‘Tiny homes’ are proof housing policy has failed

By in Australian Property, Featured Article

| 24 comments

Amid the widespread media gushing over ‘tiny homes’, it is nice to finally read an honest appraisal on why they are a retrograde solution for chronic housing policy failures:

Finally, an ingenious solution to a housing crisis that is sapping the quality of life of an entire generation: the humble van. More than 21,000 Britons applied to the DVLA in the past year – a rise of almost two-thirds in two years – to convert their van into a home…

With your cosy cubby-hole on wheels, you can escape the tyranny of a private rental sector defined by rip-off rents and a lack of security and roam the British landscape, unshackled, free!…

Stop this – stop this immediately. This is yet another attempt to glamorise a national scandal, to dress up desperation at the inability of a wealthy society to provide one of the most basic needs of its citizens as kooky and fun. Will historians look back at this as a wacky, innovative trend, or will they write: “In 2019, citizens of the country with the sixth-biggest economy were forced to transform vehicles into places to live because of the lack of affordable housing”?…

Here is a shockingly radical suggestion. Instead of cramming people into depressing, confined spaces, why don’t we provide quality housing people can afford?

Bravo. Finally somebody else ‘gets it’. Tiny homes are no genuine solution. They are merely caravans rebranded to make them sound romantic.

For generations caravan parks have been where Australia has housed its poorest and most vulnerable residents. They are effectively emergency accommodation that is one level above being homeless.

Yet, amid a 20-year crisis that has locked-out an entire generation from traditional home ownership, tiny homes are now being marketed as Australia’s housing future.

The truth is, tiny homes are a marketing gimmick and a policy smokescreen created to divert attention from the myriad of housing policy failures, including:

  • Overly generous tax breaks for housing investors;
  • Excessive immigration levels;
  • Artificial restrictions on land supply;
  • Lack of investment in public housing; and
  • Insecure tenancy laws.

Reforming these areas represent genuine policy improvements and far beats cramming people into caravans.

Unconventional Economist

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

  1. LSWCHPMEMBER

    My Dad was a mad keen caravan fanatic, and I spent most of my childhood holidays either in a car towing a caravan, or in a caravan.

    This horrible experience left me with a lifelong loathing of caravans, and showering in “amenities” blocks and being jammed into caravan parks next to noisy drunks and all the other horrors of life in a caravan.

    I would rather die than live in a caravan. Well, actually, I’d rather “tiny home” spruikers died before I had to live in a caravan.

  2. Jumping jack flash

    “Here is a shockingly radical suggestion. Instead of cramming people into depressing, confined spaces, why don’t we provide quality housing people can afford?”

    Pfft. Good luck. You will face the same problems as ANY government who has unwittingly made the promise of “affordable houses”:

    Due to our diabolical valuation system where a house’s value is simply the average of the values of all the houses all around it, you can’t place affordable houses anywhere close to unaffordable houses. Two things will happen – either the affordable houses will become unaffordable – thereby breaking the promise of affordable houses, or, the unaffordable houses will fall in value. “So what?” you may ask, “That’s a good thing, right?” No. You can’t have that either. It is almost certain that debt will be attached to these unaffordable houses and it will be subject to LVR. You can’t mess with the value of the house that has debt attached to it. The banks will become angry, not to mention the poor mums and dads living in these unaffordable houses repaying their debt like good little debt slaves.

    So you need to have the affordable houses far, far away from any unaffordable houses. But there’s another problem. If the affordable houses are too “nice” and people actually want to live in them instead of being forced to live in them due to not being able to afford enough debt to buy a real house, then sure as eggs a debt frenzy will bid up their prices and once again you’ll have the problem of the affordable houses becoming unaffordable, and the promise will once again be broken. So any affordable houses need to stay affordable, or only increase in price in line with inflation, at most.

    Considering these scenarios the ONLY real way to get affordable houses is shipping containers, or vans in a caravan park, ideally 100’s of miles away from the closest unaffordable house with debt attached to it.

    So really this is a fine solution to the affordability problem, and pretty much the only solution which can produce actual affordable “houses”, if you think about it carefully.

    However, the fact that we must resort to caravans, or shipping container slums in order to have affordable houses is a travesty, but it is of course the natural progression of things when enormous, economy-crushing amounts of debt are required to buy property.

    • Phil

      Land price graph curves have been observed, in history, to be capable of sloping upwards gradually from true rural values, to a city centre, with a curve looking like Mt Fuji.

      What we have is a curve with a massive “step” in it, representing the geographic point at which governments are restricting the use of land and enabling a racket. Remove this restriction, remove the “step” in the graph, and the problem is greatly reduced everywhere. Ironically, more people can afford to live in more efficient locations when the prices are “flatter”. Also, site prices are disciplined and don’t just escalate in value as allowed local densities increase. It once was possible to provide more affordable smaller housing simply by building more units on sites whose values were largely static, anchored in place by the shape of the whole curve. However, putting that “step” in it not only pushes up all the prices inside it, it makes all site prices “elastic to allowed density”. Therefore the resulting trend is smaller and more expensive homes, not smaller cheaper ones.

      • LSWCHPMEMBER

        This is correct. If we have lots of anything in Australia, it’s land. But artificial supply restrictions have fcuked us all.

        I was just contemplating some “Mr Fluffy” house blocks near me the other day…the houses were demolished due to asbestos contamination. The average sized blocks in an average suburb were priced around $550-650K. So that’s about 7-8 times average annual salary. In the mid-1970’s my parents bought a large block for around $10K, which was around…I dunno…the same as annual salary back then or even less. So we’ve gone from one year or less of income to buy a house block to 7 or 8 or more years and that’s all caused by an artificial shortage of land so that The Great Princes can have ever more money, while the Small People labour under soul destroying debt burdens.

        Such bullsh1t.

        • Rusty Penny

          As I’ve said before, I have clients in Karratha.

          Imagine being on Searipple road, then getting on a bicycle to Nikol or Baynton, turning around facing Searipple road and say “We are running out of land”… then turn 180 degrees.

          Apply this to Darwin, Townsville, Cairns, Mt Gambier, Albany….etc, etc…..

          Why any capital city has land prices above $12,000 for a quarter acre is absurd. Talk about cutting your nose to spite your face… this should be regional Australia’s competitive advantage. When you understand the reasons why decision makers in regional Australia allow this to happen, then all sympathy for them disappears, they deserve everything they get.

  3. JunkyardMEMBER

    Social media sucks people in too. People create YouTube channels glamorising tiny living, never telling their audience the real play is to make enough money off the videos to buy a real, actual fcken house.

    Humans create the same amount of filth regardless if their home size, the smaller your home the more of your own filth you need to live on top of.

    • HadronCollision

      Can’t see someone making anywhere near enough cash from YT subs/ads to buy a house compared to Dude Perfect, Casey N, even Durianrider at his peak etc etc = marketing machines

    • Phil

      The same principle applies to neighborhood density too. The “principle” that higher density is “less polluting” only relates to the alleged global effect; locally, it is only ever worse.

  4. The BurbWatcherMEMBER

    You’re looking at it all wrong….

    It’s not a “failure”.

    It’s a vibrant, diverse, market sector “innovating” to solve market problems! Simples! 😉

    /end sarc

    • Jumping jack flash

      Its all in the marketing.
      Put a fence around a glorified caravan park with a coded gate, and bingo bango you have a “gated community”!

      • ITAgMEMBER

        We already have them – retirement villages where you do not own the land! Repurposed (and much more profitable) caravan parks

    • Phil

      Charge the foreigners an “infrastructure tax” and use the revenue to build the actual infrastructure required for greenfields development of the kind that is the only historically proven way to stabilize urban land prices.

      Heck, if we charged young people this tax, it could be less than the “gouge tax” they now have to pay for housing, and we’d actually get something for it. But charging young people would be “unfair”….hmmm, no, wait, what is wrong with this picture…?

      • Jacob

        The railways are subsidised and 100% of the population growth is due to immigration. Charge foreigners $40 per day for a train ticket – they are the ones causing the overcrowding in the trains.

  6. Phil

    Exactly! Do we look back on “tenements” as a housing solution that showed the Victorian-era’s innovativeness and practicality?

  7. Left4NZ

    Of course, you won’t find a bigger proponent of open borders, ‘Britain for everyone’ ideology than Owen Jones. If only somehow he could relate this issue to his other hobby horse…. nah

    • SnappedUpSavvyMEMBER

      I can only fathom that, perhaps, because his enormous head is so far up his backside he cannot put the two together

  8. BubbleyMEMBER

    Does anyone else here feel like the little kid in the Emperor’s New Clothes, loudly announcing that the Emperor is actually naked and not wearing the lightest silks ever?

    Because I’ve felt like that when I’ve been watching one of these Tiny Home tv shows, muttering under my breath “Its not a tiny home its a caravan”