Affordable housing scheme not yielding results

Affordable housing scheme not yielding results
Affordable housing scheme not yielding results

Despite a chronic shortage of affordable housing, Australian governments have been slow to experiment or support affordable housing provisions through the planning and development process.

It will be interesting to see whether next month's Federal Budget from Scott Morrison advances the complex issue, and then whether further initiatives come from the State Budget.

To date NSW's mostly voluntary planning incentives have failed to deliver worthwhile numbers of affordable homes.

A recent study calculated the main affordable housing scheme had yielded only 2,000 affordable Sydney rental dwellings since 2009.

This is the equivalent to about one per cent of the city’s total supply.

The scheme typically offers a density bonus to NSW developers with increased floorspace to build in return for affordable rental housing that must be rented to eligible households at 20 percent market discount for 10 years.
Some 19 of proposals were by private sector developers, while six were by Community Housing Providers (CHPs) or not-for-profit organisations.
The policy lead in this important area has been South Australia where around 17 per cent of total dwelling approvals within major new residential development areas have been dedicated affordable homes. 

The NSW approach has focused on affordable rental housing, while most dwellings secured through the South Australian model are offered for sale to eligible moderate income earners. 

We clearly need better policy to improve the outcome.

When compared to international practice, even the South Australian schemes is modest, according to a recent study by the Australian Housing and Urban Research Institute.

In England and Scotland, the general expectation is for 20 percent to 40 per cent of new housing developments to be affordable housing. 

Australia’s first pilot schemes emerged in the mid-1990s through the Federal Government’s Building Better Cities program which funded projects in Pyrmont and Ultimo.

The approach was extended to the major urban renewal precinct surrounding Green Square.

However, the NSW Government has been reluctant to allow local councils to impose mandatory requirements for affordable housing through the planning process.

At the Federal level, the primary focus has been seeking to address affordability through increasing overall land supply.

Indeed the the Council of Australian Governments (COAG) working party on housing supply and affordability expressed the view in 2012 that affordable inclusionary zoning would be counter-productive to overall supply efforts.

Since affordable housing requirements reduce the value of undeveloped land, incentives to developers will be needed should significant affordable housing outcomes are to be delivered.

It is also important governments, rather than seeking the highest and best use land value in sales of government land, adopt a new approach with the price reflecting the housing needs that the development seeks to address.

Given that affordable housing is a 30-year plus investment, it requires our governments that think shorter to embrace vision.

This article was first published in the Daily Telegraph.


Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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