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SYDNEY'S HOUSING AFFORDABILITY PROBLEM Featured
28 March 2017 Posted by 

SYDNEY'S HOUSING AFFORDABILITY PROBLEM

The "missing middle" is the SOLUTION
By Amy Brown 
SYDNEY is in the grip of a housing affordability crisis.
 
Not only does Australia’s biggest city possess some of the world’s most expensive real estate, it’s also going to need 725,000 new homes to cope with projected population growth over the next two decades.
 
While the relentless rise in property values has been good news for some, it’s also created a range of unintended consequences for the city as a whole. 
 
The failure of our housing market is widening the divide between older homeowners and a younger generation. 
 
They are either locked out of home ownership or pushed to the fringes of cities to seek more affordable rent, leaving them far from jobs and good transport. 
 
Fiscal incentives have also benefitted the ‘haves’ instead of the ‘have nots’, leading to a constrained supply of homes for those on low to middle incomes.
 
As a result, Sydney faces not only a significant number of individuals and families in housing stress, but also rising homelessness and significant additions to the already 187,000 Australian households on the social housing waitlist. 
 
To make matters worse, our rental system is one of the world’s most unstable and unaffordable. This makes it difficult for low to moderate income earners to be housed in locations with high amenity of living and community benefit that are also near to jobs and services.
 
If we don’t act quickly on the problem of housing affordability, and rental affordability in particular, Sydney will face an exodus of our city shapers and key workers – nurses, police, firefighters, teachers and early childhood educators, social workers; the people who keep our city running – who can no longer afford to live near where they work.
 
But discussions around affordable rental housing are often fraught with divergent views about where to locate these dwellings, who should provide them, and what sort of building types are most appropriate. 
 
Much of the debate to date has focused on the supply of new residential apartment-style buildings, with incentives around floor space bonuses and planning agreements for variations to development standards. 
 
We believe the key to gaining traction on affordable rental housing is not just building more high-rise units, but rather by addressing the so-called ‘missing middle’ – housing options like more townhouses, terraces and manor houses, which are more energy efficient than detached housing and also offer more variety and flexibility for Sydney’s changing demographic.
 
Our Affordable Housing Initiative provides a solution to address both the missing middle and affordable rental housing through a simple, but potentially profound change to state planning regulations.
 
We propose an amendment to the SEPP Affordable Rental Housing 2009 (AHSEPP), so that multi- dwelling housing is permissible in the R2 Zone (where such housing is generally prohibited), provided that a proportion of the dwellings are designated as affordable rental housing.
 
This amendment would allow individuals, small developers and Community Housing Providers (CHPs) to participate in the provision of affordable rental housing by undertaking low-scale development (3-10 dwellings) on existing single residential lots. 
 
Development of this size and scale, appropriate to its surroundings, would provide an uplift in density without compromising the character of the area or placing a significant strain on surrounding infrastructure. 
 
The resultant uplift in affordable rental housing across Sydney would also ease commute times by allowing key workers to live closer to jobs and services, improving their quality of life as well delivering a direct boost to the economy: every 30 minutes that these workers can save on their commute to work would generate $815,000 in economic benefit , which adds up to $16 billion over a life time .
 
This initiative focuses on low-rise townhouse development of small scale, between three and ten dwellings per development, potentially on single lots. 
 
While development at this scale will not dramatically boost the supply of housing, it will provide a steady stream of new 
affordable rental housing units across the city. 
 
Depending on the outcome of other decisions facing Government, this may occur simultaneously with other initiatives geared at accelerating the supply of apartment buildings. 
 
By allowing for single lots to incorporate low-rise affordable rental housing, the possible groups participating in this initiative widen from what is currently a large-developer market. 
 
Small developers, CHPs and single lot owners may partake in the provision of affordable rental housing through townhouse development.
 
This initiative is not aimed at housing supply (per se) but enabling flexible housing choices via an increase of the 'missing middle'. It also seeks to increase access to (rather than ownerships of) housing via an incentive-based mechanism to ensure provision of affordable rental within these developments.
 
The Affordable Housing Initiative is a practical and elegant part-solution to a complex and worsening problem. Isn’t it time we act to make sure our city continues to be a place that people of all ages and from all walks of life can call home?
 
Amy Brown is Partner, Infrastructure and Urban Renewal at PwC.
 


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