THE RECENT REPORT BY THE ECONOMIC REGULATION AUTHORITY INTO MICROECONOMIC REFORM INCLUDED A RECOMMENDATION TO ABOLISH KEYSTART, WHICH IS THE GOVERNMENT AGENCY THAT PROVIDES MORTGAGES TO ELIGIBLE PEOPLE TO PURCHASE NEW OR EXISTING HOMES WHO MAY NOT OTHERWISE OBTAIN COMMERCIALLY AVAILABLE FINANCE.
The argument for the abolition of Keystart is premised on a very narrow understanding of the housing continuum and identifies issues created through the competition between Keystart clients and privately financed buyers in the market. In reality the housing continuum is far more complex and ranges from home ownership through to the rental market to homelessness, inclusive of government supported options.
At each stage of the housing continuum the natural market pressure in an environment of rapid population growth pushes people towards homelessness. Government intervention is required to reverse that market pressure and, whilst upward tension and competition for property can be the result, the action relieves pressure on waiting lists for social housing and reduces the economic and social blight of homelessness.
With downward pressure operating in the market, those that are not able to meet the criteria to purchase their own home remain in rental accommodation, increasing competition in that sector. Those that fail to compete for rental properties are then forced onto the social housing list and, if unsuccessful in obtaining that accommodation will couch surf or, ultimately, become homeless.
According to the ABS, Western Australia has the second highest rate of homelessness of any state, rising from 42.3 persons homeless per 10,000 in 2006 to 42.8 per 10,000 persons in 2011. Given the population in Western Australia rose by 17.1 percent to 2,391 592 people over the same period this is a significant uplift in the number at the bottom of the housing continuum.
Keystart is both a facilitator and a clear indicator of the upward movement of people through the housing continuum with nearly 80% of clients moving into private financing arrangements within three years of the initial mortgage being approved. Keystart also has a very low level of defaults.
If Keystart were to be abolished, there would be uplift in demand for social housing as the most vulnerable in the housing continuum succumbed to the downward pressure, resulting in additional budgetary pressure for the State Government. Having operated profitably for the last 25 years and making homeownership a reality for thousands of West Australians, Keystart should not be abolished. Thankfully the State Government does not appear to have an appetite for the implementation of that recommendation.