Presentation Transcript 

Opening: housing as an emergency

Karl: We are here to talk about housing as if it were a red-hot emergency. I like that title because it captures what many people are already thinking. The question is whether we are seeing that urgency reflected in the housing outcomes being delivered.

There is a lot of pressure in the community, and tonight Thomas and I will work through that story. We will begin with an emergency briefing on where we are, then move into campaign tools, change agents, Community Land Trusts and some modelling at the end.

The larger theme is the cultural shift we need in housing. Too much of the housing system has become about individual accumulation. It reflects a consumer culture that is devouring our society. We need to find another way forward. Many groups are working on this in different ways, and at Grounded we are especially passionate about Community Land Trusts, or CLTs. Tonight we will look at the issue from several angles.

A key part of the problem is that government is still relying on trickle-down supply. We have all heard of trickle-down economics, and as an economic theory it has been comprehensively challenged. Trickle-down housing supply is one of the last remaining versions of that idea. I look forward to a time when it is no longer treated as credible policy. The failure of that approach is being felt most sharply by emerging generations.

With that, I will hand over to Thomas.

Intergenerational equity and housing

Tom: Hi everyone. I am Tom from Think Forward. Thank you for coming to our office, and thank you for coming out on a cold winter night.

Think Forward was founded six or seven years ago because we were tired of politicians dismissing the concerns of younger people. Joe Hockey told people to get a better job. Malcolm Turnbull made comments about getting help from mum or dad to buy a home. It was the era of “smashed avocado” commentary. We wanted to talk about the structural causes of declining economic mobility and the economic pressures facing younger generations.

It has been a busy few months because government has been using intergenerational language and framing the budget around those ideas. We have been in Canberra, doing media interviews and working across these issues.

Housing is central to the story of intergenerational equity. Over recent decades, short-sighted policymaking has undermined access to housing for younger generations. I think this comes from two contradictory aims. In the 1980s and 1990s, governments decided people should build their own individual wealth, save for retirement and rely less on the state. Housing was turned into an asset for wealth-building, not only for owner-occupiers but also for investors.

At the same time, we retained a national goal of high home ownership. Governments introduced policies such as first-home buyer grants and Help to Buy schemes, which are intended to help first-home buyers but can also add fuel to the fire. These two aims sit in tension with each other.

The tax system plays a major role. Seeing capital gains tax and negative gearing reforms discussed in recent weeks feels like an important step. There is a scare campaign to beat, but it is moving in the right direction.

This is about housing, but it is also bigger than housing. It is about intergenerational wealth inequality and wealth inequality more broadly. Plenty of older Australians are locked out of housing too. If you do not have enough money to buy a home, you are locked out. If you do have enough money, you can buy a third or fourth property and be rewarded for it. That splintering of people’s life trajectories is damaging.

Even with tax reform, housing is not going to become cheaper in the short term, whether renting or buying. Perhaps in the long term it will become more affordable if wages catch up, but we also need alternatives to the market-led housing supply model that policymakers keep returning to.

The current assumption is that if we get the market settings right, private for-profit developers will build enough housing to bring prices down. Given the contradictions in the system, I do not think that will happen on its own. That is why the work Carl and Grounded are doing is so important. We can ask politicians, businesses and developers to act, but what communities can do is a missing piece of the puzzle. I know a little about CLTs, but tonight I am here as a learner as well.

Economic justice and the structural transition in housing

Karl: Thank you, Tom. It is good to have more organisations talking about economic justice. Jonty and I were saying earlier that a decade ago there were thousands of environmental organisations but very few groups talking about economic justice. More are coming through now.

When you think about people surviving day to day, it is not much fun to have an empty wallet on a Friday night. Is that freedom? I often ask how much economic pain people can take before they want to study the economic system and understand why some people make money in their sleep while others work two jobs just to make ends meet.

The intergenerational pressure is severe. I knew it was bad, but while working on a recent submission inspired by Think Forward’s work, I was struck by how self-managed super funds are able to invest in residential real estate. People who were first into the market bought land cheaply, then over time were able to upsize and benefit from rising values. When self-managed super funds were allowed into residential real estate, there was no requirement to direct that investment toward affordability. It was open slather.

Hopefully that changes in time, because we are in a structural transition. Many homes are shifting into investment and tourism functions. I live in regional Victoria, and Daylesford has been hit hard by Airbnb. Master-planned developers are holding land and drip-feeding it to the market, yet government does not say much about that.

I am also concerned about investors grouping together through “money partner” arrangements. It resembles shadow banking: people lend to each other to enter property deals, and it can begin to look like a Ponzi-style dynamic. Until recently, tax incentives gave this behaviour a great deal of room.

What worries me most is what is coming next. Soon people will be saying, “The algorithm ate my neighbourhood.” Algorithmic real estate is not a future risk; it is already here. Our national AI plan, launched last December, did not mention this impact on real estate.

As of May, our analysis shows that 91% of Victorians live in a suburb where buying a three bedroom house would put a family on the median income into housing stress, with 32% in severe stress. Only 9% of suburbs remain affordable.

We are beginning to realise that the data used to make housing decisions is heavily concentrated through real estate interests. We need another way to understand the story. We have been building tools that allow people to enter their suburb and see what it costs to buy there. We can already do this for rentals, but the ownership side is harder.

From more than 20 years of working on housing affordability, I have learned that when there is a gap in the data marketplace, the people with deep pockets often step in and control it. We need to use better data, and perhaps even AI, to understand and challenge what is happening in the market.

Supply, zoning and land banking

Karl: A recent report on the state of the housing system from the National Housing Supply and Affordability Council frustrated me because it barely addressed supply in the way we need it to. I want to show how anyone can begin to understand their local market using public real estate data.

Take Manor Lakes in Melton as an example. The median price was around $659,000 and had risen by 3.3% over the previous 12 months. There were 358 properties sold, but around 1,970 buyers interested, and it was taking 43 days for a property to sell.

That tells us there are far more buyers than sales. But what would be even more useful is to compare the number of buyers with how many properties are zoned in the area. Victoria has a valuable but underused source of information called the Urban Development Program, which tracks how the city and growth areas are developing.

When you compare titled land with zoned land, the story becomes clearer. Government often focuses on rezoning and celebrates the creation of zoned supply. But after land is rezoned, developers can sit on that supply and drip-feed titled lots to the market according to auction clearance rates and days on market. They have strong tools to control how supply is released, while government often remains unwilling to examine the process of profit maximisation.

We hear a lot about red tape. I think we also need to talk about “gold tape”: the barriers that developers place in front of land supply in order to protect returns. That deserves much more attention.

By combining real estate demand data with zoning data, we can start to see latent supply. In three growth areas, there were more than 9,300 zoned lots and around 7,700 sales. In some places, the difference was striking. Woodstock, near Whittlesea, had around 8,000 zoned lots but only two sales. Cobblebank in Melton had only 110 sales, despite substantial zoned supply.

This suggests that the market is already talking to developers. Developers understand it, and banks understand it. Politicians and communities often do not. We need to get this story out.

The same pattern appears around regional towns. Outside growth areas, where the next expansion of a town is likely to be, people are setting up property options. A property option is a contract with a farmer that says, for example, “In ten years I will buy this land from you at $300,000 above its current market price.” The buyer may not need to put much money down. This is happening around towns such as Daylesford, Bendigo and Bacchus Marsh.

A banker in central Victoria recently told me that properties valued between $400,000 and $600,000 are being bought sight unseen. Private equity is entering housing. Proptech is changing renting. The commodification of housing has only just begun, and the pressure people feel now is likely to build.

If housing were treated as a real emergency

Karl: We wanted to ask: if politicians truly treated housing as an emergency, what would they do first?

Tom: We should look closely at the policies that inflate prices. First-home buyer grants, Help to Buy schemes and stamp duty concessions are framed as support for buyers, but they often benefit sellers by lifting prices.

Karl: Stamp duty discounts have become the new first-home buyer grant. In Victoria they cost around $900 million, and New South Wales has gone beyond a billion dollars. During the Kevin Rudd era, the first-home buyer grant was around $16,000. Today, a stamp duty discount can be two or three times that amount. It has become a large seller subsidy.

Tom: I would also focus on the demonisation and running down of public housing. Public housing stock has been neglected, and public housing as an idea has been attacked. It is troubling that governments often act as if the only way to provide homes is to incentivise private developers.

Karl: I would like to see mortgages capped at 30 years. I can see today’s children being pushed into 40- and 50-year mortgages. They are already appearing in Sydney. In the Menzies era, people needed a 25% deposit, and that put a brake on house prices. Limiting mortgage terms is an old-school way to stop prices from stretching further.

Tom: We also need much stronger support for renters. Home ownership is declining, and investors do not always have to think seriously about the experience of renters. If standards were much higher, it could push out some speculative landlords and put quality ahead of rent-seeking and speculative gains. Victoria has made some reforms, and despite claims that the sky would fall, rental growth has been slower than in some other places.

Karl: I would also redirect the benefits from self-managed super funds, negative gearing and capital gains tax settings toward models that last longer than one buyer. Many government incentives help one purchaser, then government has to find the money again for the next group. If that support were channelled toward CLTs and limited-equity co-operatives, it could build an alternative to the current market-rigged system.

Tom: If housing is an emergency, we should build housing for people. We should stop taking the indirect route of rewarding developers and investors in the hope that enough profit will eventually create enough supply. Housing should be treated as essential community infrastructure.

Karl: I would remove interest-only loans from real estate. They are a key tool for property flipping, and we do not need them in the housing market.

Audience member: Anti-money laundering.

Karl: That is a crucial point. The Henry Review raised the need for real estate agents and lawyers to know their customers and trace money. For years, money could flow into Australian property far too easily. If you put $10,000 in a bank account, you need to fill out forms. Yet large amounts of money have been able to move through real estate with limited scrutiny.

Vacant property is another area. Victoria has a vacant residential land tax, but it has been too voluntary. Government could use abnormally low water consumption to identify vacant homes. When I last looked, the tax was raising around $5 million, but on my calculations it could raise hundreds of millions. Ideally that revenue would fall over time because more empty homes would be brought into use.

The deeper issue is credit. Private banks create money to fund mortgages, and when more money flows into a fixed land mass, prices rise. In the past, more lending was directed toward small business. Now more credit is directed toward real estate. Banking profits are significant, but land-value gains are far larger. Australian land values increased by hundreds of billions in a single year and by trillions over several years. We can be frustrated by that, or we can look for solutions.

Community Land Trusts: keeping land affordable over time

Karl: This is why we need a giant “no trespass” sign around some land: no property speculators allowed. Limited-equity co-operatives and Community Land Trusts are two of the best tools we have to do that. They can help stop property prices rising two or three times faster than wages.

One way to leapfrog land banking is through the kind of approach used in the United Kingdom: community exception sites, also known as rural exception sites. These are sites that might not normally be zoned for residential development, but can be used for affordable housing when a farmer, a community group and local councillors work together to meet local need.

The idea is to create affordable housing for key workers and local residents in places where people are being priced out. To justify using some land differently, the affordability has to be locked in permanently. A CLT can make that possible for 100 years or more.

The core idea is simple: the trust owns the land, and its number one job is to keep that land affordable over time. It stewards land for future generations. The resident only needs to borrow for the home, not the land, which can substantially reduce the size of the mortgage. The resident pays a ground lease to the trust, which means the cost of land is redirected away from banks and back into the community.

Governance is also important. A good CLT uses a tripartite governance model: one-third residents, one-third neighbours and one-third civic representatives or community-minded people. This matters because, over time, residents may be tempted to remove the affordability protections and privatise the gains. A strong constitution and governance structure help prevent that.

The model draws on international lessons. Before Community Land Trusts, there were land colonies. Some were set up more than a century ago. Generations later, people can realise they are sitting on valuable land and try to carve it up. Good governance prevents that and protects the purpose of the trust.

At Grounded, we are trying to bring together best practice in land economics, governance, environmental design and social dynamics. The social side matters because living together and making decisions together is one of the hardest parts.

What the numbers can look like

Karl: In our Grounded in Affordability report, we modelled the approach using Castlemaine land and housing prices, with modular housing. In that scenario, the resident might only need to borrow around $280,000 for the home. The deposit is much lower because the resident does not need to borrow for the land, although they do pay a ground lease to the trust.

This can save buyers around 39% compared with an open-market purchase. It can also create community wealth. If 20 homes were developed through a CLT and the savings stayed in the local economy, around $38,000 extra could be spent locally each year. Over 30 years, that approaches $10 million in community benefit.

From a government perspective, investing once in a CLT can create a much higher return than repeatedly funding stamp duty discounts or first-home buyer grants. Instead of a one-off benefit that disappears when the home is resold, the affordability continues for each future buyer.

CLTs compared with buyer assistance schemes

Tom: Help to Buy is a scheme where government becomes an equity partner when someone buys a home. A buyer may need only a very low deposit, and the government takes an equity stake that is repaid when the home is sold or over time.

A CLT can appear similar because it also reduces the upfront cost to the buyer. But the key difference is what happens when the home is sold. Under Help to Buy, the home re-enters the market. Under a CLT, affordability is preserved because the home is resold at a controlled, below-market price to the next eligible buyer.

The 5% deposit guarantee is another attempt to help younger people into home ownership. It can help individuals, but the risk is that people take on very large mortgages. Australia already has very high levels of private debt. If people are paying 40%, 50% or 60% of their income on housing, that limits their ability to start a business, have a family, participate in culture or simply live a decent life.

Schemes that help individual first-home buyers may make some people better off, but as a nation they can make the overall housing problem worse.

Karl: The 5% deposit guarantee has helped many people into housing, but at a very large public cost. If even a small amount of that funding were used to pilot CLTs, we could demonstrate how much the model could save government and communities over time.

The goal is to create community assets. In Brunswick, CERES is a great example of a community asset. In Castlemaine, The Mill shows how a place can become a social and economic anchor. We need to bring that kind of thinking into housing.

Trade-offs and buyer considerations

Karl: We need to be honest about the trade-offs. In a CLT, residents trade away part of their capital gain. Growth is slower because there is a ground lease, and the resale formula ensures the next home price remains affordable. If market prices surge, much of that gain stays in the community.

What residents gain is economic freedom and housing security. They are stepping outside a system where households must compete with property investors in a rigged game. The aim is to align housing costs more closely with wage growth.

Many renters have received the dreaded letter from a landlord saying the property will be sold and they need to move out. That often happens because the next buyer is purchasing on the basis of future capital gains. They may use negative gearing to outbid a family trying to buy, and they may need vacant possession or higher rents to make the numbers work. That is why renters are often pushed out.

A CLT offers a different path. In the model we presented, a household might need a deposit of around $64,000 rather than $160,000. That deposit gap is enormous, especially for people carrying HECS debt and facing high rents. Residents may give up some capital gain, but they can save money over time, build assets and have a clearer pathway if they later want to move into the open market.

One advantage of a CLT is that the board can include financial expertise. Residents can be supported to create a financial plan, save some of the money they are not spending on inflated housing costs, and build a pathway for their future.

The next Brickworks: community capacity and action

Karl: Brunswick has an iconic example in the Brickworks. One landlord has owned it for decades. Heritage has been demolished and much of the land has sat vacant. Yet around us there are opportunities: vacant blocks, car parks and underused sites.

We need to ask where the next Brickworks is, and how a community could be ready to act when a site becomes available. That is why I would love to see an Inner North Community Land Trust steering group.

At Grounded, we have worked hard to develop the tools that communities need: feasibility templates, a constitution, council briefing notes, campaign tools, legal architecture, property law work, governance resources, funding prospectus material and land agreement templates. The roadmap is there.

Grounded is now four years old, and projects are beginning to emerge. We have one near Maryborough that looks promising. We have also created a community advocate pack and a “10 friends” starter kit. I meet with people around the country who want to come together as community members and respond to the housing crisis.

The missing ingredient is community agency. The environmental movement has shown how effective campaigning can be. In housing, renters have won important rights, but when it comes to the big economic story, we are still learning how to campaign. We need people who care about this to step forward.

The reforms to negative gearing and capital gains tax may help, but it will take years for the benefits to work through the system. We cannot wait another five or ten years for trickle-down housing supply. Please check out our Linktree, send us an email or book a time through the contact page if you want to discuss a local project.

Q&A

Land, government support and planning

Audience member: You have talked about government putting money into tax concessions and how that money might be better spent supporting a CLT. I am trying to understand the idea. What is the minimum lot size for a feasible CLT in the inner city, especially somewhere like Brunswick where there are not many large lots left? And is the ask that state or federal government buys land to get a pilot started?

Karl: Yes. The conversations we are having are about how to get a pilot project on vacant government land, vacant church land or land held by ethical owners who recognise the need for a long-term alternative to one-off housing assistance.

Minimum lot size depends on the density bonus and planning settings, including floor-area ratios and what is allowed for affordable housing.

Audience member: I do not think the state government has introduced a floor-area ratio mechanism for affordable housing in activity centre zones. It was an option, but the department did not take it up. None of the existing or future activity centre zones are likely to have a specific mechanism for affordable housing.

Karl: I am not happy to hear that. It is similar with inclusionary zoning. We have been trying to understand how inclusionary zoning will be rolled out in master-planned communities or apartment blocks. It still appears to be voluntary in many respects, although government has talked about mandating something.

Mike: The regulations will take longer than they should. There was a deal in the upper house with the Greens to get the Planning and Environment Act amendment through, but the department and minister’s office have not seemed enthusiastic about the inclusionary zoning head of power. A committee still has to create regulations. We may not see the public version until the middle of next year, and it has to be finalised by October 2027. After that, each local government will need planning scheme amendments to operationalise inclusionary zoning. We celebrated seeing a head of power for affordable housing in the Planning Act, but there is still a lot to do before it becomes a broad mandatory scheme rather than the voluntary scheme we have been working with.

Karl: Thank you for that insight. We have developed a balanced contribution rate policy paper, and I would like to share it with you. We need to get into this policy space because developers are already there. I would love to know how many meetings ministers have with developers compared with community groups.

CLTs beyond housing and regenerative land use

Audience member: Is the purpose of a CLT only housing? I recently bought something and I am trying to work out whether it needs to be a farm first. Housing is part of that because it could serve the community, but planning permission matters. I want to understand what else can be embedded in a CLT besides housing.

Karl: That is a great question. It is close to my own experience. We moved to the countryside hoping to establish a Community Land Trust on our land. Because we are in a farm zone and an environmental corridor, we cannot currently do it. Yet other activities that seem far less compatible with the landscape can sometimes operate.

That is why I mentioned community exception sites. In central Victoria, there is land degraded by weeds and poor management. I would love to see affordable farm pods or modular housing on farmland, tied to a commitment to regenerate the land. Could we have three, four or five homes on a property, so people can work together on food sovereignty, local farming practices and land repair?

The planning system can favour low-density fragmentation in rural areas while penalising people who want to bring more labour and stewardship onto the land. Until World War II, many more people lived and worked on farms. We need independent land supply outside the corporate system: community members wanting friends, workers and local people to be able to afford to live nearby and do useful work.

There is a need for a diversity of housing in regional areas. We also need to think about risk and priorities. Bushfire risk is real, but so is the risk of people dying early because they do not have stable housing.

The planning system can reduce flexibility in subtle but powerful ways. On our website there is an opinion piece called “From Speculation to Stewardship,” based on a presentation to the Planning Institute of Australia, which explores new planning tools.

Mortgages and finance barriers

Jasmine: If the resident is not buying the land, and is only paying for the building, the mortgage might be around $280,000. But mainstream banks will not usually provide that mortgage because the resident’s name is not on the land title. What discussions has Grounded had about enabling people to access mortgages? At the moment there does not seem to be a financial product that lets people buy a house without owning the land.

Karl: I knew that question would come up. It comes up every time, and it is frustrating. We are trying to break through and find different angles.

There is some evidence of this approach already existing in Australia. One example in Victoria is the Mildura Schools Lands Trust, which goes back more than 100 years. There are 183 sites that pay a ground lease, and that income helps fund schools in the Sunraysia district. There are also specialist mortgage brokers who understand these structures, but they are hard to find.

Another example is the ACT Land Rent Scheme, which has been running since 2007. Two banks have lent into that model, including Beyond Bank and possibly Bendigo Bank. The title system is different, but the structure is similar in that people are paying for the use of land rather than buying it outright.

We are trying to get a dedicated loans officer, particularly from Beyond Bank, to work with us. There are also projects in New South Wales making progress. Some have chosen for the CLT to own both the land and the buildings, which changes the debt profile and may require philanthropic backing or other capital.

Community finance is another possibility. The Castlemaine Institute raised community debentures to buy a commercial property in the middle of town. That shows what can happen when a community recognises that it cannot rely only on corporate structures.

We are also interested in universal ownership risk. Large institutions such as banks and superannuation funds are exposed to the booms and busts of the broader economy. It can be in their interest to support models that reduce housing and land volatility.

The hardest part is aligning three sources of credit. First, you need funding to buy the land. Second, you need construction finance for the building period, often around 24 months. Third, you need residential mortgages for individual households. Getting those three sources lined up is a major challenge.

Urban models, air rights and lessons from earlier attempts

Aaron: What are the different challenges between the rural locations you have been discussing and an urban site such as the Brickworks? Moreland City Council looked into a CLT a long time ago and had a board set up. What can we learn from that urban process? And is there a role for a community “air trust” using air rights above council-owned land?

Karl: Air rights are an important idea. We have had projects that almost got off the ground using access to air rights, and we need more innovative thinking of that kind. We should learn more about what happened with the earlier Moreland process and why it did not proceed.

Urban CLTs face different challenges: land is more expensive, sites are smaller, planning is more complex and competition from private capital is intense. But the need is also intense, and underused public land, air rights and partnerships with councils could all play a role.

Trust duration and inheritance

Audience member: I was told that some trusts have to wind up after a particular life cycle, perhaps 80 years. I also read that a CLT might generally last up to 99 years. If this is not the usual model of buying a house and passing it to children, what happens after 99 years?

Karl: There are legal processes that allow these arrangements to roll over. The model is not necessarily limited by time. For example, the leasehold system in Canberra was based on 99-year leases, and government legislated for them to roll over before they expired.

I am also part of a trust that will turn 100 in 2028, and there is no threat of it shutting down. As long as a trust continues to meet its constitutional objects, it can continue. There is some urban myth around this point, but it is worth getting precise legal advice for any specific structure.

Closing

Karl: I am happy to keep talking, but I can tell people are ready for a break. Thank you for your patience and your passion. It is great to see people here in person. Thanks everyone. Let’s enjoy the rest of the evening.

Tom: Thank you.