Affordable housing to come at the cost of ... affordable housing?

Affordable housing to come at the cost of ... affordable housing?
Affordable housing to come at the cost of ... affordable housing?

Urban Taskforce Australia has reacted swiftly to the Australian Housing and Urban Research Institute's (AHURI) latest report on increasing affordable housing supply.

AHURI's report examines how planning mechanisms support affordable housing supply in both Australia and overseas locations. Headline points covered in the report which was released yesterday include:

  • 'Inclusionary planning' tools leverage significant quantities of affordable housing supply in many parts of the UK and US.
  • 12,866 affordable housing units (43% of total affordable housing output) were delivered through inclusionary planning requirements in England between 2015–16. About 12 per cent of annual housing completions in San Francisco are affordable dwellings produced through inclusionary zoning or impact fee requirements. Similar schemes apply to more than 500 cities across the United States.
  • In comparison to this international practice, inclusionary planning for affordable housing is not as widespread in Australia. However, South Australia delivered 5,485 affordable homes between 2005–15 through an inclusionary planning target applying to new residential areas. This amounts to around 17 per cent of total housing supply in that state.
  • In NSW, a planning incentive scheme introduced in 2009 has yielded around 2,000 affordable rental dwellings in Sydney, equivalent to about 1 per cent of the city’s total supply.
  • Across all jurisdictions examined, planning system tools can support affordable housing supply, but additional funding or subsidy is usually required to produce homes affordable to those on low and very low-incomes.
  • Planning system tools for affordable housing supply work best when part of a wider whole-of-government strategy to address the continuum of housing needs.

As a result, AHURI has leaned toward the expansion of inclusionary planning approaches across Australia where "affordable housing inclusion can be mandated when land is rezoned for residential development, when planning rules are varied for particular projects, or following significant infrastructure investment."

AHURI's suggested measure is intended to make affordable housing (especially apartments) more attainable for buyers across Australia, and particularly so in Sydney which is home to the nation's most expensive real estate.

For its part, Urban Taskforce Australia fired back promptly yesterday arguing that any move to advance inclusionary zoning measures would in fact drive prices up. Urban Taskforce CEO Chris Johnson released in-depth commentary on AHURI's paper.

With a particular focus on Sydney, excerpts from Chris Johnson's statement read as follows:

The AHURI report by a number of Australian academics is a useful exploration of trends and policies across the world but the Sydney market is different. 

Houses and apartments in Sydney are amongst the most expensive in the world when related to household income. Much of this high price is driven by restrictions on zoning new land for residential homes according to the Reserve Bank report on ‘the Effect of Zoning on Housing Prices’.

The zoning effect increased Sydney per house price by a whopping $489,000 and in Melbourne by $324,000. On top of all this there is a range of levies and taxes added to the cost of a dwelling by the NSW Government and the local council.

To add even more cost to new dwellings as proposed by AHURI will only drive overall housing costs upwards.

The AHURI preferred approach is to have inclusionary zoning only applied to apartments yet apartments have already become the affordable way to live for many Sydney households. The average apartment in Sydney is around 40% cheaper than the average house so this dwelling type has become the affordable way to live for many households.

AHURI however proposes an inclusionary zoning system that can only lead to forcing apartment costs up. We should be getting other building types like detached houses, commercial and retail developments to contribute to affordable housing rather than add an extra cost to the most affordable dwellings in the city.

The Urban Taskforce has developed an approach to providing up to 40,000 affordable homes across Sydney over a ten year period. We propose using the Affordable Rental Housing SEPP that gives an uplift in floor space if 20% of the apartments are affordable rentals for 10 years. 

Australian Housing and Urban Research Institute's report on supporting affordable housing supply can be seen in full here.

Lead image: City West Housing

Affordable Housing Policy Apartments


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