When politicians and economists search for a solution to Australia's housing affordability problem, their starting point is usually to find a way to make it easier for people to buy houses.

But Luci Ellis, the Assistant Governor in charge of economics at the Reserve Bank, has a different idea.

"Participation in the housing market need not be about owning your own home. Many people rent," she told a housing conference last week.

In Australia, such an idea is verging on sacrilege, but Ellis argues that rather than focusing on whether or not people own or rent the houses they live in, we should focus on what she says is another area of inequality: security of tenure.


This is the big difference between owners and renters. Put simply, people who rent move a lot more often that those who own their homes.

That's probably OK for people in their 20s, who are moving cities for work or study or travel, and are falling in and out of relationships more than older people. But as people put down roots in a community by forming lasting relationships, finding stable jobs, sending children to the local school and settling around friends and family they don't want to move.

Those who own their homes usually move only if they want to. About 10 per cent of homeowners aged 35 to 44 moved home in 2015, compared with nearly 30 per cent of renters the same age.

One of the big problems for the growing number of Australian renters is securing anything more than a year-by-year lease on their home. They are at the mercy of a landlord who might decide to sell, or boot them out in the hopes of finding higher paying tenants, or move in themselves.

Then the renter has to go to the expense of moving again, paying for removalists, for internet and power to be connected and all those other incidental costs involved in moving home.

And they have to spend hours looking at new houses, competing with other renters and being treated like a bad smell by 23 year-old rental agents who are only biding their time until someone lets them start selling houses so they can make real money.

It's little wonder then, that home ownership is such a central part of the Australian Dream. It goes beyond financial security to the sense of home itself.

"If we are concerned about inequality of housing outcomes, perhaps we should focus less on the type of tenure, and more on security of tenure," Ellis told the conference.

If Australia could emulate some European countries and the United States and give renters long-term tenure over their property, it would go a long way to making renting a more palatable option and perhaps take some of the heat out of the housing market.

However, most rental properties in Australia are owned by individuals and there is very little incentive for them to offer long-term leases that would limit what they were able to do with their property, such as sell it or get in higher paying tenants if the market changes.

Anything impinging on landlords' profits would be a very tough sell politically. Almost as important as home ownership in the psyche of Australians is the ability to own an additional home to rent to others.

Which leaves our politicians trying to address the problem in the same old way - to somehow make houses more affordable for more people.

In her speech, Ellis also questioned whether were are actually in the midst of a housing affordability crisis at all.

If we compare average incomes to national average housing prices, Australia is "somewhere around the middle of the pack". And in countries where this metric is lower, there is often a reason. In the US, for instance, a higher proportion of people live in smaller, cheaper cities than New York or Boston or Chicago, which brings down the average.

Likewise, on household debt-to-income ratios, Australia is also around the middle.
Another thing people point to is that fewer young people are buying houses. The statistics bear this out. In 1980, about 60 per cent of people aged 25 to 34 owned their home. In 2017 that number has dropped to below 50 per cent.

Ellis points out that people are getting married and having children later than they used to, and these are often the events that prompt a couple to buy a house. "The situation is more complex than would be suggested by a single-minded focus on a single metric of affordability, such as median housing prices," she says.

All of this means that our politicians and policymakers need to be more creative in their quest to ensure that everyone has the best possible chance at getting the sort of housing they need.