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Climbing the walls: Seven ways to affordable housing

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Its proposed solution, however, to reform planning and zoning laws to build more houses, is unfortunately off the mark.

Medium- and high-density housing is already allowed in many metropolitan municipalities, and the endless expansion of Melbourne’s urban growth boundary and two-decade apartment building boom in Melbourne and Sydney have demonstrably not brought prices down. The argument for simply increasing supply is straight out of the housing and urban development industry playbook.

Developers set housing prices according to their costs and profit expectations. If there was actually enough housing built that the market was saturated and prices really did come down, the shrieks of over-supply would be deafening. As we have recently seen, even the slightest drop sends investors into a spin. Developers would stop construction until the market “recovered”.

State governments could regulate the industry to compel delivery of approved plans – and of course engage their own development agencies – but to be fair, achievement of political support for a sustained decrease in Australian property prices is a big call.

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Policies to restore sanity to the housing market will require a long sell, and a lot more than just building more housing. These policies will come eventually – they have to, if we are not to experience systemic social collapse.

In the meantime, and anyway, we need to develop new kinds of housing delivery and better tenant protections. Australia is unique in rich developed nations for its narrow range of housing types and poor treatment of tenants. Some 95 per cent of housing here is private, either owner/buyer-occupied or investment rental, and subject to market rates. Less than 5 per cent is public or community (counted together as “social”) housing for people on lowest incomes.

European and North American countries have many more housing types and management systems, especially for low, low-to-middle and moderate-income households. Some of these are perfectly transferable models.

  1. Sozial Wohnung – social dwellings – are rent-controlled apartments within private housing developments in Germany. The rent is limited to affordable levels (about 50 per cent of market rent) for usually 20 years, after which it reverts to the market, giving building owners incentive to properly maintain the properties. Australia could do this now with inclusionary zoning.
  2. City-owned housing associations, building for a range of income groups in each apartment block. In many cities, the combination of state, city and non-profit housing association housing comprises more than half the total housing stock. Canadian cities also have large city-owned housing associations, tending to provide specifically for people on low incomes.
  3. Co-housing initiatives are usually structured as tenants-in-common, where residents buy a share in the company rather than a property title. This means they can come in with a small share and change the amount of space they need according to their circumstances. This means being able to borrow without access to a title – European banks are accustomed to lending against other forms of security. Australia could enable alternative sources of finance.
  4. Baugruppe – German-developed building groups – are where residents pool their resources to build their own apartment buildings, again usually self-financed under more flexible lending systems. Australian governments could facilitate low-interest loans to designated self-build enterprises.
  5. Co-ops – co-operative rentals – are often financed by pension funds and other institutional investors interested in secure, long-term revenue streams. Australia has trillions of dollars tied up in super funds – it’s time to enable (even require) them to invest in low- to middle-income housing models.
  6. Community land trusts and Zelfbouw – self-builds in the Netherlands – are where plots of land, often council or state-owned, are sold or leased on a long-term basis to collectives of home-builders.
  7. Rent controls are common in many European and North American cities. While some property owners get bad press for throwing or bullying tenants out in order to renovate and re-let at uncontrolled prices, rent-controlled apartments are very common and give owners a sustained revenue stream.

British Columbia’s Minister for Housing, Selina Robinson, said earlier this year of Vancouver’s housing affordability crisis that “this is not a supply problem: it is a right supply problem”. By this she meant building specifically for low-income groups, for families, for different household sizes and age groups, and directly connecting supply to local need. Robinson recognises that leaving the solution to the market, with or without constraints, will never be sufficient.

Dr Kate Shaw is an urban geographer at the University of Melbourne.

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