018
Executive Summary (PDF 1.4MB)

This Tasmanian Housing Update has been prepared to inform ongoing community debate and policy deliberations concerning the housing challenges facing our community. The Update builds on the University of Tasmania’s Housing Summit Directions Paper released in March 2018 and combines the most recent housing and demographic data with an assessment of policy options that could contribute to better housing outcomes for all Tasmanians.

The analysis has been conducted by the Institute for the Study of Social Change and draws on the University of Tasmania’s expertise in housing policy including that of the Housing and Community Research Unit.

The Update begins with a snapshot of housing market conditions in Tasmania before presenting a detailed overview of the drivers of housing outcomes in Tasmania. Our analysis includes a detailed assessment of both the composition and concentration of population growth in recent years and its implications for housing, as well as an assessment of current building activity and its consequences for housing supply.

Part 2 updates our previous analysis of the growth of the short stay accommodation sector in Tasmania and its impact on housing markets and rental supply and affordability in particular. Given the ongoing growth of this sector and its impact on residential housing, we examine emerging regulatory frameworks being developed in other jurisdictions that aim to balance the interests of the short-stay accommodation sector with the housing needs of the Tasmanian community.

Part 3 focuses specifically on outcomes in the social and community housing sector and the housing conditions some of the most vulnerable Tasmanians are facing. This section includes a preliminary assessment of the Tasmanian Government’s response thus far to the housing crisis.

The report concludes by outlining the short to medium term policies we believe should be considered by governments and the wider community, given their potential to contribute to better housing outcomes.

The Tasmanian community faces significant housing challenges; and we acknowledge that housing systems are complex and meaningful change will take time. Yet, despite these challenges, we believe, that with a collaborative and evidence-based approach, we can achieve good housing outcomes that will deliver social and economic benefits for all Tasmanians.

Richard Eccleston, Julia Verdouw, Lisa Denny, Kathleen Flanagan, Sally Glaetzer and Saul Eslake

August 2018

The Tasmanian housing market: An overview

Tasmania’s housing market (and Hobart’s in particular) remains strong, although there is some evidence that the rate of price growth (both to buy and rent) may have slowed in recent months. The strong market is good news for home owners and investors but is problematic for aspiring home owners and tenants in the private rental market, many of whom are struggling obtain secure and affordable housing. Given these growing barriers to home ownership and challenging conditions in the private rental market there a growing concerns that a greater number of lower income Tasmanians will require social and community housing, placing more pressure on a strained system.

The growth in house prices, which have increased by 32% in Greater Hobart since early 2016 (although growth outside Hobart remains modest), have attracted a good deal of attention: but our primary concern is availability and affordability in the private rental market.

Figure 1. Hedonic home value index, by area and dwelling type, January 2016 to June 2018.
Figure 1. Hedonic home value index, by area and dwelling type, January 2016 to June 2018.
Source: Core Logic

Historically low vacancy rate continues

The private rental market in Greater Hobart remains very tight. The rental vacancy rate has stabilised over the past three months at around 0.7%. This is the lowest rate of any Australian city and suggests there is an ongoing shortage of private rental accommodation. While this is an improvement over the historic lows of late 2017, evidence from other markets suggests that any rate under 1% is likely to result in significant rent increases leading in turn to a range of adverse social and economic consequences (as discussed below). It will be important to monitor whether the vacancy rate continues to improve in the final months of 2018 given that rental demand historically increases towards the year’s end.

Figure 2. Rental vacancy rate, Greater Hobart, January 2014 to June 2018
Figure 2. Rental vacancy rate, Greater Hobart, January 2014 to June 2018
Source: SQM Research

Rising rents

Rising rents are an inevitable consequence of a shortage of private rental accommodation. While national rents fell 0.2% in July 2018 and grew by only 1.6% over the year, Hobart’s weekly rents have increased by 10% over the year.

Rents across Greater Hobart have risen consistently over the last five years, currently at a median of $400 per week, dropping slightly from a peak of $420 in May 2018. This continues to be significantly higher than the rest of Tasmania, where median rents in June 2018 were $280 per week.

Impacts on households

Rapidly rising rents have a number of adverse social and economic consequences. Low income households may be forced out of the private rental market; while those who can secure a home will be forced to pay a higher percentage of their income on housing.

In Tasmania, according to the recent PRD Australian Economic Property Report, the proportion of household income required to meet rent payments in March 2018 was 28.1%, second only to NSW and up 5.6 percentage points from the previous year.

The Rental Affordability Index (RAI), which assesses the percentage of income households in the bottom 40% of the income distribution spend on rent, suggests that Hobart is the least affordable capital city in Australia. Approximately 30,000 households in the private rental market in Greater Hobart could soon be paying an extra $5,000 per annum in housing costs, representing a significant burden on household budgets and the wider economy.

Figure 3. Median dwelling rent, Tasmania, June 2009 to June 2018
Figure 3. Median dwelling rent, Tasmania, June 2009 to June 2018
Source: Core Logic

Part 1: Key drivers of housing outcomes in Tasmania

Housing markets are complex and shaped by a wide range of factors. Population growth is the key driver of housing demand and this section of the report provides updated analysis of population growth across all of Tasmania and specific regions experiencing high growth. Part 1 concludes with an assessment of new housing supply in Tasmania and its ability to respond to population growth and associated demand.

1.1 State-wide population trends – Tasmania

Over the year to December 2017, Tasmania’s population increased by 0.9% to 524,677, slightly higher than the 15 year average growth rate of 0.7% per annum and this growth has largely been concentrated in Greater Hobart. This recent population growth has been predominantly driven by a reversal from net interstate migration losses between 2011 and 2014 to increasing gains, despite a persistent decline in the rate of natural increase (the number of births offset by the number of deaths). Tasmania is now experiencing a population growth rate closer to that of 2003, prior to the resource boom, and its peak of 1.2% in 2008, prior to the Global Financial Crisis (Figure 1.1).

Figure 1.1 Components of population change and population growth rate, Tasmania
Figure 1.1 Components of population change and population growth rate, Tasmania
Source: ABS, Australian Demographic Statistics, Cat. No. 3101.0

Between 2011 and 2014, departures interstate largely cancelled out the population gains arising from overseas arrivals and Tasmania’s slow population growth was mostly driven by natural increase. As we have noted, since then natural increase has continued to decline due to the ageing population and the primary driver of population growth has shifted to migration; both interstate and overseas. This shift has considerable implications for the housing market. Population growth arising primarily from natural increase has less impact on housing demand than population growth arising from migration. Net overseas migration (NOM) has been the greatest contributor to population growth and has increased considerably in 2016 and 2017, an average of 2,219 per annum compared with an average of 1,552 per annum for the previous five years.

Overseas migration is comprised of family, skilled or humanitarian migrants, international students, working holiday makers, visitors, New Zealand citizens and Australian citizens who have either lived in Australia for 12 out of the previous 16 months or left Australia and not resided in the country for 12 out of the previous 16 months. The contribution to Tasmania’s net overseas migration has varied for each component since 2011, when the Australian Bureau of Statistics (ABS) changed its methodology for measuring net overseas migration, more effectively capturing the population contribution of international students.

From 2015 to 2016 Tasmania experienced a 61% increase in net overseas migration (increasing from 1,403 to 2,298 in 2015), following an 18.2% decline between 2014 and 2015.

Figure 1.2 Net oversea migration, by visa type, Tasmania, 2012 - 2107
Figure 1.2 Net oversea migration, by visa type, Tasmania, 2012 - 2107
Source: ABS, overseas migration by visa type, Tasmania, customised data set

In 2017, 13,560 people moved to Tasmania to live from interstate, while 11,680 people left Tasmania for interstate. The age profile and stage in the lifecycle of these inward and outward interstate migrants have differing effects on the housing market.

Interstate migration to Tasmania has been positive in the three years since 2015 (Figure 1.1), but more younger people, particularly those aged 15 to 24 years, continue to leave the state than arrive, while a greater number of older people arrive in Tasmania than leave (Figure 1.3). This has consequences for housing, given that the young Tasmanians leaving are much less likely to be ‘freeing up’ housing for older arrivals.

Although Tasmania experiences net losses in the younger age groups, the second largest group of inward interstate migrants since 2012 has been those aged 20 to 24 (1,272 arrivals on average per annum). These young migrants from interstate are likely to be seeking affordable independent accommodation options whereas outward migrants of this age (1,710) are more likely to be leaving the familial home, again increasing housing demand. The largest age group of interstate migrants arriving in Tasmania are 25 to 29 years (1,607 on average per annum).

Also evident from the 2017 data, as shown in Fig 1.3, is an increase in the number of families with young children moving to Tasmania, as shown by the large number of zero to 9 year old children arriving in the state and the corresponding larger number of people in the peak child bearing and rearing ages of 25 to 44 years.

Figure 1.3 Interstate migration by age group, arrivals and departures, Tasmania, 2017
Figure 1.3 Interstate migration by age group, arrivals and departures, Tasmania, 2017
Source: ABS, Migration, Cat. No. 3412.0

While interstate migration gains are predominantly in the age groups older than 25, overseas migration gains are predominantly in the age groups younger than 30, reflecting the high proportion of overseas migrants who are international students (Figure 1.5). In 2017, the net losses of 15 to 24 years olds interstate was offset almost entirely by the arrival of overseas migrants aged 15 to 24 years. In total, Tasmania gained an additional 4,040 people from migration during 2017, the largest gain since 2003.

Figure 1.4 Net migration to Tasmania, interstate and overseas, by age group, 2017
Figure 1.4 Net migration to Tasmania, interstate and overseas, by age group, 2017
Source: ABS, Migration, Cat. No. 3412.0

1.3 International Students in Tasmania

Tasmania has become an attractive destination for international students with growing numbers of students studying at Tasmanian schools, vocational education providers and the University of Tasmania. Since 2014 international student migration has been a major driver of population growth.

The economic and wider social and cultural benefits of Tasmania’s international education sector are widely understood but there is growing recognition that education providers in partnership with industry and government need to ensure that there is sufficient student accommodation to meet the needs of international students.

The ABS measure of ‘Net Overseas Migration’ is one measure of the increase in international student numbers although it may exclude international students who return home for vacation but require accommodation during semester.

The number of international students studying across the University of Tasmania’s campuses between 2014 and 2018 is presented in Figure 1.5.

The number of International students studying at the University of Tasmania has increased significantly in recent years, adding to the demand for housing generally and student accommodation in particular.

Figure 1.5 International student enrolments, University of Tasmania, 2014-18
Figure 1.5 International student enrolments, University of Tasmania, 2014-18
Source: University of Tasmania student data

In order to meet demand from local, interstate and overseas students, the Student Living unit at University of Tasmania currently manages 1,983 student apartments across the state. This portfolio includes more than 750 new apartments constructed since 2015.

In May 2018 the University of Tasmania announced construction of a new $70 million accommodation project which would deliver an additional 430 beds by 2020.

Table 1.1 Student accommodation managed by Student Living, University of Tasmania, August 2018

BuildingLocationTotal Beds
Investigator Hall Launceston 277
Kerslake Launceston 109
Leprena Launceston 158
Newnham Apartments Launceston 180
Inveresk Apartments Launceston 120
West Park Apartments Burnie 40
Christ College Hobart 201
John Fisher College Hobart 110
University Apartments Hobart 173
Hobart Apartments Hobart 442
Mid City Accommodation Hobart 139
Mount Nelson Villas Hobart 34

Source: University of Tasmania student data

1.4 Population growth and housing supply in Tasmania

An analysis of housing market data suggests that approvals for new dwellings would have met demand for new housing, had these homes been completed. Between June 2016 and December 2017, Tasmania’s population increased by almost 5,000 people. Based on an average household size of 2.3 persons this results in a projected demand for new dwellings of 3,114. In that time, 3,625 new dwellings were approved for construction, creating a potential surplus of 511 houses. However, only 2,648 new dwellings were completed, resulting in a shortfall of 466 homes that has contributed to present tight market conditions.

Figure 1.6 illustrates the year-on-year relationship between new dwelling demand based on population growth, new dwelling approvals, commencements and completions between 2013 and March 2018 (the latest available building activity data). Approvals, commencements and completions were broadly aligned between 2013 and 2015. However, from 2015 until 2016 there was a significant divergence, with demand increasing substantially while both approvals and commencements declined sharply.

Since 2016, approvals have increased, as have commencements, although not enough to meet demand. Importantly, completions continue to decline in number, reflecting the drop in approvals and commencements from 2015 to 2016 and other constraints on the supply of new housing, which must be analysed and addressed (Section 1.6).

Figure 1.6 Dwelling demand and supply, 2013 to 2017, Tasmania
Figure 1.6 Dwelling demand and supply, 2013 to 2017, Tasmania
Source: ABS, Building Activity, March 2018, Cat. No. 8752.0, quarterly, trend data

1.5 Regional population trends and housing demand – local government area

While Tasmania is experiencing population growth as a state, the experience differs substantially when considered by local government area (LGA). Since 2012, when population growth resumed, 14 LGAs experienced, on average, positive population growth on an annual basis, while 15 experienced average annual declines. Of the 14 LGAs that experienced growth, nine were in the south of the state, four in the north of the state and only one, Latrobe, in the north west.

Given this regional variation, a state-based policy response must consider the specific housing needs of communities and how this is likely to vary over time. As noted in the policy recommendations below, this approach must be a central feature of long term urban and regional planning in Tasmania.

Figure 1.7 Population growth rates, local government areas, Tasmania, average, 2012 to 2017
Figure 1.7 Population growth rates, local government areas, Tasmania, average, 2012 to 2017
Source: ABS, Regional Population Growth, Australia, 2016-17, Cat. No. 3218.0

New dwelling demand for LGAs is calculated based on population change since 2016 and the average household size for each area. Figure 1.8 draws on new dwelling approval data for LGAs to June 2017, identifying a surplus or deficit of new housing for each area. Six municipalities experienced a deficit in housing supply for their growing populations, while in all other LGAs new dwelling approvals exceeded demand (Figure 1.8).[1] This analysis identifies those LGAs likely to be experiencing housing shortages, but local market conditions will also be influenced by the number of homes that have been converted to short stay accommodation in a community and whether housing approvals have progressed to building commencements and completions (Part 2).

It follows that LGAs recording higher rates of population growth should also experience higher numbers of dwelling approvals. However, caution needs to be exercised given the role that access to affordable housing may play in contributing to population growth, particularly in peri-urban areas. Strong population growth in areas such as Sorell, Latrobe, Brighton, Kingborough, Clarence and West Tamar is partly driven by the supply of affordable housing. Increasing peri urban home supply has long term impacts in terms of traffic congestion, infrastructure needs and reduced access to services and employment opportunities.

Figure 1.8 New dwelling approvals, local government areas, Tasmania, surplus or deficit, 2016 to 2017
Figure 1.8 New dwelling approvals, local government areas, Tasmania, surplus or deficit, 2016 to 2017

1 This analysis doesn’t include a loss of housing stock as dwelling become derelict and uninhabitable.

1.6 The composition of population growth by Tasmanian LGA

Not only does the size and growth rate of the population affect overall housing demand, as noted above (1.4), the composition of the population and various components of change (births, deaths, interstate and overseas migration) affect the type and mix of housing required. The components of population change differ considerably for each LGA. Where population change is dominated by natural increase, as in Brighton, Glenorchy and to a lesser degree Kingborough, housing will need to meet the needs of young families. Where natural increase is low relative to the internal migration, such as in Latrobe, West Tamar, Sorell and Clarence, the populations are likely to be older and housing supply needs to reflect the needs of an ageing population. Where population change is dominated by overseas migration, as in Hobart, Launceston, and to a lesser degree, Glenorchy, housing should meet the needs of students and skilled migrants. Where population change is driven by internal migration gains (people arriving from other parts of Tasmania and interstate), such as in Clarence, Kingborough, West Tamar, Latrobe and Sorell, affordable homes for growing families and retirees are likely to be key housing needs.

Launceston and Hobart were among the LGAs that experienced considerable internal migration losses, reflecting a likely change in population composition, which affects the mix of housing supply that is needed. Other LGAs experiencing internal migration losses include Burnie, Meander Valley and Waratah/Wynyard, but these changes are likely more reflective of changing employment opportunities in these regions, as the losses are not compensated for by gains in the other components of population change. As noted above, it is vital that housing policy and longer term urban and regional planning frameworks understand and respond to variations in housing need across Tasmania.

Figure 1.9. Components of population change, local government areas, Tasmania, 2016 to 2017
Figure 1.9. Components of population change, local government areas, Tasmania, 2016 to 2017
Source: ABS, Regional Population Growth, Australia, 2016-17, Cat. No. 3218.0

Analysis of the impact of population growth on housing tends to focus on net migration figures. In Tasmania, while net interstate migration has averaged a loss of around 1,200 people per year since 2012 (offset by international gains), around 10,500 people arrive in Tasmania every year from interstate while on average 11,755 leave to reside in another state or territory. This churn creates turnover in housing and changes in housing demand and supply, which affect housing markets. Despite the average loss of interstate migrants from Tasmania, more recently, Tasmania has been experiencing a gain in arrivals and a slight decline in departures. As we have noted, the composition and age profile of these movements also impacts on housing.

Internal migration flows vary by local government area. Figure 1.10 illustrates that Hobart and Launceston have recorded large inward movement flows (more than 3,500 people per annum) and outward flows (more than 4,000 per annum) since 2012. Clarence, Glenorchy and Kingborough also experience large flows in and out of their respective areas. In cases where outward movements are greater than inward movements, the population is supplemented by overseas migration and natural increase, also creating demand for housing.

Figure 1.10. Internal migration movements, local government area, Tasmania, average, 2012 to 2016
Figure 1.10. Internal migration movements, local government area, Tasmania, average, 2012 to 2016
Source: ABS, Regional Internal Migration, Cat. No. 3412.0

Thus far we have analysed the impact of population growth on housing demand including new data on the variations in the quantum and composition of population growth across Tasmanian LGAs. This population growth is welcome and has many economic and social benefits, as long as the supply of housing and other infrastructure can meet growing demand.

1.7 Housing Supply and Construction Activity

In our Tasmanian Housing Summit Directions Paper we identified supply constraints exacerbating housing pressures in Tasmania. While there has been strong growth in approvals for the construction of new homes over the course of 2017, this has not been matched with a commensurate increase in housing commencements or completions (Section 1.4).

While building approvals data is available up to June 2018, data on commencement and completion is only available up to March 2018. For the purposes of this section, building and construction activity concentrates on the period to March 2018.

In the year to March 2018, approvals for new dwellings increased by 26.2% from a low in 2017 of 2,144 to 2,705, similar to 2015 (Figure 1.11). While residential building commencements also increased in the year to March 2018, it was not at the same rate at approvals. Commencements increased by 247 new dwellings in the year, a 13.9% increase. Dwelling completions continued to decline with 304 less dwellings being completed in the year to March 2018 than the previous 12 months, 15.5% less. This recent decline in completions extends that experienced between 2016 and 2017. Given the rate of commencements has not kept pace with the increase in approvals it is unlikely that the number of dwelling completions will meet future demand in the short to medium term.

Figure 1.11. New dwelling approvals, commencements and completions, year on year to March 2018, Tasmania
Figure 1.11. New dwelling approvals, commencements and completions, year on year to March 2018, Tasmania
Source: ABS, Building Activity, March 2018, Cat. No. 8752.0

Residential Approvals

Residential dwelling approvals across Tasmania increased by 599 dwellings (26.6%) over the 12 months to June 2018 to 2,847, after a decline of 179 for the previous 12 months. This increase is predominantly in private sector housing (509 more dwellings). Public sector house approvals increased by 24 to 36 over the period while the approvals for ‘other’ public sector dwellings increased by 42 to 61 in the year to June 2018.

Based on a commencement rate of 71.5% (the commencement rate during the 2017 calendar year) approximately 2,035 dwellings should begin construction in the forthcoming year.

The relationship between commercial and residential approvals

In our March 2018 Housing Directions Paper it was noted that since 2014, there has been an almost inverse relationship between residential and non-residential (commercial) approvals, suggesting that increased commercial construction may be constraining the supply of new residential housing. This was particularly evident between 2015 and 2017. As we have just noted, more recent data suggests that during 2018, the decline in the number of residential approvals reversed, while non-residential approvals continued to decline, albeit at a slower rate than in 2017 (Figure 1.12).

Figure 1.12. Change in the number of residential and non-residential building approvals, 2014-18.
Figure 1.12. Change in the number of residential and non-residential building approvals, 2014-18.
Source: ABS, Building Activity, July 2018, Cat. No. 8752.0, quarterly, original data

The ongoing decline in the number of non-residential building approvals in Tasmania does not reflect a decline in the scale or value of commercial construction activity. This is because the number of larger, high value projects has increased. For example, over the past year the number of low value projects approved ($50,0000 to $250,00) has decreased from 63.9% to 55.8% of the total, while there has been a corresponding increase in approvals for projects valued at over $1,000,000. This suggests there is a need to increase the construction workforce to meet growing demand in both the residential and commercial construction sectors in Tasmania.

1.8 Construction Workforce

The supply of labour affects the ability of the building and construction industry to convert dwelling approvals to commencements and completions. In the period May 2013 to May 2015 the building and construction workforce was relatively stable, despite an increase in both approvals, commencements and completions of new dwellings. In the two years to May 2017 the workforce grew considerably, reflecting the increase in demand for housing and growth in commercial construction. Since then, however, growth in the building and construction workforce has plateaued, even though there is increasing demand for residential and non-residential construction (Figure 1.13).

Figure 1.13. Building and Construction Industry Workforce, year on year, Tasmania.
Figure 1.13. Building and Construction Industry Workforce, year on year, Tasmania.
Source: ABS, Labour Force, Australia, Detailed, Quarterly, May 2018, Cat. No. 6291.0.55.003

The number of building and construction apprentices in training has been steadily increasing since 2014, with 1,285 apprentices employed in the sector as at 31 December 2017.

Corresponding with the increase in training, apprenticeship commencements increased from 2014 to 2016. However, in the year to December 2017 the number dropped from 535 to 510. This will likely result in a levelling out of the number of apprentices in training over time and a further reduction in apprenticeship completions.

As is evident in Figure 1.14, there is a considerable discrepancy between apprenticeship commencements and apprenticeship completions in the building and construction workforce.

Along with a steady increase in the number of withdrawals from apprenticeships, this reflects the state of the economy as well as the time lag from commencement to completion (approximately 4 years).

For those who commenced their apprenticeship in the building and construction sector in the years 2011 to 2013, the completion rate improved for each successive commencement year, with 67.4 % of apprentices who started their apprenticeship in 2013 completing.

Since then, the attrition rate of apprenticeships has increased, with a third of those commencing dropping out in 2014 and 37.4% dropping out in 2015, despite a strong building and construction sector. Of those who started their apprenticeship in 2016, more than a quarter (28.3%) have withdrawn.

Figure 1.14. Construction sector apprenticeships, 2013-17.
Figure 1.14. Construction sector apprenticeships, 2013-17.
Source: NCVER, Apprentices and trainees 2017 December quarter, June 2018

These high rates of non-completion in times of high demand for skilled building and construction labour may indicate a saturated workforce whereby strong demand and other constraints limit training opportunities for apprentices.

Figure 1.15. Completion rates for construction sector apprentices, 2011-2016.
Figure 1.15. Completion rates for construction sector apprentices, 2011-2016.
Source: NCVER, Apprentices and trainees 2017 December quarter, June 2018

Policy recommendations for consideration

  1. Establish a framework for the development of robust five yearly population projections at a local government area level across Tasmania, including a profile of the changing mix of population and housing demand in each area.
  2. Promote and facilitate the development of housing appropriate for each LGA population profile.
  3. Promote collaboration between state and local governments to develop regional housing and settlement plans which will complement Tasmania’s Population Growth Strategy. Suchplans will support sustainable population growth and should be central elements of any regional and urban planning initiatives including prospective City Deals
  4. Support the Tasmanian Building and Construction Industry Training Board (TBCITB) to implement a comprehensive workforce development plan for the industry and support apprentices to complete their training.
  5. Develop a detailed building and construction pipeline by region, building on the work already started by Infrastructure Tasmania’s Infrastructure Pipeline.

Part 2: Short Stay Accommodation

Over the past three years there has been exponential growth in short-stay accommodation listings worldwide. Strong growth in Tasmanian tourism over the period has resulted in the sector expanding by 162% in the two years to June 2018, with almost 5000 properties now listed on Airbnb (table 2.1). The local boom in short-stay accommodation has delivered many benefits for the tourism sector in Tasmania and the wider economy but, like many new technologies and business models, it has created unintended consequences such as reducing supply and increasing prices in the private rental market (Horn and Merante 2017, Boston; Segu 2018, Barcelona).[2]

Figure 2.1. Number of Airbnb property listings, by area and type
Figure 2.1. Number of Airbnb property listings, by area and type
Source: Inside Airbnb, monthly data July 2016 to June 2018

This analysis updates our previous research on the growth and impact of the short-stay accommodation sector in Tasmania. While the rate of Airbnb (the dominant platform in the sector) listings has continued to grow in Tasmania between February and June 2018, this growth has been at a lower rate than the previous two years. Irrespective of whether short-stay listings continue a slower growth trajectory over the coming summer season, our analysis suggests that short-stay accommodation is impacting on the Tasmanian housing market generally and the inner Hobart rental market in particular. Given these impacts, a more concerted and targeted approach to regulating the short stay sector in Tasmania will be required as part of broader policy response to the housing challenges facing our community.

Given the global reach and impact of short-stay accommodation, Tasmania is not alone in grappling with the challenges associated with developing regulations that effectively balance the costs and benefits of Airbnb and similar platforms.

Airbnb in particular has been described as ‘a movement for deregulation’ (Slee 2016, 26), as many governments initially abolished restrictive laws and ‘red tape’ in the hope of encouraging innovation and private entrepreneurialism (Ferreri & Sanyal, 2018: 3). This approach was particularly attractive in Tasmania given the shortage of traditional hotel accommodation. However, as the impacts of accommodation sharing are becoming more evident, a growing number of jurisdictions with established Airbnb markets are actively re-regulating the short stay accommodation sector to achieve a better balance between the housing needs of the community and the interests of the tourism sector and owners of short stay accommodation in particular. Tasmania can learn from these recent developments and this section concludes with a summary of evidence-based policy recommendations.

Some of the more widely used policies include (Leshinsky & Schatz 2018):

  • Differentiating between 'shared' listings and 'entire' home/apartment listings and limiting permits to shared listings only (e.g. Berlin); or limiting property listings to primary residences only (e.g. Vancouver)
  • Requiring mandatory registration of Airbnb properties as accommodation providers with city or council authorities (e.g. Barcelona)
  • Placing caps or limits on short-term accommodation listings to minimal periods of time per year, e.g. to up to 180 days per year (e.g. Sydney) 60 days (Amsterdam) or as little as 30 days (New York)
  • Use of interim planning regulations to ‘pause’ the issuing (or renewal) of short-term rental licenses in particular zones or districts identified as experiencing adverse local housing impacts as a result of the impact of the short-stay accommodation sector (e.g. New Orleans; West Michigan). This is often temporary, for example, to give the local authorities time to properly consider the impacts of short-term accommodation use in the area and create appropriate frameworks for its effective regulation.

The following section updates the available data on Airbnb use in Tasmania, drawing on data from ‘Inside Airbnb’, an independent, international data organisation providing services to researchers, regulators and governments. The data includes Airbnb listings in Tasmania since July 2016 to June 2018, with the exception of a small break in data between August and December 2016.

2 Our intention in this report is to focus on all short-stay visitor accommodation platforms. However, we use the example of Airbnb because it is a dominant global player and data on its use is more readily available.

2.1 Quarterly update

Overall growth in Airbnb listings in Tasmania and Hobart in particular has continued into June 2018. For the majority of indicators, listings are currently at their all-time peak (see figure 2.1), the only exception being Greater Hobart entire properties, which are down very slightly from the peak of April 2018. Earlier in 2018, we noted a slight downturn in listings in February, but the number of listings since March has continued to grow, with the exception of a slight overall downturn in May 2018 (with the exception of Hobart LGA entire properties, whose listings continued to rise). It is possible that the May 2018 downturn is a seasonal adjustment that mirrors 2017 activity (a plateau in April and May 2017 before an increase in listings in June, which continued throughout 2017). If so, we may expect the slight increase in Airbnb listings to continue into early 2019.

We have also conducted a new analysis of ‘high filter’ property listings. This filter includes only properties listed as an entire home or apartment, recently booked (has been given a review in the last 6 months), frequently booked (listings with estimated booking nights of more than 60 bookings per year), and highly available (listings available more than 60 nights per year). High filter properties are more likely to indicate commercial activity and traditional style (e.g. Bed and Breakfast) accommodation, where the host is very unlikely to be sharing the property with the user. As shown in Figure 2.2, high filter listings have also continued to grow over the last 6 months. The Hobart LGA in particular shows steady growth, with no indication of a slow-down in February, and only a very slight slowing in April. Currently, both Hobart LGA and Greater Hobart LGA high filter listings are at historical highs. State-wide, high filter listings peaked in April, slowed in May and have increased slightly in June.

Figure 2.2. High filter* Airbnb property listings, by area and type (monthly, July 2016 – June 2018)
Figure 2.2. High filter* Airbnb property listings, by area and type (monthly, July 2016 – June 2018)
Source: Inside Airbnb, monthly data July 2016 to June 2018
*Entire properties, recently and frequently booked, and highly available

Mirroring international experience, Airbnb growth in Tasmania has been concentrated in urban areas with good access to visitor attractions. As noted above, activity in Greater Hobart is concentrated in the Hobart LGA, which has 56% of entire property listings despite being home to 23% of the resident population of Greater Hobart. When it comes to high filter listings, the concentration in the Hobart LGA is even higher at 63%, suggesting higher levels of intensive, commercial use.

Figure 2.3. Hobart LGA properties listed (by type) as a percentage of Greater Hobart listings (by the same type), July 2016 – June 2018.
Figure 2.3. Hobart LGA properties listed (by type) as a percentage of Greater Hobart listings (by the same type), July 2016 – June 2018.
Source: Inside Airbnb, monthly data July 2016 to June 2018

Within the Hobart LGA, entire properties listed comprised 78% of all listings in June 2018, indicating high numbers of properties where the hosts are entirely absent when the property is available for visitor use. The proportion of entire properties listed on Airbnb has also continued to grow relative to all properties listed for the last 24 months.

Again, while this trend is evident state-wide (Figure 2.4), it is most notable in the Hobart LGA where there has been an 18 percentage point increase in entire properties listed, growing from 60% in July 2016 to 78% in June 2018. This suggests visitor demand is for entire homes and that listings are becoming less characteristic of a ‘sharing’ economy (i.e. private or shared room listings).

Figure 2.4. Proportion of ‘entire properties’ listed relative to all properties listed, by area; July 2016 to June 2018.
Figure 2.4. Proportion of ‘entire properties’ listed relative to all properties listed, by area; July 2016 to June 2018.
Source: Inside Airbnb, monthly data July 2016 to June 2018

Table 2.1. summarises the growth in state-wide, Hobart LGA and Greater Hobart Airbnb listings, by type of listing. In particular the data shows the high percentage increase in listings across all areas and types, the most notable being a growth of 268% in entire properties in the Hobart LGA between July 2016 and June 2018.

Table 2.1 Growth in Airbnb listings, by region and listing type

  July 2016 June 2018 Growth %
 Total listings (no.) Entire properties (no. and %) High Filter (no. and %) Total listings (no.) Entire properties (no. and % of Total listings) High Filter (no. and % of Total listings) Total listings Entire properties High Filter
State-wide 1,827 1,198 66 715 39 4,783 3,655 76 2,055 56 162 205 187
Hobart LGA 416 250 60 211 51 1,177 920 78 581 63 183 268 175
Greater Hobart 787 485 62 350 44 2,085 1,589 76 929 58 165 228 165

Another indication of the shift from sharing to more intensive commercial activity in the short-stay sector has been the steady growth in ‘multi-listings’ where there are two or more listings per host.

Multi-listing hosts are unlikely to be living on the property (Inside Airbnb 2018). Throughout 2018 multi-listings have continued to steadily increase and, despite a slight decrease in the state-wide listings in February and April, multi-listings across all three areas (see Figure 2.5) are at an all-time high.

Both state-wide and in the Hobart LGA, multi-listings constitute nearly half of all listings. The proportion of multi-listings relative to all listings has also steadily increased state-wide (see Figure 2.6).

Again, this suggests that, as the short-stay accommodation sector matures, a greater percentage of homes are being listed by commercial operators and professional managers. It is also worth noting that in the south, 62% of all multi-listings in Greater Hobart are located in the Hobart LGA.

Figure 2.5. Properties listed as multi-listings, by area (July 2016 – June 2018).
Figure 2.5. Properties listed as multi-listings, by area (July 2016 – June 2018).
Source: Inside Airbnb, monthly data July 2016 to June 2018
Figure 2.6. Multi-listings and non-multi-listings as a percentage of all listings, by area (July 2016 – June 2018).
Figure 2.6. Multi-listings and non-multi-listings as a percentage of all listings, by area (July 2016 – June 2018).
Source: Inside Airbnb, monthly data July 2016 to June 2018

2.3 Yield and peak ‘Airbnb’

Many short stay accommodation markets on the Australian mainland and beyond appear to have reached saturation, with the growth of new listings exceeding demand, resulting in falling prices (e.g. Domain 2018). However, due to strong visitor demand and a shortage of traditional hotel accommodation, Tasmanian yields (the price-per night in entire property Airbnb listings; Figure 2.7 below) across the state and Hobart LGA remain close to historic highs. It is notable that the Hobart LGA yield has barely slowed (only by four dollars per night) even into the non-peak tourism season when hotel and traditional accommodation prices are significantly lower.

When the high filter is applied, total yield per night is slightly lower, mostly likely due to high filter properties being available all year around rather than only being listed in peak or holiday seasons, and therefore subject to lower (shoulder season or off-peak) price adjustments. Price per night in high filter properties also drops slightly into June 2018 and, similarly to entire property listings state-wide and in the Hobart LGA, this may indicate a seasonal adjustment in tourism demand and/or off-peak pricing also noted in May and June 2017.

Given that the price per night yield has remained close to historic highs so far in 2018, alongside the overall continuing growth in Airbnb listings, it appears that demand for short-stay accommodation across the state remains strong, suggesting we are yet to reach peak Airbnb in Tasmania, and the Hobart LGA in particular. This suggests there is a real risk that more long term residential housing stock will be converted into short-stay accommodation.

Figure 2.7. Entire property price per night, state-wide and Hobart LGA; and Hobart LGA high filter listings July 2016 to June 2018.
Figure 2.7. Entire property price per night, state-wide and Hobart LGA; and Hobart LGA high filter listings July 2016 to June 2018.
Source: Inside Airbnb, monthly data July 2016 to June 2018

2.4 Short-stay accommodation in regional Tasmania

There is growing research on how the incidence and impact of Airbnb and similar platforms varies across regions and communities. In-line with international trends, the greatest demand for short stay accommodation in Tasmania has been in inner city locations close to key visitor attractions. However, there is also strong demand for short-stay accommodation in and around popular holiday towns and regional visitor destinations.

In our previous reports we argued this regional growth in the short stay accommodation sector would not have a significant impact on housing outcomes as most listed properties were shacks and holiday homes, which are not used as a permanent residence. However, given recent reports (e.g. Break O’day Council, 2018) of a shortage of residential rental properties in regional towns such as St Helens, we have analysed the distribution of high filter Airbnb listings across LGAs and the percentage of the permanent rental stock these listings represents. Figure 2.8 highlights the concentration of Airbnb listings in the Hobart LGA but also illustrates the significant number of listings in the East Coast LGAs of Glamorgan/Spring Bay (8% of state total) and Break O’Day (5% of state total). Unlike LGAs in Greater Hobart with similar percentages of the state wide listings, the two coastal municipalities have small resident populations and limited rental stock resulting in Airbnb listings being equivalent to 40% of rental stock in Glamorgan/Spring Bay and 17% in Break O’Day. This suggests the short-stay sector may be disproportionately impacting rental supply and affordability in regional towns.

Figure 2.8. Number of high filter Airbnb property listings in Greater Hobart, Glamorgan/Spring Bay and Break O’Day LGA’s, at June 2018.
Figure 2.8. Number of high filter Airbnb property listings in Greater Hobart, Glamorgan/Spring Bay and Break O’Day LGA’s, at June 2018.
Source: Inside Airbnb, monthly data July 2016 to June 2018; ABS 2016 Tasmania Local Government rental statistics.

2.5 Impact on rental supply

The ongoing growth in the short-stay accommodation sector in Tasmania, its regional distribution and its growing intensity have been outlined above. At present state and local governments don’t collect sufficient data to make a precise assessment of the impact of the short stay accommodation sector on the supply of residential housing in Tasmania. We may not know exactly how many of the 2,055 high filter entire homes currently listed on Airbnb in Tasmania have been taken out of long term housing supply, but mounting evidence, both here in Tasmania and beyond, suggests that the ‘conversion rate’ in inner city markets in particular is likely around 75%. Recommendations for acquiring sufficient data to model the precise impact of the short stay accommodation sector on the Tasmanian housing market are detailed below.

Table 2.2 provides conservative estimates of the combined impact of the growth in the short-stay sector and population growth, calculated against new housing supply in both Greater Hobart and the Hobart LGA. New housing supply has met increased demand resulting from population growth, but has fallen well short of replacing housing stock lost to the short stay sector, explaining the declining rental supply and vacancy rates in Greater Hobart over the period. Given these outcomes, like other cities and regions internationally, we believe the short stay accommodation sector should be subject to Greater regulation until conditions in the residential rental market improve.

Table 2.2 Estimates of housing supply deficit, Greater Hobart 2016-18

  Total Airbnb listings Entire home,  high filter Airbnb listings Stock lost, conservative 75% conversion Stock shortage due to population growth (see section 1) Net housing shortage 2016-18
Hobart LGA 1,177 581 -436 -15 -451
Greater Hobart 2,085 929 -697 +98 -599

Source: Inside Airbnb; Figure 1.8

2.5 Compliance with 2017 Visitor Accommodation Guidelines

In July 2017, the Tasmanian government introduced new guidelines in relation to planning approval required to make a residential property available as short stay visitor accommodation. In the City of Hobart for example, under the Hobart Interim Planning Scheme (Planning Directive 6), in the General Residential Zone a property owner is required to secure a permit (clause 10.3.2). The owner is entitled to a permit (with the exception of entire property conversions in the area identified as Battery Point Heritage Precinct or BP1) with no qualification if the visitor accommodation has complied with the:

  • visitor accommodation objectives including that the accommodation is compatible with character and use of area; does not cause unreasonable loss of residential amenity; and does not impact the safety and efficiency of local roads or rights of way;
  • acceptable solutions related to those objectives including appropriate habitability, gross floor area of not more than 200m2, and not part of a strata scheme where another lot is used for residential use; and
  • performance criteria related to these acceptable solutions (e.g. unreasonable loss of amenity includes considerations regarding: privacy, minimal noise, scale of use compatibility with surrounds, retaining residential function of an area, impacts on local road network and owners and users rights of way).

The only circumstances under which a permit is not required is when the dwelling is used by the occupier as the primary place of residence and:

  • only used when the dwelling is temporarily absent (e.g. on holidays); and/or
  • if the visitors are accommodated in not more than four bedrooms.

Given these criteria, the majority of the 581 entire ‘high filter’ properties require (and would be entitled to) a visitor accommodation permit. However, since the interim directive came into effect in July 2017, only 87 permits have been issued by the City of Hobart across Hobart LGA, suggesting very low levels of compliance with the scheme. In response to the very low levels of compliance with July 2017 guidelines, on August 7 2018 the Tasmanian government announced new enforcement provisions aim at improving compliance in the short stay accommodation sector. This initiative should yield better data on the growth of the sector and will provide a foundation for more effective regulation.

Figure 2.9. City of Hobart visitor accommodation permit map (left) overlaid with Inside Airbnb high filter map (right), as at June 2018.
Figure 2.9. City of Hobart visitor accommodation permit map (left) overlaid with Inside Airbnb high filter map (right), as at June 2018.
Source: (left) City of Hobart and Inside Airbnb.

The August 2018 reforms should promote cooperation between state and local government to ensure state-wide compliance with the July 2017 guidelines. Local governments need to be able to gather accurate data on dwelling use, and changes of use, in order to understand the impact of the short-stay accommodation sector on local housing markets. Research tells us that the jurisdictions most effective in impacting the number of listings in a given jurisdiction are those that have developed effective ways to monitor, and ensure compliance from, both individual and professional hosts (Hsi, 2017).

Conclusions and policy recommendations

Short-stay accommodation is having an impact on housing supply in some local markets. As the short-stay accommodation market matures fewer properties are being ‘shared’, with the majority of listings being for entire homes that are available for more than 60 days per year. ‘Multi-listing’ properties are also increasing.

We have been able to monitor changes and growth in the Airbnb platform in Tasmania for some time now, but it is time to move beyond monitoring toward more proactively managing the effects of this part of our economy. While it is appropriate to maximise the benefits of a more diverse tourist accommodation market, this needs balancing with management of the negative consequences for local residents.

Given these imperatives governments should consider:

  1. Developing a consistent and comprehensive database of information to better understand and monitor the short-stay accommodation landscape, including any changes that arise as a result of regulation.
  2. Providing a clear directive that all properties converted to visitor accommodation by non-owner-occupiers require a permit, regardless of when the property’s change of use took place (that is, no grandfathering). The Government’s August 2018 announcement that it will introduce legislation to address poor compliance with existing planning provisions is to be commended.
    1. a framework to ensure compliance by hosts, such as the requirement to display a permit authorisation number on the short-stay accommodation user platform and in associated marketing. (The Tasmanian Government has adopted this recommendation since the drafting of this report).
    2. A requirement that short-stay accommodation operators provide local councils with adequate information from which to make informed decisions about their community and housing conditions in the area.
  3. Expanding the State Government’s June 2018 Planning Directive to consider the impact of short stay accommodation on the affordability and supply of residential rental properties, with permits only be issued if the change of use to visitor accommodation does not have detrimental consequences for the local housing market.
  4. A state-wide regulatory framework that empowers local councils to take discretionary action if needed to respond to the housing needs of their communities, with a range of approaches available to address needs flexibly. These may include:
    1. Limiting short-term rental accommodation availability for owner-occupied listings to 60 or 90 days per year
    2. Establishment of permit fees, e.g. $500 per annum.
    3. Implementing a ‘pause’ on visitor permits or renewal of permits in communities where the short stay accommodation sector is deemed (by an agreed measure) to be having a detrimental impact on rental market outcomes until conditions ease.

Part 3: Social and affordable housing and the Tasmanian Affordable Housing Strategy

In any housing system, an adequate supply of affordable housing is important, and this includes housing provided at subsidised (i.e. below-market) rents for people on low incomes. Social housing is particularly critical, especially during periods of inadequate supply and rising prices (to buy or rent) in the private housing market. For households on lower incomes, whether working or reliant on income support, social (including public and community) housing provides a home that is secure (meaning available in the long-term) and affordable, with rents linked explicitly to households’ capacity to pay rather than to prices in the wider housing market. Yet it is well-documented that the Australian social housing system is in crisis, with need massively outstripping supply due to the chronic under-funding by government over decades. The Tasmanian Government’s Affordable Housing Strategy 2015-2025 and its Action Plan 2015-2019 include specific initiatives on new social housing supply. More recently, the State and Commonwealth have signed a new bilateral housing funding agreement, the National Housing and Homelessness Agreement (NHHA), which is intended to stand until 2023.

3.1 The Affordable Housing Strategy

The Affordable Housing Strategy (AHS) includes an array of initiatives addressing housing need among low income Tasmanian households. Not all measures focus on the provision of new long-term housing—emergency accommodation, transitional (medium-term) housing, supported accommodation, private rental subsidies (see section 3.4), and system redesign were also included in the recommendations, while some initiatives related to social housing did not specifically target new supply but were instead aimed at addressing the massive maintenance and refurbishment needs of existing stock to improve amenity for current tenants. All of these measures are important—crisis assistance, for example, is vital and needs to be provided, but it doesn’t provide permanency. In order for emergency housing to enable people to move on from homelessness, exit points into long-term, permanent accommodation must be provided, and this issue continues to be a challenge for homelessness services around the state. Other AHS initiatives, such as ‘youth castles’ or ‘backyard units’, are described in such a way that they are clearly intended to act as necessary transitional housing options for young people rather than being permanent housing.

It is not always easy to identify whether the original Action Plan targets have been delivered because circumstances change over time and so initiatives have been revised and reconfigured since the Action Plan was written. Some targets have been subsequently revised, some initiatives have been amalgamated, and new strategies have been taken up. The original targets, current achievements, and our interpretations are contained in Table 3.1. It is possible that there is some double-counting; for example, the Department notes in its quarterly housing reports that take-up of the HomeShare program is influenced by the availability of affordable land, such as that provided elsewhere under the AHS.

New supply initiatives: Action Plan 2015-2019Progress as at June 2018Interpretation
Home ownership
HomeShare is a home ownership assistance program using shared equity—new purchasers only have to borrow a portion of the value of the property (no more than 70%), with the Director of Housing holding the remaining component of the equity. This program existed prior to the AHS, but the AHS continues it. Purchases can be of new housing (e.g. a house or a house and land package) or of existing Housing Tasmania stock, but most recipients buy new housing. The Action Plan 2015-2019 set a target of 203 assisted to purchase new supply, plus 47 to purchase existing public housing dwellings.
114 This figure refers to new stock, and although the precise breakdown is unknown, at least 90% of purchases are for house-and-land packages, suggesting some overlap possible with the affordable land lots below. In addition, a further 23 HomeShare applicants have purchased existing Housing Tasmania dwellings.
Public housing reinvestment
This initiative was described in the Action Plan as portfolio realignment (from detached family homes on large blocks to smaller properties with accessible design that are suitable for current applicants), and therefore as delivering upgrades and redevelopments only. The initiative would be funded within internal resources by accelerating Housing Tasmania’s existing sales and replacement program.
61 From September 2016, reporting of progress on this initiative refers to new supply gains arising from it. Whether this new supply represents a net gain in stock is unclear from the information available.
Community housing—stock leverage*
The stock leverage program involved title transfer of a small number of public housing properties to community housing providers. The title would mean these providers had enhanced capacity to leverage additional borrowing which they could use to fund up to 150 new homes. These properties would be made available to priority social housing applicants for at least 30 years. The Action Plan notes that an additional $2 million over four years was attached to the stock leverage program as ‘recurrent financial incentives’.
22 These initiatives have been subject to considerable revision over the life of the AHS to date. The inner-city units are now to be delivered as part of a new complex in Goulburn Street, Hobart, which will supply 25 affordable accommodation dwellings for older people and people with disability and the Newstead units no longer appear in the quarterly progress reports (the Somerset units do). In addition, the Action Plan progress reports now include an additional 25 units of social housing at Brent Street, Glenorchy. Elsewhere, the Brent Street development has been described as a joint venture between CatholicCare Tasmania and Wilson Homes, which will deliver 25 affordable housing units (apparently independent living units), 20 discounted house and land packages and 30 private homes.[3]
Private purchases
The Action Plan set targets for two initiatives which were subsequently combined in reporting, Shovel Ready Housing Supply (up to 12 homes in northern Tasmania for older people and people with disability) and Private Developer Social Housing Grants (purchase by tender from builders and developers of up to 80 homes in small unit complexes for use as social housing; this program would be state-wide but would ‘primarily target’ northern and north-western areas).
46 According to the quarterly progress reports, these properties are located state-wide. They are referred to as ‘Private Developer Social Housing Purchases’ in reporting.
Regional supply
The original regional supply target in the Action Plan was for 50 properties, with delivery targeted to areas outside existing investment under Better Housing Futures. Projects would respond to local needs for affordable housing.
4 The regional supply target was revised upwards in the March 2017 report to 75. The four that have been delivered to date are on Flinders Island and will be managed by the local Aboriginal community.
Disability accommodation
The original Action Plan included a number of initiatives responding to the needs of Tasmanian's with disability, including a supported accommodation facility in Burnie (25 units), a youth-specific supported accommodation facility in Devonport which would include provision for disabled youth (25 units) and a group home for NDIS participants in Devonport (4 beds). This form of supply is targeted for people who require specific support as well as accommodation and is not always (though it can be) permanent housing.
17 The names and descriptions of various initiatives in the progress reports have changed with time. It is not clear which initiatives are intended to provide for permanent housing. The impact of the NDIS-linked Supported Disability Accommodation (SDA) program, which provides funding for accommodation to eligible NDIS participants, is not yet clear. It is also worth noting that many Tasmanians with disability are of course eligible for and live in non-supported accommodation, including the private rental market and social housing.
Affordable land lots
The original Action Plan included specific provision for the release of affordable building lots at three locations, 230 lots at Huntingfield (near Kingston), 15 in Somerset and 22 in Devonport. Huntingfield is a sizeable land holding and is to include a substantial development incorporating additional services and amenities as well as a mix of housing stock. The Action Plan indicated that the lots at all three sites would be sold primarily through the private market, either directly or via further subdivision by private developers.
194 The initial phase of Huntingfield (42 affordable lots) were reported as having been released in December 2016 update, while 23 lots in Devonport were reported as released in the June 2017 update, and 16 in Somerset in the June 2018 update. The June 2018 update also reports the release of an additional 22 lots in Clarendon Vale by the Better Housing Futures provider there, Mission Australia, 54 lots in Glenorchy, which may refer to the Brent Street development (see above), and 37 ‘land release purchases’; none of these were referred to in previous updates. The June 2018 update increased the forecast result for this component of the Action Plan from 268 to 401. It isn’t clear what ‘affordable’ means in this context, and whether it means ‘affordable’ in comparison to the prevailing market or ‘affordable’ according to capacity to purchase; the Stage 1 Huntingfield lots were promoted as $170,000 each.
Total to date (June 2018)469 

3 CatholicCare Tasmania 2015. Commencement of residential development to ease housing stress. Media release. https://hobart.catholic.org.au/media/news/commencement-residential-development-ease-housing-stress, accessed 31 July 2018.

* Excludes 29 community housing stock refurbishments.

Table sub-headings and figures under Progress: June 2018 supplied by Housing Tasmania. Other material drawn from AHS Action Plan 2015-2019 and quarterly housing reports on AHS implementation, unless otherwise indicated.

3.2 Social housing stock

Overall figures for social housing properties in Tasmania between June 2016 and June 2018 are presented in Figure 3.1 below. It is evident that despite new investment, the available pool of social housing continues to decline gradually over time. This is not surprising. It reflects ongoing financial pressures within the portfolio that are well-recognised in research (Jacobs et al. 2010), particularly the absence of sufficient subsidy to offset operational costs, which means that the system must ‘cannibalise’ (sell) assets (in this case housing stock) in order to survive. Housing Tasmania has sold 301 properties over the last three years (122 in 2015-16, 102 in 2016-17 and 77 in 2017-2018), 153 onto the open market and the rest through affordable home ownership programs (HomeShare, as above, and Streets Ahead, which provides deposit assistance). Similarly, while the contracts for Stage 2 of the Better Housing Futures program required community housing providers to deliver 321 new dwellings, they also contained provision for up to 600 sales per annum which will result in an overall contraction in supply.

Figure 3.1. Social housing property numbers in Tasmania.
Figure 3.1. Social housing property numbers in Tasmania.
Source: Department of Communities Tasmania
Please note these figures do not include the small number of dwellings where title has been transferred to Community Housing Providers.

The supply of social housing is unlikely to improve under the new NHHA. The agreement notes the State Government’s existing commitments under its own AHS, but the Commonwealth base funding of $19 million per annum for housing programs will be directed to just 15 new social housing properties each year. The other initiatives are 1050 upgrades for public housing (important for the living standards of existing tenants) and assistance with private rental for 1500 households. This modest increase in supply is not enough to offset ongoing decline. The need for a recurrent subsidy for the social housing system is increasingly prominent in national policy debates, as a growing body of evidence indicates that the supply of social housing will not grow sufficiently without it, with potentially disastrous consequences for lower income earners.

The housing register

Pressures in the wider housing system may also be reflected in the number of Tasmanian's seeking crisis or subsidised housing or requiring housing support for transitional periods.[4] The current housing register—or people waiting to be housed in social housing—lists 3,216 applicants (see figure 3.2), of which 2,251 (or 70%) are priority applicants, and 869 (27%) are general applicants. The number of people on the register has fluctuated over the last two years, but reflects high and sustained demand for assistance. Of applicants, almost 70% are aged between 19-49, 57% are female, over half of applicants require a one-bedroom dwelling, and the highest need factor (for 2,398 of the applicants) is 'homeless'. In other words, at present, the register is driven by the risk of homelessness for the majority of applicants.

Figure 3.2. Housing register applicants by type, and year, July 2016 to June 2018.
Figure 3.2. Housing register applicants by type, and year, July 2016 to June 2018.
Source: Department of Communities Tasmania.

At an individual level, waiting times do vary depending upon the preferred areas which an applicant has nominated. However, the average waiting time once listed is an indicator of current pressure on the social housing system. The waiting time for people who have been housed increased by 33% in the 24 months since June 2016. Also notable is that 24 months ago priority applicants were housed on average 8.3 weeks earlier than all applicants, whereas now waiting times for priority applicants and all applicants have more or less equalised. Waiting times are higher in the South, where it takes ten weeks longer on average than to be housed in the north, and 20 weeks longer than in the North West, outcomes which are consistent with our findings suggesting that housing pressures in the south are greater than elsewhere in the state.

Over the last two years therefore, not only has it taken longer to find housing for all applicants, but applicants recognised has having the greatest housing need are experiencing lengthening waiting times, suggesting it is increasingly difficult to accommodate even them in a timely manner. This further underscores the limited capacity of the social housing system as it is currently constituted to function as a meaningful ‘safety net’ for vulnerable households.

Figure 3.3. Wait time for priority applicants who are housed (weeks), June 2016 to June 2018.
Figure 3.3. Wait time for priority applicants who are housed (weeks), June 2016 to June 2018.
Source: Department of Communities Tasmania.

4 Multiple complex factors affect the composition of the register and therefore direct correlations between the wider housing market and the housing register should be avoided.

3.3 Homelessness and Crisis Assistance

Specialist homelessness services provide assistance to individuals and households who are either homeless or at risk of becoming homeless. This support is measured in ‘periods’ of engagement with the service. As part of national data collection requirements, services collect information at the beginning and end of a support period to capture information about the reasons a person or household might need assistance, as well as the degree to which the service was able to meet their needs during the time assistance was being provided.

Current figures indicate that the main reasons households need assistance from services are housing-related issues, domestic violence, relationship breakdown and financial difficulty. Housing-related issues include ‘previous accommodation ended’, ‘housing affordability stress’, ‘housing crisis’, and ‘inadequate or inappropriate dwelling’. These issues dominate all reasons provided, and the proportion reporting these as their main reason for needing assistance has increased by 10 percentage points from 47.8% in 2015-2016 to 57.5% in 2017-2018. In other words, currently, 20% more Tasmanian's are accessing homelessness and crisis housing supports for housing-related reasons than two years ago. This indicates that the provision of secure and affordable long-term housing for disadvantaged and vulnerable residents is under pressure, and that necessary structural safety nets (such as social housing) are straining to cope with demand.

Figure 3.4. Number of support periods provided where main reason for assistance is housing-related, and main reason for assistance as housing-related as percentage of all reasons .
Figure 3.4. Number of support periods provided where main reason for assistance is housing-related, and main reason for assistance as housing-related as percentage of all reasons .
Source: Specialist Homelessness Services Data Collection
Note: Data for 2015-16 and 2016-17 (the first two columns in the graph) is for the full year. Data for is only available up to March 2018 for 2017-18 (column 3), but we have projected figures for the full 12 months based on patterns evident up to March 2018 continuing unchanged to the end of June 2018.

3.4 Private Rental Incentives

As part of the Action Plan 2015-2019, the government committed to incentive programs to provide rapid access to affordable private rental accommodation for vulnerable households, such as women and their families escaping domestic violence. Rapid Rehousing is provided as a $10,000 subsidy, per property, to community housing providers, with the funding to be used to assist with costs, including rent or security upgrades, for up to 12 months. Since July 2015, the Action Plan has delivered assistance to 120 households under this program, almost all of whom were escaping family violence (eligibility for the program has very recently been expanded to people with a serious mental illness and people leaving prison). However, although the original rationale of the Rapid Rehousing program was to enable people leaving crisis situations to settle immediately in what would become long-term secure housing, supply and cost pressures within the market and long-term affordability constraints once the subsidy has been consumed mean that in many cases assistance is for much shorter periods than 12 months. The average length of a completed, subsidised period in the south to date for the family violence component of the program is 28 weeks. The equivalent figures for the north and north-west are 36 weeks and 45 weeks. The shortening of assistance periods mean that effectively the program is now functioning as a transitional housing program rather than a long-term one.

The other major private-rental related initiative under the Action plan was the Private Rental Incentive scheme. This provides landlords with payments of up to $13,000, along with a rental guarantee, in exchange for offering approved low-income residents on the housing register secure and affordable rental leases. The scheme commenced on May 29, 2018, and as of July 17 in the south a total of 64 tenants had applied for and been found eligible for the program, and 28 properties had been approved for inclusion. Four tenants have been assisted into properties so far. The Tasmanian government has committed to an evaluation of the program in 2019 including an assessment of whether it has resulted in homes being removed from the short-stay accommodation market and made available for long term rent by low income tenants.

3.5 Recent Housing Initiatives

Further rental-market related initiatives have been introduced in response to recent publicity (in particular, the increase in the visibility of homeless people in Hobart and the focus on Hobart’s declining private rental affordability) and following the Government’s Housing Summit. A three year land tax holiday for all newly built housing made available for long-term rental (at least 12 months) has been announced, while property-owners who convert their short-term rental property into long-term rental will receive a one-year land tax exemption. While both of these initiatives may increase private rental supply, unlike the PRI scheme outlined above, neither is tied to any social outcomes, such as renting to a tenant on a low income.

Private rental incentives targeted to low income households are important sources of assistance for those households, and encouraging landlords to lease on the long term residential market as opposed to the short-stay accommodation sector could also increase overall rental supply. In a housing market where increasing numbers of households are living for extended periods of time in private rental housing, it is important that they receive adequate assistance to ensure they can access housing that is affordable, secure and appropriate. However, relying on the private rental market to fulfil the ‘safety net’ function assigned to social housing is highly problematic. It means that government’s capacity to deliver housing assistance is tied to market performance, and can mean, as now, that at precisely the time when governments face increased demand for housing assistance, their capacity to respond effectively is constrained because of supply and affordability problems in the market.

Tasmanian government response to Tasmanian's in housing need since March 2018 Housing Summit

March 24 announcement

Housing summit communique and actions included:

  • $500,000 for immediate emergency accommodation options in Greater Hobart area: Cabins, hotel and motel-style accommodation, includes $150,000 through housing connect to partners to provide emergency accommodation options and support to transition to permanent affordable housing options
  • The release of 239 hectares of government-owned land (approx. 2,000 parcels), including fast-track legislation to accelerate zoning changes and supply of affordable housing – Note: the Housing Land Supply Bill 2018 passed Parliament on 12 July 2018.
  • One year land tax exemption to incentivise property owners to convert properties currently made available only for short-term rental into long-term rental
  • Housing Tas stock match –program to better match tenants and properties

State election promises about to be given effect in parliament include:

  • 50% stamp duty holiday for first home buyers for homes up to $400,000
  • three-year land tax holiday on all new-built housing made available for long-term rental
  • 50% stamp duty discount for seniors who downsize

Government soon to commence consultation on the second action plan for the Affordable Housing Strategy 2015-2025.

April 2018 announcement

Government improving turnaround time for public housing properties (fallen by 28% under Hodgman Liberal government)

27 June announcement

HomeShare (shared equity home ownership assistance): The maximum equity the Director of Housing can hold in a new property or house and land package purchased under this program has been increased from $59,119 to $81,245.

1 August announcement – youth homelessness

  • Extending out-of-home care up to the age of 21, to support young people who are transitioning from out of Home Care when they are ready to do so, not just because they turn 18.

7 August announcement – promoting compliance with SSVA planning provisions

  • Intention to introduce legislation clarifying the need for permit for all short stay visitor accommodation that is not a primary residence plus new compliance and enforcement provisions. Will yield data on the growth of the sector and provide a foundation for effective regulation

Policy recommendations for consideration

When the housing system is under pressure, those most affected are households on low incomes and those with other vulnerabilities. Many if not most of these households are eligible for social and affordable housing assistance. The State Government’s Affordable Housing Strategy is delivering a modest injection of new social and affordable housing supply to support these households, but overall, the social housing system continues to decline over time. This is the result of a structural funding shortfall attributable to a long-term failure on both sides of politics and at both state and Commonwealth levels to invest sufficiently in the system. To ensure our social and affordable housing system is both fit for purpose and able to genuinely meet need:

  1. The State Government must ensure that Stage 2 of the AHS includes robust provisions for new social and affordable housing supply, including using levers available through the planning system (e.g. inclusionary zoning and similar provisions) as well as through new capital investment.
  2. Recent policy initiatives designed to increase rental supply such as the Private Rental Incentive scheme should be subject to independent evaluation to ensure their efficacy.
  3. Interest on Housing Tasmania’s historical housing debt to the Commonwealth consumes approximately half of the federal funding for affordable housing in Tasmania. Given that the Commonwealth has refused to forgive this debt, the Tasmanian government should treat the debt as a whole of Government Issue and service it out of consolidated revenue, freeing resources to invest in social and affordable housing.
  4. The State and Commonwealth governments must work together to find a solution to the well-recognised shortfall in both capital and recurrent subsidies for social and affordable housing. The efficient financing available through the National Housing Finance and Investment Corporation (NHFIC) is a worthwhile start, but it does not solve the underlying structural problem, which is that providers do not have access to sufficient recurrent subsidies.
  5. Governments must also work with institutional investors to encourage more large scale investment in the sector and implement tax changes to promote this investment.
  6. Social and Community housing supply should be central elements of any regional and urban planning initiatives including prospective City Deals.

Summary of Policy Recommendations

Population, Planning and Construction Workforce (Part 1)

  1. Establish a framework for the development of robust five yearly population projections at a local government area level across Tasmania, including a profiling of the changing mix of population and housing demand in each area.
  2. Promote and facilitate the development of housing appropriate for each LGA population profile.
  3. Promote collaboration between state and local governments to develop regional housing and settlement plans which will complement Tasmania’s Population Growth Strategy. Such plans will support sustainable population growth and should be central elements of any regional and urban planning initiatives including prospective City Deals.
  4. Support Tasmanian Building and Construction Industry Training Board (TBCITB) to implement a comprehensive workforce development plan for the industry and support apprentices to complete their training.
  5. Develop a detailed building and construction pipeline (infrastructure pipeline already announced) by region.

Short Stay Accommodation (Part 2)

  1. Government should develop a consistent and comprehensive database of information to better understand and monitor the short-stay accommodation landscape, including any changes that arise as a result of regulation.
  2. Government should provide a clear directive that all properties converted to visitor accommodation by non-owner-occupiers require a permit, regardless of when the property’s change of use took place (that is, there is no grandfathering of current permit requirements). The Tasmanian Government’s August 2018 announcement that it will introduce legislation to address poor compliance with existing planning provisions is to be commended. This should include:
    1. A framework to ensure compliance by hosts be put in place, such as the requirement to display a permit authorisation number on the short-stay accommodation user platform and in associated marketing. (The Tasmanian government has adopted this recommendation following the drafting of this report).
    2. Short-stay accommodation hosts should be required to provide local councils with adequate information from which to make informed decisions about their community and housing conditions in the area.
  3. Conditions outlined in the State Government’s June 2018 Planning Directive for compliance with the planning scheme be expanded to consider the impact of short stay accommodation on the affordability and supply of residential rental properties, with a permit only be issued if the change of use to visitor accommodation does not have detrimental consequences for the local housing market. If the short stay accommodation sector is deemed to be impacting on rental market conditions then local councils should be have the authority to respond (see 13. below).
  4. A state-wide regulatory framework should be established that empowers local councils to take discretionary action if needed to respond to the needs of their communities, with a range of approaches available to address needs flexibly. These may include:
    1. Limiting short-term rental accommodation availability for owner-occupied listings to 60 or 90 days per year
    2. Establishment of permit fees, e.g. $500 per annum.
    3. Implementing a ‘pause’ on issuing new visitor permits or renewal of permits in communities where the short stay accommodation sector is deemed (by an agreed measure) to be having a detrimental impact on rental market outcomes until conditions ease.

Social and Community Housing (Part 3)

  1. The State Government should ensure that Stage 2 of the AHS includes robust provisions for new social and affordable housing supply, including by using levers available through the planning system (e.g. inclusionary zoning and similar provisions) as well as through new capital investment.
  2. Recent policy initiatives designed to increase rental supply such as the Private Rental Incentive scheme should be subject to independent evaluation to ensure their efficacy.
  3. Interest on Housing Tasmania’s historical housing debt to the Commonwealth consumes approximately half of the federal funding for affordable housing in Tasmania. Given that the Commonwealth has refused to forgive this debt, the Tasmanian government should treat the debt as a whole of Government Issue and service it out of consolidated revenue, freeing resources to invest in social and affordable housing.
  4. The State and Commonwealth governments must work together to find a solution to the well-recognised shortfall in both capital and recurrent subsidies for social and affordable housing. The efficient financing available through the National Housing Finance and Investment Corporation (NHFIC) is a worthwhile start, but it does not solve the underlying structural problem, which is that providers do not have access to sufficient recurrent subsidies.
  5. Governments must also work with institutional investors to encourage more large scale investment in the sector and implement tax changes to promote this investment.
  6. Social and Community housing supply should be central elements of any regional and urban planning initiatives including prospective City Deals.