A United Nations (UN) report on the financialization of housing and its impacts on human rights has found “patterns of systemic exclusion” resulting from the role of international finance in housing systems.
The report, penned by the UN’s special rapporteur on adequate housing Leilani Farha, examines the global financial structures that treat housing as a commodity and the consequences for those in need of adequate housing.
“The value of global real estate is about US$217 trillion, nearly 60 percent of the value of all global assets, with residential real estate comprising 75 percent of the total,” the report reads. “Housing is at the centre of an historic structural transformation in global investment.”
Farha’s report found that in 2015, a total of US$443 billion in capital was raised for trans-border real estate investments, of which residential properties was the largest single share. In addition, “corporate tax havens that generate massive amounts of profit immune from taxation, estimated at 30 percent of global gross domestic product, are particularly attracted to housing and real estate.”
The report found that these global financial factors have led to greater income inequality, spatial segregation, inadequate housing provision and growing homeless populations.
The report stated: “Financialized housing markets respond to preferences of global investors rather than to the needs of communities. The average income of households in the community or the kinds of housing they would like to inhabit is of little concern to financial investors, who cater to the needs or desires of speculative markets and are likely to replace affordable housing that is needed with luxury housing that sits vacant because that is how best to turn a profit quickly.”
These findings correlate to recent figures on vacant properties in Australia. One such report – the 2015 Speculative Vacancies report produced by Prosper Australia – 82,724 residential properties in Melbourne appeared to be vacant, based on their average daily water consumption being less than 50 litres. Of those, 24,872 dwellings had zero water consumption and were considered to be “demonstrably unoccupied.”
Farha’s UN report states: “In such markets, the value of housing is no longer based on its social use. The housing is as valuable whether it is vacant or occupied, lived in or devoid of life. Homes sit empty while homeless populations burgeon.”
Further, the report found “the dominant impact of wealth and private investment has also created and perpetuated spatial segregation and inequality in cities.”
This is reflected in the 2014-2015 State of Australian Cities Report, which found the price of housing has risen more acutely in areas closer to city centres causing, Australia’s cities to fracture along the lines of income, level of education and access to amenities. Research from University of Sydney urban design and planning academics also revealed bigger cities lead to greater income inequality.
“Financialization also creates gender segregation,” Farha’s report states, pointing to 2016 analysis by Victora-based Council to Homeless Persons, which found a single woman on the average working wage for women in Victoria can only afford to rent in 28 out of 106 Melbourne suburbs without being in rental distress. Of those 28 suburbs, only one (Footscray) is within 10 kilometres of the city centre.
Analysis of the Sydney rental market undertaken by The Guardian found that a single woman earning the average wage for women in NSW “could not even afford the average rent on a one bedroom property in an outer area like the Blue Mountains, Penrith, Campbelltown or Gosford.”
Farha mentions a number of government policy responses from around the world that prioritize housing needs over financial investment. These range from Catalan government legislation to prohibit foreclosures and eviction that would result in homelessness to a City of Vancouver tax on vacant homes.
In Australia, the Victorian government recently announced plans to introduce a Vacant Residential Property Tax, levied at one percent, to address the number of empty dwellings in Melbourne.
Farha makes a number of recommendations that UN member states can take to “reclaim the governance of housing systems from global credit markets,” including planning, regulatory and taxation measures to promote an inclusive housing system and prevent speculative housing development.