Living on The Block and other housing fantasies

Living on The Block and other housing fantasies
Jacob RobinsonDecember 7, 2020

It’s ironic that fantasy home shows are the latest genre in reality TV, at a time when affordable housing is the real fantasy for many. The format is strangely addictive – photogenic twenty somethings compete for renovation profit on The Block; community hero gets surprise home makeover on Domestic Blitz; or charismatic real estate agents lead fussy house hunters around town on Location Location.

I’ve thought of a new show. Called Revolving Doors, it follows international students as they time share a bunk bed in a Sydney high rise sub-let; ageing parents wonder whether their thirty somethings will ever leave home; and a frantic family of five try to find an inner city rental.

We’ll hear real housing horror with a new Senate Estimates Committee inquiry into affordable housing due to report in June. The terms of reference span the roles of government and community housing providers, the effects of taxes and levies on home ownership and housing supply, and issues around sustainable design, innovative construction, and alternative funding mechanisms for affordable housing.

While the inquiry is welcome, cynicism has already set in. Economist Saul Eslake, former member of the axed National Housing Supply Council, has lodged a damning submission titled “50 years of housing failure”. He argues that tax benefits and grants for home ownership have inflated housing demand, while withdrawal of funding for public housing and infrastructure, have exacerbated supply pressures over time. This has meant housing preferences for established suburbs which have high accessibility to jobs and transport, but inherent supply constraints.

Consequently, numbers of new homes built has remained static over the past thirty years, rather than increasing in response to high housing prices. Nationwide, there is an estimated shortage of nearly 500,000 homes available and affordable for low and moderate income earners to rent or buy.

While around 51% of homes sold in Australia in 2003-04 were affordable to moderate income earners, this slipped to 34% in 2007–08 and 28% in 2011-12. Low income groups and those with complex needs – single parents, people with a disability, face particular housing stress and discrimination, while numbers of homeless have grown to over 100,000 people.

Still, some question the need for another government inquiry. The last Senate investigation on housing in 2008, generated over 100 submissions and comprehensive recommendations for taxation and planning system reform, affordable housing targets, adjustments to infrastructure funding, and wider efforts towards regional decentralisation.

What has happened since? Putting aside the major proposals around taxation reform, which continue to generate much talk and little action, there have been some successful policy experiments by all levels of government.

Just build it

Governments serious about housing supply in general and affordable housing in particular, know what to do. Nationally, the social housing initiative under the economic stimulus plan funded 19,700 new affordable homes between 2009-2012, sustaining construction activity during the GFC and providing a much needed boost to the sector.

The National Rental Affordability Scheme (NRAS) is another important supply initiative. With an initial budget commitment for 50,000 dwellings, the scheme subsidises new affordable housing construction, often within larger mixed tenure projects, through tax credits of A$10,000 per year over 10 years, provided the units are leased to eligible households at 20% below market rent. As market familiarity grows, the scheme has gained traction, supporting new collaborations between community and private sector housing providers.

Western Australia has committed to generating 20,000 affordable homes by 2020, partnering with industry and landholders to produce quality dwellings at a price point below A$300,000. For those low and moderate income earners needing finance or struggling to meet the “deposit gap”, its “Keystart” loan programs also allow purchasers to partner with the government in a shared equity scheme.

There is also a special program to deliver affordable homes for service workers in regional communities like the Pilbara, with 293 units about to be released in Port Hedland.

The ACT government supports affordable housing development through a number of products. A land rent scheme allows eligible buyers to build a house but pay only a percentage of land value, reducing the entry costs to home ownership. Design innovation and flexible planning for small lots is delivering affordable house and land packages for sale without additional subsidy.

With land in the ACT remaining in government ownership, the territory has committed to ambitious affordable housing targets. 20% of greenfield housing in the ACT must be affordable to low and moderate income earners, determined with reference to size and price thresholds, to a maximum of A$374,000 for homes larger than 105 square metres.

In South Australia, smart use of government land has also enabled affordable housing within well located areas. Rather than maximising revenue from real estate windfall, the state actively supports affordable housing delivery on its own land.

Combined with Planning Design concessions, and National Rental Affordability Scheme funds, affordable rental is being delivered in urban renewal areas and home purchase in greenfield areas. Eligible low and moderate income earners (up to A$95,000 per year for couples) can search for a home on the affordable property locator.

Faster, simpler, cheaper planning?

Of all the recommendations arising from the 2008 Senate Inquiry, planning system reform has probably received the greatest attention.

Spurred by claims that urban consolidation policies have created an artificial shortage of land, and inefficient and parochial local councils have blocked housing development, many of the states have embarked on exuberant programs of red tape reduction, competing for the title of fastest, simplest, and indeed, cheapest, planning system.

Common measures have included standardisation and often reduction of land use zones, codification of development types (meaning automatic approval), and “panelisation” (referring development applications to expert panels rather than local councils). More reforms are underway in Victoria, NSW, and Queensland, but it’s hard to see benefits for affordable housing.

Perhaps the exception are reforms designed specifically to support affordable housing supply. The NSW state policy for affordable rental housing (introduced in 2009) enables diverse housing types, and makes granny flats permissible on most blocks, adding much needed flexibility. It also permits additional density for projects including affordable rental housing. While aspects of the current scheme have been problematic, a clearer mechanism for including affordable housing in major developments is proposed in new draft planning legislation.

Supporting the community and affordable housing sector

Despite a reputation for NIMBYism, many local councils have been strong innovators and supporters of affordable housing. The Cities of Sydney, Brisbane, Adelaide, and Port Phillip in Melbourne have long dedicated significant parcels of council land to enable affordable and mixed housing developments and support local affordable housing providers. If anything, local government efforts to address affordable housing through their planning powers have been curtailed by state governments, often influenced by industry lobby groups.

More widely, growing a dedicated affordable housing sector is critical. With funding a central issue, proposals for leveraging new investment through affordable housing bonds, supported by a special purpose affordable housing finance corporation offer important models for the future.

A national housing plan?

The terms of reference for the Senate inquiry foreshadow a national housing plan. This would provide a basis for aligning housing and urban policy at national, state and local levels, and for extending and implementing the range of measures identified above.

But there is not a lot of evidence to suggest that governments are capable of a national housing plan to tackle affordable housing:

  • The politics don’t work – two thirds of the households who are home owners/purchasers want prices to go up;

  • The profitability of the four “too big to fail banks” depends on rising house prices to minimise risks to the banks

  • State governments are addicted to the stamp duties they receive from rising house prices; and

  • Powerful real estate lobby groups white ant the many sensible affordable housing policy initiatives.

Still, maybe they will surprise us. Public submissions to the inquiry close on March 24.

Nicole Gurran is associate professor at the University of Sydney. Nicole receives funding from the Australian Research Council and has received funding from the Australian Housing and Research Institute (AHURI).

Peter Phibbs is chair of urban planning and policy at the University of SydneyPeter receives funding from the Australian Housing and Urban Research Institute.

This article was originally published at The Conversation.

            

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