Why aren’t governments investing more in social and affordable housing? It’s not as if we all can’t see the results, indeed, a growing number of us are feeling the consequences. A recent AHURI reportestimated that over the last 20 years social housing numbers increased by 4%, far outstripped by household numbers which grew by 30% over the same period. Combine this with house prices rocketing upwards and incomes for most people just stuttering forwards and it looks very like a car crash waiting to happen.
The 2016 census data released a couple of weeks ago shows that one consequence of this under investment is the rise in homelessness across Australia and in NSW particularly, where the numbers of homeless people jumped to almost 38,000, an increase of 37% on the 2011 figures. In NSW the main explanation seems to be the severe overcrowding many people face in exchange for getting an affordable roof over their heads.
It isn’t just people on the lowest incomes feeling the pinch, as demonstrated by research from the University of Sydney’s Urban Housing Lab for the Teachers Mutual Bank, Firefighters Mutual Bank and Police Bank. This shows that nurses, teachers and police are being driven to the outer reaches of the city (and beyond) as high house prices price them out of communities close to jobs.
So again, why aren’t we seeing governments take up the infrastructure challenge and invest in a large scale social and affordable housing program? In the absence of robust housing needs assessments common in other jurisdictions the Federation asked Judith Yates, currently an Honorary Associate in the School of Economics at the University of Sydney, to prepare estimates of the need for additional social and affordable housing in NSW. Her conservative estimates – based on getting back to the proportion of social housing we had in 1996, meeting the needs of households eligible for affordable housing who are currently in rental stress and responding to household growth over the next ten years – demonstrate the challenge – 12,500 additional social and affordable homes per annum. It will get larger the longer we wait to start.
So is the reason that it costs too much? Well it also costs not to invest, as Cameron Parsell at the University of Queensland explained in an article in which he showed that governments were spending on average $13,100 more each year to keep someone homeless than if they had provided them with a home and support services.
And governments do invest big dollars in improving Australia’s infrastructure. The Commonwealth 17/18 budget earmarked $75B over ten years for spending on ‘critical airport, road, and rail infrastructure projects’. While in NSW the state government increased its four year infrastructure spending to $80B on transport, as well as water, energy, education, justice and cultural projects
So perhaps we need to take a few lessons from the transport lobby and make an additional and compelling argument for social and affordable housing. It is the reason that the Federation, with support from the national industry body, CHIA, and nine community housing providers commissioned an investigation into the impact of the housing market’s performance on economic productivity from the City Futures Research Centre at UNSW. See Making Better economic cases for housing below.
Making Better economic cases for housing
The report was launched at a seminar in Sydney on 8 March, kindly sponsored by Payce , with the lead author, Professor Duncan MacLennan setting out a new ‘economic narrative’ for housing. Yes he said cities like Sydney have triumphed through economic benefits accruing from agglomeration, but failure to anticipate the congestion costs and / or a belief that markets would respond and sort them out has led to the sort of housing failures we now see.
In particular he sees the impact of housing on productivity go virtually unrecognised by finance ministries. He outlined two major risks this approach brings to Sydney (and other large cities):
- ‘Constrained human capital’ – lower living standards, concentrations of disadvantage, long commutes and poor quality homes all reduce labour productivity.
- Negative effects on savings and consumption – people spend less on goods and services, invest less in productive enterprises and are very exposed to economic downturns. As more people retire without owning their own home the impact on future health and pensions spend will be significant.
He dismissed the simple solution that looser planning controls and less regulation would solve the problems as recently argued in the RBA publication on the additional cost of a house which is attributable to zoning restrictions. Professor Maclennan also shared reservations expressed by a number of academics that a sustained increase in new housing supply will solve affordability problems for most households. It’s an argument made most recently by the Grattan Institute in a report that also proposes changes to rebalance the tax system.
Professor Maclennan argues we need to treat housing as key economic infrastructure alongside transport and services and use both government resources such as land and contributions from well- designed inclusionary zoning to fund the affordable housing elements. He implied the Western Sydney City Deal provided an opportunity to do just this.
The evening concluded with a lively panel discussion involving Dr Jennifer Westacott, CEO of the Business Council of Australia, Dr Judith Yates, and Dr Marcus Spiller of SGS Economics and featuring some challenging questions from the audience.
Dr Westacott outlined the need to plan better, design programs that attracted institutional investors, get the right mix of tax and incentives (replacing stamp duty with a broad based land tax being one suggestion), include housing in infrastructure plans and sort out public housing. Dr Yates urged the audience not to abandon the social justice narrative in the pursuit of stronger economic arguments for government investment in housing. She also argued for a very long term view and questioned if we should be creating new urban centres to accommodate Australia’s growing population.
Dr Spiller of SGS Economics reminded us that governments had once planned housing and jobs together – noting the number of public housing built alongside car factories. He argued that since both Federal and State governments were failing to address the housing challenge, he proposed that a better way to transact housing policies would be to devolve authority for matters such as planning and taxes to the regional / metro level. He also proposed the question about who owns the development rights to land – while ownership of the land is clear, surely the development rights belong to all of us. It is a concept he argues at greater length here.
While there was some differences in policy prescriptions the panellists seemed to be on the same page when it came to housing’s importance and the damaging effects of shortfalls in social and affordable housing. The Federation and its partners are aiming to do further work to press the case for more investment including modelling the financial costs to government of continuing business as usual.
The final words most surely go to Dr Westacott who posed three questions to the audience:
- How much lower should home ownership rates get before it worries us
- What level of housing stress are we prepared to accept
- How many homeless households will we walk past
We need those national and state housing plans now.
Affordable Housing Conference 2018
Don’t forget to register for our upcoming Affordable Housing Conference! The 2018 conference theme – Everybody’s Home – highlights the current and growing shortfall of accessible and affordable housing in Australia across the entire housing continuum. Over two days, housing professionals from the private, not for profit, and government sectors will come together to share expertise and find out about the latest news in the industry.
Already announced to speak international and national affordable housing experts Emily Cadik, Saul Eslake, Alex Notay, David Orr and Craig Sanderson!
March Federation Exchange – our biggest yet!
Our March Federation Exchange was our biggest yet with over 200 guests attending from across the sector. We hope that you found the Federation Exchange informative and worthwhile. The primary goal of the Exchange was to bring together members from across the state to hear from industry leaders regarding sector innovation and policy updates, as well as sharing ideas and providing networking opportunities. We thank you for making this goal possible.
We were lucky enough to have Day 2 of the Federation Exchange opened by Tania Mihailuk. Day 2 also featured a successful CEOs Breakfast Session on Making Better Economic Cases for Housing. International guest Professor Duncan Maclennan presented on his wide-ranging study on the economic implications of housing market performance and the case for treating housing as a form of productive infrastructure. Stay tuned for the Federation Exchange Report and Presentations which will be released in the coming weeks.
Delivering new housing supply – NSW Community Housing Industry Snapshot
The NSW Federation of Housing Associations is delighted to be able to share its 2017 Development Snapshot.
Providing more affordable rental housing is one of the major challenges for NSW and Australia. The community housing industry is uniquely placed to provide solutions. Registered community housing providers have a long term commitment to the communities they work in and they develop quality, well-designed housing that meets local needs.
This Snapshot is based on information provided by our members. It is the first time the community housing industry in NSW has reported on the significant contribution that registered community housing providers make to social and affordable housing supply.
The Development Snapshot highlights the expertise that registered community housing providers now have. By 2020, registered community housing providers will have:
- Created almost $1billion in new investment in housing for local communities
- Developed 2,700 new properties in addition to the 38,000 homes they currently own or manage
- Delivered 8 out of 10 homes independently without partnerships with for-profit developers
- Developed new housing in 34 of the 115 local government areas they currently operate in
To accompany the Snapshot, we have developed an infographic and maps which show where planned, completed and overall new social and affordable housing projects are being delivered.
Some select results are:
- By 2020, a total of 503 affordable rental housing properties will be delivered in the City of Sydney – 192 between 2012 and 2017 and a further 311 by 2020.
- In Greater Metropolitan Sydney between 2017 and 2020:
- 317 new homes will be delivered in the City of Penrith
- 185 will be delivered in the City of Liverpool
- 127 will be delivered in Canterbury-Bankstown Council
- Outside of Sydney between 2012 and 2017:
- 73 new homes were delivered in Mid-Coast Council
- 43 were delivered in the City of Shoalhaven
- 23 were delivered in Wingecarribee Shire
See some of the media coverage the Snapshot received here
Using the planning system for delivering affordable housing
As we debate in Australia the best options to deliver affordable housing through the planning system there has been an interesting development in England. Sure there are many differences between the Australian and English policy and funding frameworks that influence for example the contributions that can reasonably be required. That said it is more than likely Australia would face similar issues to England in realising site targets. So to see the UK Government contemplating nationally set “non-negotiable” requirements for affordable housing contributions may be worth some consideration here.
In a consultation document to revise the National Planning Policy Framework (NPPR), published this month the Conservative Government considers ways to provide developers with certainty about future contributions. One option proposed is for contributions to affordable housing and infrastructure to be set nationally, and to be non-negotiable.
Also proposed are changes to viability assessments which allow developers to limit their contributions to affordable housing and other infrastructure if they can demonstrate it would reduce their profits to below 20%. Research by Shelter UK examines the use of viability assessments. Their work focusing on 11 Councils, found 79% fewer affordable homes than were required were built after the viability assessment process. Since this work the Campaign for the Protection for Rural England (CPRE) with Shelter has found similar problems in eight Councils where half the affordable homes were lost to the viability process. See the report Viable Villages here.
The changes mooted in the NPPR would make it more difficult for affordable housing contributions to be whittled away by:
- Restricting viability testing to developments which do not comply councils’ local plan priorities – for example containing the required % of submarket housing
- Making the viability assessment publically available
- Setting a method for assessing development cost based on the existing use value of land, plus a landowner premium
Capacity building program for ACHPs underway
The Aboriginal Housing Office is working with the Federation to deliver information to assist ACHPs make an informed choice about registering through NRSCH or the NSW Local Scheme. The program includes eight workshops around NSW about the NRSCH. See here for more information. Future events will include specialist two-day workshops on asset management, finance and NRSCH for boards.
The Federation will also be supporting the creation of Regional Connection Working Groups in three locations around the state. These groups are designed to support mutually respectful and beneficial partnership working between ACHPs and CHPs. We will send out more information about this shortly – but in the meantime please contact email@example.com if you think your organisation might be interested in participating.
Inner West Council – planning together for a better Sydney roundtable 7th March 2018
The newly amalgamated Inner West Council in Sydney brought together a range of stakeholders for a planning roundtable this week. The Federation has worked with IWC over the course of several months to support and encourage Council in their development of a series of affordable housing initiatives. IWC have taken commendable steps to promote affordable housing in their area, including developing an Affordable Housing Policy and a paper on the issues around Value Capture Best Practice in Value Capture
IWC have also applied for an extension to SEPP 70 to enable the levying of mandatory affordable housing contributions and set an affordable housing target of 15% for developments with a gross floor area of 1700 m2 or greater, and seek 30% affordable housing on their own land.
So it was with interest that the Federation and sector representatives attended IWC’s planning roundtable. The conversation was very wide ranging and covered interests and priorities from the airport to the economic value of industrial land. Key affordable housing points made were:
Sydney’s pace of growth – the city is expected to reach a population of 8 million by 2046 – 10 years earlier than previously projected. Sydney is growing faster than any other top 10 global cities.
Gentrification in IWC is leading to less diversity and the exclusion of people on low incomes and those dependent on public and social housing, including Aboriginal people and the roundtable acknowledged the huge pressures on affordable housing in the area.
The roundtable returned frequently to a number of themes – the need for placed based planning, a community led bottom up approach and with calls for resistance to the silo led government agencies (with RMS getting a particular Guernsey in this context). The silo based agencies fulfil their briefs but may not be aware of the evidence of different modes of working that take a community wide and city wide view (rather than thinking about the speed of traffic flow, for example).
Another are where Council was urged to push back was around Treasury’s insistence on highest and best value in its land dealings, as this leads to many lost opportunities. Some advocated an approach which measures and prioritises wider benefits and included the value of open space and culture and argued that “Net Community Benefit” should be examined at the DA stage.
Rik Hart, IWC General Manager, included a call for practical suggestions about how IWC could deliver the ambitious and varied plans suggested by participants. Two suggestions from the sector were to utilise value capture more effectively and to understand the development equation better – for example major developers will build with 35% inclusionary zoning when required – developers understand the process and factor the costs into a lower land price.
Meanwhile use housing
Meanwhile use housing is housing temporarily located on vacant or unused land. The term can also apply to the short term use of existing buildings to provide housing. Meanwhile use housing projects have begun to appear to provide short to medium term housing by taking advantage of points in the development cycle of land, where it may sit unused. Notable examples are:
- Launch Housing has partnered with VicRoads and the Department of Health and Human Services on a project which will deliver 57 prefabricated units for people at risk of homelessness across nine parcels of land in Melbourne’s inner west
- The Place/Ladywell project in London which has used modular construction to create 24 two- bedroom units and commercial space on a vacant brownfield site
In February, the Federation hosted a workshop for its members to explore the potential for meanwhile use housing in NSW. The workshop was also attended by independent experts (including Dr Heather Holst, Deputy CEO, Launch Housing) and representatives of several NSW Government agencies, including Treasury, Landcom, Urban Growth, Planning and Environment and FACS.
The workshop focussed on the opportunities and challenges for meanwhile use housing projects, including:
- Identifying appropriate target groups
- Engaging landowners, land costs and desirable features for sites
- Planning system engagement, including zoning and community acceptance
- Innovative financing approaches
- Design and construction, including modular and prefabricated units
- There needs to be a high level of understanding and trust between landowners and meanwhile use housing owners and operators. This could mean a government landowner involving another government agency with direct experience of working with community housing providers, as in the Launch Housing experience where VicRoads brought the Department of Health and Human Services in to oversee the contractual relationship with Launch Housing.
- A key issue for landowners will be ensuring that the site can be returned to them in a timely way after the agreed meanwhile use period. Partners in a meanwhile use project will need to develop strategies and agreements to manage this issue.
- Messaging and communication with local communities is very important because adverse reactions to planned developments can delay projects. Using modern construction methods potentially adds to the complexity of winning community acceptance for social and affordable housing developments.
- There may be housing models which are permissible in certain zones in the current planning system which could provide a template for meanwhile use housing – student housing being permitted on commercially zoned land.
- Modular, prefabricated housing is well suited to the concept of meanwhile use given that it is designed to be transportable.
- Prefabricated housing will need to be engineered so that it is robust enough to be transported to a new site at the end of each meanwhile use period.
- The prefabricated housing will need to be designed so that it can be readily adapted for different sites, for example where the building may need to be oriented differently for solar access.
- Different ownership and funding models will need to be explored because traditional mortgage finance is not an option where the borrower does not own the land, as in meanwhile use projects.
- There is a need for parties to work together to negotiate an appropriate sharing of risk in meanwhile use projects. A key factor in this will be services to the site and the potential cost of this.
- Government could take on a role supporting the growth of the meanwhile use housing concept, including developing a suitable policy framework, identifying potential government owned sites and to deliver social and economic benefits.
Opportunities and next steps
- Several community housing providers are pursuing meanwhile use projects in existing buildings and are considering other innovative models.
- Landcom identified a potential site that could be used for a desktop feasibility study of a meanwhile use housing project. The Federation will meet with Landcom to scope this work out.
- The Federation will continue discussions with its members on how it can support them to explore opportunities. This will include a focus on how Aboriginal organisations can identify ways to apply aspects of this concept to Aboriginal land.
Everybody’s Home hits the ground running
With recent census figures revealing an alarming increase in the number of people experiencing homelessness, there was an appetite to shift the conversation to solutions at the launch of the Everybody’s Home campaign at the National Press Club in Canberra on 20 March. The audience included representatives from supporting organisations as well as journalists, union and private sector representatives and many people who are living at the coalface of Australia’s broken housing system.
Professor Julian Disney and Kate Colvin, the spokesperson for the Everybody’s Home campaign, briefed the audience about the pressing need to boost the supply of affordable housing – the lack of which is a fundamental driver of homelessness. .
With thousands of individual supporters and over 100 organisations behind it, the Everybody’s Home campaign is off to a flying start.
Watch the video and join us by signing up on the campaign website or contact firstname.lastname@example.org for more information about how your organisation can support the push to ensure that everybody has a safe, secure and affordable place to call home.
Julain Disney’s full transcript is published here