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21 November 2018

We've Identified the Issues: What's the Next Step?

Across Victoria, despite a softening in the housing market thanks to the tightening in bank lending and other factors, there is a significant problem with the provision of housing affordability. This includes the ability of the development industry, Councils, and the State Government to respond to this challenge.

As discussed in our previous Affordability Series articles, there are multiple factors which contribute to housing prices, and an array of hurdles which must be jumped in seeking a suitable solution to housing unaffordability.

Whilst steps are being been taken by various bodies and interest groups, the piecemeal nature of solutions has resulted in an unnecessary level of complexity.

The (In)ability to Innovate in Victoria

This begs the question – without the need to immediately introduce drastic, mandatory measures which would cause outcry and losses to landholders, how can we reduce the complexity and increase affordability? Is there a bridging solution to enable progression within the affordable housing space without resulting in a cardiac event for the development industry?

Further, is it possible to “re-frame” the framework by combining a range of interests and development mechanisms to provide for guidance and support within the emerging affordable housing sphere?

At this stage, Victoria’s approach to affordability is somewhat embryonic in nature. Whilst this indicates that we are some ways behind other nations in terms of addressing the issue this also offers a unique opportunity to innovate within the development arena and learn from international experiences.

There is an opportunity to reflect upon the current context in which we lag behind other nations, and translate this into ’doing it better’ with a range of specific, potentially nationally applied models which can identify and respond to the needs and constraints of the Australian housing environment.

There’s No Such Thing as Original Thought

There are many alternative approaches to similar housing cost-related problems. It’s undoubtedly useful to assess overseas methodologies, and to reflect upon areas in which solutions have been effective. Although these examples provide information from which we can derive new ideas, the direct translation of concepts may be inappropriate with respect to local characteristics.

Specifically, overseas solutions include an array of differing cultural, religious, and economic environments which contribute to the viability of the affordability solutions. The complexity of simply adopting an overseas solution is further enhanced by the policy framework enacting the housing provision (Government, private developers etc.), and other market drivers within those countries.

When assessing overseas models, it is also important to recognise other factors which impact upon viability, such as (inter alia): building standards, materials and labour costs, which are all influencers of financial viability.

In areas such as the United States and United Kingdom, affordable housing provisions are well-established, yet there are significant differences in the policy framework within which planners, developers, and architects must operate; therefore, there is no ’one size fits all’ approach.

Indeed, many of the countries cited as examples are currently in their second or third “cycle” of solutions; adapting approaches as economic markets evolve, and as new means of management and provision are discovered.

Similarly, there exists a range of affordable housing advice boards/committees around the globe, comprising local council committees, think-tanks, and interest groups, to name a few. Advisory councils already exist in Australia, namely in New South Wales, yet it is clear that this local provision cannot sufficiently influence the national agenda, nor relate to those of other states.

Dreamers and Pessimists

To achieve a body which can provide this level of influence, we need to combine the opinions of those who are approaching the issue from a variety of professional fields, from academics to economists, to provide a comprehensive solution which addresses the heart of the issues rather than a band-aid or temporary fix.

We propose that there needs to be an independent body which can lead, and provide the necessary influence, knowledge, and (most importantly) the vision to develop housing solutions. 

This body would include a cross-section of industry members; State Government officers, Local Government officers, developers, architects, housing officials, and economists. It would also be important to achieve a balance of vision and creativity – of ‘dreamers and pessimists’ – to ensure that the group can facilitate innovation rather than continuous replication.

Once established, we can explore where such a committee could lead the affordability discussion, and what could be offered to influence progress in the housing sphere. In very general terms, any such committee could develop processes which could:

  • Create a knowledge-bank upon which the development industry can rely for consistent, and accurate advice.
  • Provide for a one-stop-shop in terms of leading initiatives, utilising knowledge sharing ideologies, and to develop initiatives to inform the wider public and improve engagement.
  • Actively influence zone/policy development as a specialist advisory body, and assist councils and authorities in appropriately developing and apply new policies.
  • Prepare a framework to secure contributions from developers where there is no physical affordable housing provided and then provide this housing elsewhere in the locality (in a similar manner to current infrastructure contributions).
  • Work within the wider economic environment to secure contributions from investors/business where they are developing in areas which will generate employment, to balance affordable housing and key-worker needs.

 Ultimately, a key component will be the transparency of such a committee and the mandate to implement its recommendations. Engagement at all levels is the only way in which a truly responsive and representative committee can be realised.

How Would this Differ from Other Advisory Groups?

Key to success is the diversity of representation, so as to increase the scope for development of ideas. By positioning potentially competing viewpoints alongside each other to develop outcomes, greater consideration of a range of interests can be achieved, to influence a range of solutions.  

A group with a wide range of viewpoints could also assist in managing contributions, in terms of:

  • Providing subsidies for Councils to develop their own affordable housing provision.
  • Providing subsidies for developers to offset the financial cost of providing affordable units.
  • Providing grants (in collaboration with Public Transport Victoria (PTV) or similar) which can assist in reducing the cost of living, where not possible to impact the physical cost of housing.
  • Providing funding for research to influence methodology, and to develop housing typologies more palatable to the development industry.

A committee of interested parties would enable those with “skin in the game” to influence the management and physical make-up of affordable housing, and be respectful of their key role alongside public authorities to secure an appropriate affordability outcome.

Helping the Resident – Sharing the Knowledge

Reflecting the intent of the Committee, an information point could be established where people can easily review, assess, and understand the options available to them as a consumer/interested party, particularly those seeking to access more affordable housing.

The ability to educate and to highlight the viable options available to those experiencing housing stress is key.

As part of a suite of solutions to help address housing issues, a primary responsibility should be enabling interested parties/those in housing stress to easily access advice and solutions, be it cohabiting, grants, support, housing associations, first home mortgage specialists etc.

By combining information in a centralised, readily accessible library (such as an affordable housing website) it would improve accessibility to existing underutilised initiatives such as grants, first-time buyer contributions/discounts to consistent advice, support networks, and to service providers.

Helping the Developer - Also Sharing the Knowledge

This suite of solutions can also be employed to include providing information to developers who may be reluctant to involve themselves in the affordability environment, because of inaccurate perceptions, or a basic lack of understanding. 

For example, a simple information resource could inform development processes with regard to affordability, and provide detailed input in a logical and accessible manner to indicate options available to the development industry, and highlight viability. See Figure.1: Indicative Information Resource/Directory for Developers.

By adopting two “tranches” of information provision (one for those seeking affordable housing, and one for those providing), this could become a valuable resource to industry, highlighting where benefits such as uplift can mitigate affordable provision, advising on methodology to maximise uplift, or simply providing information on differing affordability solutions.

What Does it all Mean?

It’s no surprise that there needs to be a suite of solutions to approach the issue from all sides, working towards the central goal of creating a more affordable Australia, and a built-form outcome that developers can live with, which responds to housing needs.

The ultimate goal is to give all interested parties increased incentive and skin in the game, as they are the people in a position to explore how housing can be achieved in the most cost-efficient manner, as a result of having the appropriate “local” understanding to provide appropriate, suitably tailored responses.

Author: James D'Arcy, Senior Planner

 

HOUSING AFFORDABILITY GLOSSARY

There are a number of terms used throughout our Housing Affordability series that have multiple interpretations. For the purposes of clarification, we've put together a glossary of terms as we've used them.

 

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