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Housing affordability needs a vision that goes beyond the next election

By Russ Grayson - posted Monday, 20 October 2003


"We're asking around $430,000", said the real estate agent. Far too much for a shady, south-facing 1970s apartment that needs work, I thought. My friend, whom I was accompanying on her search for an apartment, commented that she had seen similar offerings around the $380,000 mark. We were at Collaroy on Sydney's northern beach strip, a middle-class area enmeshed in Australian beach culture. Hoping to make the move so she would be closer to her place of work, my friend was selling the southern suburbs family home she and her relatives have inherited.

The sale of homes on her street reveals how much the Sydney residential property market has blown out. Two years ago the late-1940s fibro house next door sold for $650,000. Just recently, a similar house two doors down, a house on the same-size block, sold for $850,000. That is a $200,000 rise in two years. Then, just six weeks ago, the larger block with three-bedroom house adjoining the park sold for $1.2 million.

Such prices are the stuff of Sydney's over-heated housing market, a market quickly becoming a political and, maybe, an electoral issue. The high prices are good news to those selling and moving out of town but not such good news to the growing number of first-home buyers that cannot afford a home in the metropolitan area. They are forced to towns within commuting distance of Sydney, such as those of the Illawarra region, where they increase demand and prices and spread Sydney's housing problems further afield.

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High housing prices contribute to yet another "haves/ have-nots" divide in Australian society - those who have and those who do not have the means to buy a home. This reality is recognised by all sides of politics and, like education and medical care, housing unaffordability is another sign of the approaching death of the Australian notion of fairness.

Economic and social factors limit affordability

A number of trends have come together to perpetuate a situation that some in the real estate industry say could continue for years. One of these is investment buying - the purchase of property for later resale by people who already own or who are buying a home.

Investment buying has sustained Sydney's apartment market although it now shows signs of weakening. The market has been boosted by the conversion of old industrial properties in the inner and middle-distance suburban ring to medium-density residential development.

Sydney, however, is running out of old industrial sites. Now developers are interested in buying the airspace over railway stations. St Leonards railway station, on the lower North Shore, has already been built over. Developers are now eyeing Hurstville and Kogarah Stations, both of which are already built over with modest, one-level shopping facilities but which would be rebuilt as multi-level apartment/ retail developments housing hundreds.

A more indirect contributor to the unaffordability of housing is the casualisation of the workforce, almost one-third of which now puts in less than 40 hours a week. Although casual hours suit some workers, it is a fact that many casual workers would prefer to go fulltime and have greater employment security. Casual work reduces security of employment to a day-to-day timeline. Any business person knows that without a degree of certainty regarding cash flow, investment in longer-term plans is risky. It is exactly the same with casual workers who would like to enter the housing market.

There is a further factor influencing Sydney's high housing costs and it is unlikely to be remedied without rancour. It is overseas immigration and it swells Sydney's population by around 50,000 a year.

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According to new research by Monash University's Centre for Population and Urban Research, overseas immigrants are responsible for up to 76 per cent of the demand for housing in the city. In comparison, immigration in Melbourne's accounts for 61 per cent and in Brisbane a lowly 31 per cent. As NSW Premier Bob Carr has pointed out, immigration creates strain on services such as water, sewage and public transport at the same time that it increases demand for residential property. The research identified immigration as a major factor in the city's housing boom.

A reduction in immigrant numbers would make housing more affordable but it is too much of a hot potato with a federal election looming. No party wants to risk alienating the ethnic lobbies which, sooner rather than later, could resort to allegations of racism in an attempt to discredit those proposing changes to immigration policy.

Stabbing at solutions

State and federal government have touted various financial fixes to housing affordability. Joint ownership with banks, the first-home buyers grant, a federal proposal that the NSW government reduce its high rate of stamp duty (according to commentators this boosts home prices by $15,000), higher interest rates, even an inquiry into housing affordability.

As usual with issues requiring the application of intelligence and creative thinking, housing affordability has become a game of political ping pong as state and federal governments seek to point-score off each other rather than apply themselves. Such pedestrian politics is meaningless quibble to people wanting to buy their first home in the city. It moves the argument absolutely nowhere except into a quagmire of political buck-passing and bun-fighting.

That leaves the economics of home ownership as the most likely point of intervention for government. This year's budget surplus could enable Canberra to raise the value of the first-home buyers grant. The impending election would make the move a vote-getter for the Coalition or for the Opposition, had they a more promising leadership. We may yet see movement on this as the election approaches but potential first-home owners should not hold their breath in anticipation.

Then there is the "out of the box" thinking that takes a more innovative but longer-term approach to reducing the cost of housing.

An innovative scheme that could tackle the more extreme situation of homelessness rather than the affordability of home ownership is presently underway under the control of UNSW architect and academic, Col James. He has gained the support of property owners and South Sydney Council to set up the city's first legal squatter's settlement. The prototype in Sydney's Green Square will accommodate only students but it holds potential to address homelessness through a do-it-yourself approach. Unlike the popular image of unruly and scungy squatter households, James' model is highly organised and makes use of buildings only until they are ready for redevelopment.

Of more direct value to home affordability is co-housing. Developed in Scandinavia more than 20 years ago and since spread to the US, the model lends itself to affordable housing because it offers freehold title to a dwelling in a medium-density development and to shared ownership to communal facilities. Think of it as strata title applied to a horizontal residential development rather than a vertical apartment block. Shared facilities might include, as they do elsewhere, launderette, child-minding facilities, dining and open space. The legislation to make co-housing a reality in Sydney already exists in the form of the Community Titles Act. With its shared open space, co-housing developments could also address the need for creating a sense of community, the "village green" that Sydney-based social analyst, Hugh Mackay, has identified in his research.

At present, there are three co-housing developments in Australia including one each in Perth and Melbourne and, the first, Cascade Co-Housing in Hobart. Despite promise, the early-1990s proposal for a co-housing project in Sydney, the Inner Pod Co-housing project of geography PhD, Nigel Shepherd, did not eventuate.

Making a lasting dent in Sydney's home-affordability crisis requires short-term financial solutions as well as longer-term approaches that promote choice through new models of residential development. The biggest impediment here is not identifying those new models - they already exist - but getting Canberra and Macquarie Street to think beyond the next election.

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Article edited by John Carrigan.
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About the Author

Russ Grayson has a background in journalism and in aid work in the South Pacific. He has been editor of an environmental industry journal, a freelance writer and photographer for magazines and a writer and editor of training manuals for field staff involved in aid and development work with villagers in the Solomon Islands.

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