Affordable Housing


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Initiative Title: Affordable Housing
Category: Residential Services Initiatives
Description:

Future of Manly Hospital Site – Affordable Housing

Hardly a day goes by when the Manly Daily doesn’t have some heart breaking story about local members of our community having to move elsewhere simply because they are no longer able to afford to continue to live where they were born, went to school and grew up.  Working families, caught in the grip of rising house prices and sawing rental payments, can no longer afford to live here, taking their much needed and valued skills elsewhere. The stress of it all can be felt right across our greater community, in all facets of business and public services.   Most are spending any where between 30- 70% of their household income on rent.    Many of these are our long term locals who we might call “Care Workers” and “Emergency Service Workers” – social workers, nurses, carers, young doctors, teachers, police, paramedics, students, etc.   All people we can ill-afford to loose from our community.    Many of these are the type people we are most likely to need to service our ailing health care services.  Our proposed Manly Community-driven Health Care Facility (McHCF) will need many such Care Workers!  

 

The most critical issue is the lack of supply; the supply of affordable housing.

 

What does this term “Affordable Housing” (primarily for Care Workers) mean?

  • Primarily rental accommodation able to be made available at below market prices because of the land and infrastructure being made available by NSW Health Infrastructure
  • Residential principles governed by our local Community which determine the makeup of its residents in terms of current and projected community priorities.  
  • Accommodation will be studio, one and two bedroom apartments, not large luxurious penthouses, which will always be cheaper than market prices to rent
  • They are attractive to local renters (primarily Care Workers) keen to stay in the area and be able to work here
  • Those wishing to purchase will mainly do so for the life-style and local proximity rather than for equity and investment purposes, so that their apartment will always remain “affordable”
  • They will not be council or government subsidised accommodation, nor for the likes of back packers, etc.   

Being able to provide a reasonable spectrum of affordable housing at our Future Manly Hospital site must surely be one of our main priorities.  “Build-to-Rent” is the term often ascribed to medium-density housing held by institutional owners for renting.  This type of housing is what people called “key worker housing” for people who are basically in that middle bracket who maybe can’t afford home ownership at the moment.  If the value of the site land can be taken out of the cost equation, then the notion of the renting and even (non equity-based) purchases, then this must surely add to the affordability proposition for residential accommodation.

 

Another concept known as “inclusionary zoning” is widely employed as an effective method to ensure affordability housing in central locations like our Manly Hospital site.  This approach has been proposed as part of our Greater Sydney Commission’s grand plan for Sydney city. Rezoning may be required to allow future renters/owners to pursue mixed-use development while establishing height limits in an area that includes other resident types, like aged care, disability housing, etc. and retail outlets for private health care services etc. 

Affordable Housing covers a broad spectrum of accommodation opportunities that are currently not available within the Manly Community.  The most basic 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 that they can no longer afford to purchase or rent appropriate accommodation in the Manly area primarily because they simply cannot afford to do so.  Enabling our younger generation to live and work in their local Manly area is a prime objective, especially with the rising house prices and rental accommodation making living locally an impossibility. 

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 network of contacts. For example outback Australia towns, are advertising liveable homes for $100, because of their decreasing populations. But they tend to be lacking in employment opportunities, with their prime driver being population growth.

 

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) 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 reside) are homes at 20% lower than average market prices for our social or key workers seeking rental accommodation at such affordable prices. The first “no-brainer” in 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 “banks for available bucks”, irrespective of a rental or purchase decision. To make the most of the space (home and land) flexibility of the occupants, innovation to cut costs (like solar panels), an open plan design with on-site parking (not necessarily a garage) is 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 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 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 the supply-side barriers. The housing sector contributes towards $40bn in tax revenue each year. Recent data shows that the removal of taxes would slash the cost of new housing in Sydney from $639,533 to $371,617, a whopping 58% reduction.

 

In the extreme are our homeless.  The key exit strategy for homelessness is support and employment.  The key drivers are rising house prices, addiction, domestic violence, government taxation and broken marriages. Homelessness is mostly circumstantial ie. 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 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/or 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 where you integrate conventional rental with homeless accommodation, around 90% of their onsite homeless have found employment and many moved on to other traditional rental properties.

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 – a low income earner. Given the dramatic falls in mortgage rates, the current (Australian) level of affordability, or lack of it, is no worse than in previous house price surges as is occurring now. But the rate of homelessness is worsening.  The rate of house price increases in the cities is out pacing the flat rate of take home salaries and their ability to save for the required deposit (up to 20%).  The main reason most do not move into regional areas where house prices are more affordable is because the opportunities for employment are not there.

 

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 homes purchasers. Making conventional house prices more expensive only ever leads to putting additional pressure on the (once) affordable sector. Expecting developer to cover the affordability gap is not going to work because the gaps 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).

The lack of affordable housing to rent is the primary reason for most people being homeless in Australia.  extra demand for accommodation across all 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 construction of 180 new units of crisis accommodation and 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 the unemployment queues. Homeless frustration inevitably leads to increased crime 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) choose to live in their car if they are fortunate enough to own one. But 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. 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 hospital to return to their homeless situation. A common survival fall-back for the homeless is to travel on trains every day as part of their cycle of survival. Again putting a strain on our public transport system. Where the homeless leave their meagre possessions and necessarily portable belongings also become an issue as it all accumulates across the public domain. Many store their possessions in shopping baskets or large plastic carry bags.

 

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 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 lower incomes – 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 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) to 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

     · Encourage greater development of new housing by make capital more accessible

     · Stop negative gearing for home investors

  • Force the banks to make deposits easier to obtain at lower rates

 

But our broken democratic process (warring political factions) is preventing much needed affordable housing legislation address 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 than ever to leave the world better 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 that for both singles and couples, the emphasis for new designs extends into the general needs for a range of affordable housing:-

  • 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.
  • 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 1 – 2 children as no such refuge exists anywhere across the Manly area

  

Contact Name: Darryl Dobe
Contact Email Address:
Start Date: 20-Jun-2017
End Date: 21-Dec-2018
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  1. Darryl Dobe   

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