Affordable Housing

Affordable Housing covers a broad spectrum of accommodation opportunities that are currently not available within the Manly Community.  The most basic and extreme examples of “unaffordability” is our homeless.   Whereas the more fundamental form of our “unaffordability” gap pertains to our young who probably grew up within the Manly Community and, through no fault of their own find, find they can no longer afford to purchase or rent appropriate accommodation in the Manly area primarily because they simply cannot afford to do so.

The key drivers of homelessness are unemployment, rising house prices, addiction, domestic violence, government taxation and broken marriages.  Homelessness is mostly circumstantial, not necessarily brought about directly by the people and families involved. Even a person who is currently struggling to pay the rent and wants a home of their own, could be regarded on the extremes of homelessness. People can suddenly finding themselves subjected to the previously mentioned driver situations often through no fault of their own. These are personal situations which push them onto the bottom rung of the social ladder, totally unprepared for what is to follow.  There is no lower social state for an otherwise healthy person than to find yourself (and potentially your family) homeless – exposed to the elements, insecurity, violence, robbery, molestation and humiliation. The SA  Government’s Youth 110 residence in Adelaide stands as testimony to how through the effective integration of conventional renters with homeless accommodation, around 90% of the onsite homeless have found employment and many moved on to other traditional rental properties within 2 years.



What does the term “affordable housing” mean?  For economists “affordability” is a measure that combines house prices, mortgage costs and household income.   At the low-end of the affordable market is rental accommodation.   At the upper end is property/home ownership for low income earners.  People at the upper end have the choice of either renting or trying to get a mortgage towards finding a suitable home within the bounds of what a bank is prepared to loan them.  Both choices are predicated by some requirement to sustain monthly/weekly payments, which often turn out to be very similar in monetary terms (rental payments or home loan repayments).  It’s all determined by who has the income capacity to save for a deposit, namely, a low income earner.  

It’s all about the supply of affordable housing.  Any person spending more than 30% of their income on their housing, be it rent or repayment of a mortgage loan, their home is deemed to be “unaffordable” for them.   Currently in NSW many are paying up to 50% of their income on their home.  Affordability rent in NSW is at an all-time low.  Stable, safe and affordable housing is sought be all.  But the housing stress being experienced by many on low and fixed incomes is giving rise to mental health issues, like depression and anxiety.  The rate of renters defaulting on their lease agreements and the number of our homelessness are worsening.  Overall the dramatic falls in mortgage interest rates (all time low), the current (Australian) level of affordability, or lack of it, for home purchasers is probably no worse than in previous house price surges.  But the rate of house price increases in the eastern cities is out pacing the flat rate of take home salaries and for FHBs their ability to save for the required home deposit (up to 20%) is making home ownership an impossibility.  The main reason most do not move into regional areas or cities like Perth where house prices are more affordable is because the opportunities for employment are not there.

For those who have no/little savings, the only viable option is rental accommodation.   For those with some savings and a desire to purchase their own home, most are forced to seek accommodation in a location within their financial capacity and away from their traditional comfort zones of family, friends and contact networks.   For example outback Australian towns, are advertising liveable homes for $100, because of their decreasing and aging population. But they lack employment opportunities, their prime driver for population growth.  Their advertisements often attract new immigrants, used to living in rural communities overseas, keen to replicate their agricultural skills and created their own job opportunities – just what is needed in a struggling outback community.  

The two categories of home “affordability” in our major cities can be described thus:-

  • Affordability with a capital “A” – is social or key worker accommodation (nurses, teachers, ambulance drivers, fire fighters, clerical staff, students, tradies) for those who cannot “A”fford market rents or market prices. This sector is by far the largest seeking Affordable housing, who struggle to have the holding bond moneys and the regular weekly rental payments.
  • “a”ffordable housing with a small “a” is for the low-moderate income earners looking to purchase or rent accommodation in a particular location that is a well-designed small apartment, townhouse or terrace house on a small lot typically provided by some housing developers.  They typically cannot afford either the deposit or the mortgage repayments in a rising price market with excess demand (despite interest rates being at an all-time low).


What is deemed to be Affordable Housing in the cities (where the bulk of the homeless also reside) are homes at 20% lower than average market prices for our social and key workers seeking rental accommodation at an affordable price.   The first “no-brainer” is that there needs to be an increased supply of affordable housing as demand far outstrips viable supply.  The resultant trend is away from larger homes and blocks to smaller homes close to amenities (such as shops, parks, transport, schools and grandparents, etc.).    Good home design is clearly another determining factor for getting the best “bangs for available bucks”, irrespective of a rental or purchase decision.  To make the most of the space (home and land) flexibility is key.  Flexibility in occupants’ expectations, innovation to cut costs (like solar panels), an open plan design with on-site parking (not necessarily a garage) are all sought. Today homes specifically designed for low energy consumption attract government capital (from the Federal CEFC – 7 star NatHERS).   This assists in building more affordable better homes but even this capital injection is limited.    As mentioned earlier, what’s required is a product design priced well below the going rates in a particular area (like Manly), a smaller home supported by viable financial models for rental and/or purchase (even for investors seeking to rent at affordable prices) such as:-

  1. Lowest cost trailer home with solar electricity and tap water on site – to accommodate a single or couple in one bedroom ($65,000 purchase or under $100 rental/week)
  2. Lowest cost home and land – to accommodate a single or couple in one bedroom ($375,000 purchase or $370 rental/week)
  3. Two bedroom home for a couple and 2 children ($475,000 purchase or $475 rental/week)
  4. Three bedroom home for a couple with 3+ children ($575,000 purchase or $575 rental/week)


To provide this style of affordable housing, a shift away from the traditional developer-pays approach is required.  New home buyers in NSW currently pay 42% ($250,000) of the cost to the government in the form of taxes, levies and charges.  The average time to save their minimum deposit is 5 years on an average $600,000 home.   This continuance is non-viable, if we are to ever solve our housing affordability issue. The new housing sector bears a large, inefficient and inequitable tax burden, which inevitably fall on the home buyers.  It’s the second largest tax contributor after the GST.  Reducing this burden (in part or totally) could be achieved by removing stamp duty, compliance costs, ad hoc taxes, fees, charges and many of the supply-side barriers.  The housing sector contributes towards $40bn in tax revenue each year. Recent data shows that the removal of such taxes would slash the cost of new housing in Sydney from $639,533 to $371,617, a whopping 58% reduction.  


Clearly, Government has a major role to play in making homes in Australia more affordable. It is impossible to make 10% of homes affordable (as suggested in the above list) by requiring the developer to carry this reduction; for these reductions will merely be passed on to the remaining 90% of conventional home’s purchasers.  Making conventional house prices more expensive only ever leads to putting additional pressure on the (once) affordable sector.  Expecting developers to cover the affordability gap is not going to work because the gap is eventually passed onto the 200,000, in the current boom, who are waiting to buy new homes.


Social affordable housing has to be a vital part of our current housing solution.  Low-income individuals and families need quality accommodation but the government and the local community need to work together effectively to achieve this.  The coming available Manly Hospital site is an excellent opportunity for government, developers and our local community to work together in developing appropriate housing designs, financial models and private/public arrangements to facilitate this style of social housing (for purchase and/or rental or refuge for our homeless).


Being homeless becomes both a physical situation and a state of mind.  Being homeless can arise from a life of poverty.  Or it can be as a result of having made some poor decisions in life which, for one reason or another, have not worked out as anticipated.  Based upon my experiences, very few homeless choose to remain homeless.  They all seek a better social state, for being homeless robs them of the opportunity to exit their current state by making employment almost impossible – their prime exit strategy from homelessness.  Even those very rare examples where a homeless person chooses to remain so, their decision usually ties back to some life situation which resulted in them eventually becoming accepting of their inevitable state of homelessness.  Being forced to adopt and adapt to homelessness is a challenge in itself.  It becomes a relatively stable and repetitive daily cycle of survival. Some addicts (drug/alcohol) who feel they need every cent to support their addiction habit, will trade-off being homeless for being able to afford and continue their habit.  Many use the state transport system (mainly trains) as a place of shelter and where to sleep, away from the elements and violent attacks.

But in the main, most of the homeless I have dealt with over the years fit a broad spectrum of situations called – living on the street, couch surfing, rough sleeping, being evicted (for non-payment of rent), lacking in the necessary funds to afford  regular accommodation, etc.  There are examples in NSW where an eligible homeless male can be on the waiting list for public housing for over 15 years before a permanent home is made available.   Bare waiting 15 years, the only exit strategy for the homeless is the will and persistence to be housed and to gain access to sufficient funds to be able to afford some form of permanent rental accommodation, albeit welfare funded.  It is far more difficult for a homeless person to find employment than someone already housed, hence the reason why so many are on the long term unemployment queue.

The lack of affordable housing to rent is the main cause for most people being homeless in Australia.  This additional demand for rental accommodation across our major cities has been identified as the reason the homeless rates around Australia are increased.  In Melbourne the rate of increase in rough sleepers is up 75% in the past 2 years.   Family violence is a major contributor, especially where domestic violence campaigns lead to the removal of women and children from their home situation without a matching increase in available housing and support.  Despite the Victorian government’s construction of 180 new units for crisis accommodation plus the availability of 130 new women’s refuges, there remains 250 rough sleepers in Melbourne CBD, up from 142 in 2014.  Figures in Sydney are just as bad – 28,000 people are homeless, 60,000 families are sitting on public housing waiting lists and it’s getting worse.  The home affordability issue needs to be urgently addressed as refuge and crisis centres are only ever short-term measures and most are constantly full.  Unless appropriate housing is found for these people, they inevitably join the “rough sleeper” category without any permanent accommodation and little prospect for employment.   Homeless frustration inevitably leads to increased crime, violence and house brake-ins. The streets are filling with more homeless than ever before.   There are more women on the street than ever before.  Many women (for obvious reasons) who choose to live in their car (if they are fortunate enough to own one) are in an unsustainable situation due primarily to government regulatory provisions (banning such behaviour).  For where they choose to park becomes an issue.  Being homeless also adds to the burden placed upon our hospital system as the homeless become exposed to illness, violence, molestation and the extremes in weather conditions and the more likely they are to have related health problems.  The transition pathways from places such as hospitals, mental health units, prisons and rehabilitation units into the general public are simply not there and inevitably many simply leave such institutions to return to their homeless situation.  


As mentioned earlier, a common survival fall-back for the homeless is to travel on trains every day as part of their cycle of survival.   This in itself places a strain on our public transport system.   Where the homeless leave their meagre possessions and necessarily portable belongings also become both a health and social issue, especially as it accumulates across the public domain.  Many store their possessions in shopping baskets or large plastic carry bags to deal with their regular need to “move on”.


Governments around Australia are fighting a losing battle, for no matter what initiatives are put in place, demand continue to exceed the ability to create new appropriate housing options.  Government needs to take the lead in working with the development industry and the community in improving affordable housing supply, especially for those on our lower income brackets – both tenants and potential owners.   Possibly governments could act as mortgage insurers for lower income groups and affordable home developers by assisting in their purchases of specifically designated and approved affordable housing sites in an attempt to drive down low end accommodation rates and to free up even more affordable existing rental accommodation.  


An excellent model to consider is that underpinning the recent “Nightingale” project in Victoria, where affordable housing is made available at around 20% beneath market price on the condition that the property’s affordability is able to be carried onto the next purchaser.  In which case, the purchaser forgoes the opportunity to take advantage of the traditional growth in property equity, containing their sale to also being 20% below current market.  


Suggestions abound when it comes to enabling First Home Buyers (FHBs)  get into the housing market:-


  • Allow FHBs to gain access to their Superannuation
  • FHBs delay having children to allow more time for saving deposits
  • Move to a regional area where housing is more affordable
  • Reduce/eliminate Stamp duty for FHB and shift it to the more progressive Land Tax
  • Encourage greater development of new housing by make capital more accessible
  • Stop negative gearing for home investors and tighten investor regulations
  • Force the banks to make deposits easier to obtain at lower rates for lower income earners


But our broken democratic process (waring political factions) is stifling much needed affordable housing legislation that addresses regulatory issues and viable affordable housing strategies and policies from gaining any traction.


In the meantime, community empowerment through the use of technology innovations (like social media) is enabling individuals to become more powerful and determined to leave the world a better place than we found it. 


General Housing Trends


Affordability has also brought about a significant social shift in Australia cities:- “living alone”.   According to the ABS, one-person households in NSW are projected to rise from 630,000 in 2011 to 1.03 million by 2036.  Little wonder the demand for studio and one bedroom apartments suitable for singles is far outstripping supply.  At the older end of the spectrum, many of our widowed elderly are also living alone.  This dilemma fs now becoming the fastest type of accommodation sought by a large proportion of our population.


People are living longer, often outliving their partner and women’s equality are contributing to both male and female feeling they no longer have to be married and through modern communications no one is truly alone any more.   Our younger people feel they have better things to spend their money on and simply use their home as a place to sleep.


The latest BASIX figures suggests only 19% of new apartments are either studio or one bedroom, while 2 bedrooms account for 64% of new development and 17% for 3+ bedrooms. The older style one bedroom accommodation are in hot demand, especially by first home buyers.   With these trends in mind, low-medium income earners’ demand for affordable housing is beginning to influence the style of internal design for both the re-use of existing buildings and the construction of new accommodation.  


With aged care facilities likely to favour both singles and couples, the emphasis for new designs extends into the general need for a range of affordable housing:-


  • Homeless refuge accommodation is needed largely for men but also women requiring temporary accommodation until such time as some DOH subsidised rental accommodation becomes available.  The largest gap in Manly community is a refuge for parent(s) with child(ren) as no such refuge exists anywhere across the Manly area
  • Social or key worker accommodation (nurses, teachers, ambulance drivers, fire fighters, clerical staff) – those in our local community who cannot “A”fford market rents or market prices. This sector is by far the largest seeking affordable housing, who struggle to have the holding bond moneys and to meet regular weekly rental payments.
  • Low-moderate income earners accommodation – those seeking to purchase or rent in a particular location.  A home well-designed, like small medium density apartments or townhouses.  They are typically younger family members of the community who cannot afford either the deposit or the mortgage repayments in a location like Manly where the rising home price market coupled with excess demand (despite all time low interest rates) makes living in Manly an impossibility.


In summary the main social situations, as to why Affordable Housing has become such a critical issue for our low-moderate income earners living within our Manly Community, are:-

  1. First Home Buyers cannot acquire appropriate and affordable homes within their community because the house prices have been sky-rocketing at far greater rate than they are able to save for their deposit
  2. Renters are being driven out because of the rising cost of home prices and investors choosing to re-investing in their rental properties to either sell at the higher prices or to charge higher rents from more affluent renters
  • Our Youth are being forced out of our Manly Community in order to find affordable homes or rental accommodation where employment opportunities as interest rates rise and their mortgage buffer shrinks
  1. Our Social and Key workers, who have many of the skills desperately needed by our Community, are leaving our community to find jobs elsewhere and affordable accommodation, leaving skill shortages
  2. Our homeless, rough sleeps, couch surfer, etc. face a lack in available refuges for either single men and women nor single parents with children, who need to be on a waiting list for years before government housing is offered to them


The four main reasons affordable housing is lacking in our Community are:-

  1. a lack of supply of affordable housing and
  2. insufficient government land (suitable for housing) being made available for developers to construct homes that abide by the “affordable home” criteria
  • Governments add over 40% in taxes/duties/rates to the price of homes and many monitory regulations favour our medium to high income investor to the detriment of those (above) most in need
  1. More macro-prudential regulations placed upon banks to curb precarious lending and lending that favours the investor and overseas buyers over first home buyers

All these factors can be supported by our Future Manly Hospital site proposal.     


Our current Federal Government Treasurer (Scott Morrison) put it this way:-

Affordable Housing, particularly for renters, was absolutely necessary as this would reduce the country’s growing social welfare bill and get the welfare budget under control by getting:-


  • the young people into a job
  • homeless people into a home
  • low income people into a rented home they can afford and not be kicked out of home every six months or so
  • more affordable home made available for both renting and purchasing



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