Most of us assume that housing affordability is a city problem only. This article, from Andrew Beer, Dean of Research and Innovation at University of South Australia, says not. Who would think that lazy, low cost regional towns like Tweed Heads and Port Macquarie make the top ten unaffordable locations?
The newly released annual Demographia report on housing affordability has found – once again – that Australia has some of the least affordable housing markets in the world. Sydney was ranked as the second-least-affordable housing market behind Hong Kong. This news came just a day after incoming NSW Premier Gladys Berejiklian announced that improving housing affordability would be a priority for her government.
What was more surprising was that Australia had the dubious distinction of having four of the ten least-affordable housing markets covered by the survey. Melbourne was ranked the tenth-most-unaffordable housing market. Wingecarribee and Tweed Heads came in at seventh and eighth respectively.
This is sobering news given the report covers major world centres such as London and New York. And for many commentators this outcome came as a shock: how could regional Australia – which is perceived as less dynamic than the capital cities and with ample space for housing – be so unaffordable?
But the result has been signalled previously. In 2012, Port Macquarie on the New South Wales mid-north coast was named among the five least affordable housing markets globally. It was the most unaffordable housing market in Australia – beating even Sydney.
Indeed, housing researchers have been discussing the housing crisis outside our capitals since the early 1990s.
Cashed-up newcomers have an impact
What are the factors that have given rise to this outcome? And why are some regional communities so badly affected?
First, and perhaps most importantly, the housing affordability crisis in communities such as Wingecarribee and Tweed Heads reflects change in where and how Australians live. Wingecarribee in the southern highlands of NSW and Tweed Heads on the Queensland-NSW border are attractive destinations for retirement and leisure living.
BPS Newsletter – June 2020 – https://t.co/49Shxxtl6s pic.twitter.com/ix2yuR2NTI
— byronpropsearch (@byronpropsearch) June 1, 2020
Baby Boomers and cashed-up Gen Xers move to these communities for lifestyle reasons. In the process, they push up the price of housing. Often these wealthy city buyers are buying a property they will occupy for only two or three weeks in the year, but the impact on the housing market is long-term and cumulative. An influx of cashed-up newcomers to regional communities for lifestyle reasons is one factor pushing up property prices.
Second, the common perception that country Australia is less prosperous – and less frenetic – than our major cities has an element of truth. Average incomes are lower in country towns and along our coastal seaboard when compared with the cities. But this means households need to spend a higher percentage of their earnings to pay the rent or meet their mortgage. That task becomes more difficult when they have to compete with city residents looking for holiday homes or rental investments.
Challenges in building new housing is a third factor affecting affordability across the regions. While housing construction costs are slightly higher outside the capitals, the biggest barrier to the construction of affordable housing is land cost. Preservation comes at a price. In some communities, planning restrictions meant to protect valuable and productive agricultural land, in combination with measures placing buffers around water courses and laws protecting native vegetation, mean there is simply no land available for urban development. In numerous small towns across Australia it is near impossible to build a home.
The self-interest of existing home owners – the Not In My Back Yard (NIMBY) phenomenon – has contributed to the affordability crisis in many rural and fringe metropolitan communities. New arrivals from the cities as well as long-term residents have lobbied governments to impose restrictive conditions that preserve the quality of life of existing home owners. This resistance to change has locked out new entrants, especially if they are seeking affordable housing. In some parts of Australia it has meant those raised in a community are forced to move to less attractive places to find accommodation they can afford.
Finally, we need to acknowledge the sale of public housing by state governments has had an impact on city and regional housing markets alike. Many governments have shed both their employee and public housing stock in rural and regional communities. This has resulted in a reduced supply of affordable homes and increased competition in both rental and home-buying markets. In some townships the withdrawal of government investment and ownership has also led to a noticeable deterioration of dwellings. This is because low-income buyers have been unable to afford the maintenance of properties purchased at low prices.
The housing affordability crisis in regional Australia is not news to long-term observers of Australia’s housing markets. The challenge we face as a nation is that solving this problem of housing affordability is likely to be more difficult in our regional centres – because of their differing circumstances, their geographic spread, the large number of governments involved – than in the capitals.
However, solutions are needed if our country towns, coastal communities and regional cities are to remain vibrant and productive places.
Yes Minister, affordable housing. No problem!
Yet again, affordable housing is a hot topic. Anybody would think that something will be done soon but I doubt it. This would involve people actually making a decision that is going to upset people. We can’t have that!
Every politician involved in this issue is reading from the script of the popular BBC series “Yes Minister”: “If you want to show concern for an issue but plan to change nothing, here’s what you do: hold an inquiry, string it out as long as you can and, at the end of it, find an unpopular minority (In Oz, read Chinese) to blame for the problem – and then recommend holding another, more in-depth, inquiry.”
The new NSW Premier, Gladys Berejiklian, has learned the script well. She says solving the housing crisis is her number one issue but rules out reviewing stamp duty, which is a state government cash cow. The Federal Government has a leading role in this sit-com as well. It makes it a big issue but refuses to look at negative gearing. Even our local Byron Council is getting into the act. A well-orchestrated talkfest is being planned for this Friday Feb 10 at the Cavanbah Centre. Looks like our rates are being well utilized on flights and accommodation for well-paid speakers to take minor, walk-on roles in this mini-drama with a long season but no resolution.
The property industry, of which I am a part, but hopefully an honest member, continually prattle on that it is all just a matter of supply. Again, this is self-serving as the HIA (Housing Industry Association) wants to keep rolling out suburban subdivisions and high-rise apartments to keep its members happy. Since they have been pushing supply for years and prices keep going up, they should give it a rest, as it’s obviously not the magic bullet they claim.
So enough hand wringing and belly aching, what are some solutions. Lets go through a few options, but will involve making some decisions:
- The federal government allows negative gearing for new dwellings only, or only one or two investments properties. At least this will target what Negative Gearing is supposed to be doing, which is to encourage the private sector to provide affordable rental dwellings and not help build investor property portfolios
- The state government can eliminate or reduce stamp duty (and other revenue raising taxes) so buying property is not so expensive
- Adjust pension asset tests so downsizing baby boomers selling the family home will not be slugged so hard. This would free up a large number of suburban properties being under utilized
- Free up planning regulations so more in-fill development provides housing for singles or couples
- Local and regional councils could use caravan park/manufactured home estate planning to provide low cost options for retirees and singles
- Use incentives and building public transport to encourage growth in rural and regional centres
- Follow the Private Public Partnership model, which is a success and being looked at by Treasurer Scott Morrison during a recent UK visit. There, the Housing Finance Corporation is given low interest loans, backed by the government, to provide affordable rental property
Talking to a local: Paul Spooner on Affordable Housing
The recent election bought up a lot of chatter about affordable housing in the shire. BPS loves a complicated situation so what’s the fuss? Is affordable housing a lost dream or an idealistic fiction? Can it be attained and how so? The biggest advocate on this issue is re-elected counsellor Paul Spooner. BPS sat down with him to find out what’s what and what’s not.
Q. What exactly is affordable housing? After all what is affordable to one person is out of the question to another. Definition please:
A. The actual definition of affordable housing is 30% of income to pay for accommodation. That means 30% of your wage should be spent on your mortgage or the rent. But affordable housing, the term, has become loaded. I want to change it to “Essential Housing”. The problem is that most people think “affordable housing” means cheaper house prices but its not.
Here we have house prices and rents which most working people cannot afford. Key workers cannot afford to live here. We don’t have enough diversity of housing. One or two bedroom apartments are not available and so people have to go back to shared housing. But basically, affordable housing is supposed to be a reasonable proportion of your income.
Q. What’s the difference between affordable housing and social housing?
A. Social housing is available to those people on some form of benefit – government subsidised housing. Here is an interesting figure: The state NSW average for the supply of social housing is 5% of the housing stock. Here in Byron shire it is only 1.8%. That is just one indicator of how badly off we are here.
Q. The conservative councillors argued in the last council that we can best achieve affordable housing by releasing more land and satisfying the supply/demand pressure. What’s wrong with that?
A. That’s why I have bought this graph to show you. Look at this from the Sydney Morning Herald. It clearly shows that even when you have an increase supply of the housing stock the median house price keeps rising in Sydney.
Increasing supply does not decrease house prices. Cheap credit is the main reason for price increase. This is all over the place and not just our problem. New York, London, San Francisco and other places are having to look at supplying social housing again.
Q. Most people believe all the levers controlling the housing issue are in the hands of the state and federal parliaments. What exactly can BSC do?
A. This is the problem we have inherited. The government has stepped out of social or affordable housing. Now its time to step back in and its no coincidence that state and federal government are talking about it again. But I dispute that there is no room for local council to have an influence in this space.
If we had been more active with things like the West Byron development we could of had a good outcome and demanded 20% of that stock be affordable.
I personally am of the opinion that we have a lot of scope to allow more housing inside our built up areas. Do we want development in our green zones, our rural areas? Or do we want to allow more dwellings inside our towns and villages. I am firmly in the camp we can get more diversity and capacity in towns, especially if we drop some of the restrictions around car space requirements. We have planning regulations formulated in the 50s and this is a new century.
We can look at these things while formulating the new residential settlement strategy. One of the first things I intend to do in the new council is to hold a Housing Affordability Summit. That will be at the council meeting of October 6th so we will take it from there.
Q. Is one way of encouraging more affordable housing getting council partnering with developers and find an appetite for PPPs – Private, Public, Partnerships? Do you think the new council will have an appetite for that and what will it look like?
A. We want to do that. We are already progressing it with the land to the south of the Council Chambers in Mullumbimby with Northern Rivers Community Housing. They are the largest community-housing provider in this region. We had four lots there that were just going to be sold off but we offered it to them as long as they provide affordable housing in Mullumbimby. It’s still in early stages but I think it will happen.
Q. I have seen many waves of people leaving because the town has changed or is no longer affordable. Maybe this is just the law of natural attrition. Do you think we can really change that?
A. I don’t accept inequality and we are creating a community that is unequal. The dividing line is between those who own property and those who don’t. I don’t want to live in an unequal community. If you want to be green you have to limit inequality. If you can solve the housing problem here you can solve it anywhere.
Action on Affordable Housing
Mayor Simon Richardson has recognised that the affordable housing problem is an ongoing crisis in this shire. It is a nutty problem that is not easily remedied. The mayor has called for any interested parties to come forward and offer some solutions.
Over the years Byron Shire Council has sold off many of its assets to fund a budget shortfall. It is now generally acknowledged that this may have not been the wisest approach – considering the stellar performance of property prices over the recent years. In hindsight, we may have been better served retaining these assets and budgeting in other areas.
As well as calling on input from the wider community on affordable housing, council is developing a Private Public Partnership policy. Many capable and experienced people already reside in our region and council is hoping to engage with outside individuals and groups to assist in solving this problem. Other shire councils have had a PPP’s so the BSC is now inititating its own policy guidelines.
Council still has a number of land parcels still in its possession.
Also, some privately owned land parcels may have suitable zonings and DCP for some of these models which may be already allowed. Council now wishes to work with people submitting ideas and partnership models as well as landholders and professionals who would like to contribute to this issue. Council is also asking for input into its Draft Rural Settlement Strategy.
Social Habitat Housing (SHH) is a registered Not For Profit company that will be presenting a proposal. I, Michael Murray, am a director, as well as Malcolm Price, a local social planner and designer, and Michael Dowling, who has extensive experience in real estate finance and property management.
SHH would like to work with council in developing a “Tiny House Eco-village” on suitable valuable land. The idea is a hybrid using the existing “Manufactured Home, Caravan Park, Retirement Village” model. This model already has been in existence for many decades and we are suggesting it be available for urban leasehold. Using this model, Byron Council will be able to derive a reasonable income while retaining ownership of the original asset.
This is not a social housing model. Potential residents will still need to have sufficient funds to build a small home and pay a rental land lease. But the economics will be within the established affordable housing definition: 30-35% of a basic wage or pension.
More information is available on the website: https://shh.socialhabitat.com.au. Anyone interested in being involved or hearing more about this project, please go to the website and register your name and contact info. You will then be informed of a public meeting time to be held shortly where more information will be made available.
Brunswick Eco Village
Many of you are aware of the Brunswick Eco Village project on Saddle Road near Brunswick Heads. Kelvin Daly and his family have purchased a large 100-acre rural property and want to turn it into an affordable housing eco village with around 130 homes and including a market garden, school and healing centre. Obviously there is the usual amount of resistance and opposition to it but my reading of the situation is that it should be supported.
One thing they are doing that is absolutely right is having all the potential shareholders participate in a training program before taking up their share and residency. Anyone with any experience in MOs, CTs or intentional communities knows that is usually the interpersonal dynamics that cause these things to turn sour.
Anyone interested in participating in the next round of the “Village Development Program” should go to the website – brunsecovillage.com.au and look for the VDP page. It will be a week-long course in early February 18. It is for anyone looking at thinking about, improving, or planning life on an intentional community.
Image: To place the site, the two roundabouts in the attached map are the roundabouts at the Mullum/Bruns Pacific Highway exit.
The Bruns Eco Village (BEV) crew had two open information days during August. A few people asked me my opinion so thought it best to do a whole blog on it. Lots of people turned up, standing room only, so it is certainly creating a bit of interest. This shows there is a lot of demand for alternative ways to live and cohabit in this area. This one is a bit different and has its pros … and cons.
1. The Idea
BEV wants to rezone approx. 105 acres of rural land into “Mixed Use”. These uses will include: medium density residential, market gardens, schools, healing centre and more. The land is on Saddle Road just outside of Brunswick Heads. The existing zoning of this land under the old LEP 1D (Under Investigation), which means it had the potential to be rezoned at some time in the future.
The plan is to provide permanent housing for the selected residents and an affordable rent with a strong, viable community. It also wants investors to invest in the various business activities associated with the community. It is structured to eliminate any property speculation and keep the focus on community building. In line with that they want to structure it under CLT – Community Land Trust, which is more common OS than here in Oz.
2. The Deal
Anyone wanting to participate will have to participate in a Village Development Program, which will cost $1000. Once you have completed this (5 weekends during the year), you are eligible to become a resident if you so choose. It will be a selection process and you cannot be selected unless you have done the course, which will provide the ground rules for community living.
There are three kinds of participants:
- Residents who pay a refundable bond and then pay rent
- Resident/investors who pay the bond and the rent as well as being an investor in the BEV business venture
- Investors who invest in the business but are not a residents
The refundable bond amount is at least $60,000 bond and you still pay rent. For example, a 2-bedroom unit will cost a redeemable bond of $70,000 and you pay $384 per week in rent plus a smaller monthly amount for management and maintenance. If you leave or die you get the bond back but no interest on it.
3. The Team
The main dude is Kelvin Daly who owns the land. He has been an organic/biodynamic farmer and a history in alternative building practices and affordable house design. Mullum solicitor Wroth Wall is doing the legalese with planner Rob Doolan doing the DA. Shane Sylvanspring is an ex-planner and a member of the Global Eco Village Network and is running the Village Development Program. David Jacobson is an architect with considerable experience communal living and sustainable housing. It’s a very strong team with lots of experience in their chosen fields.
4. The Schedule
The Village Development Program will take a year. Applications to council will add another 18 months at least. Building will probably start sometime after that and be completed in stages. Therefore it is a long-term venture for anyone planning to be residents.
Conclusion
In Byron everyone has an opinion. There are also any number of people who will oppose anything. With this one the “Saddle Ridge Community Action Group” has popped up and they do make some fair points. Things like a difficult Geotech report, Aboriginal heritage, and soil toxicity. To me – not enough to knock it back. They have a Facebook page which you can see if interested, go FB and search for “Bruns Eco Village Sceptics”.
The main criticism I have is the developers are not doing any favours to the residents in terms of equity split. I understand and am supportive of people doing any venture, especially a risky one, for them to cover costs and make a profit. Even though I believe Mr Daly to have his heart in the right place – he is covering himself financially. They have valued the land and existing farmhouse at $8M, which they say is already heavily discounted. This would have to be the valuation after the rezoning and not at today’s prices. They have not factored in that the residents and investors are assisting in the rezoning.
The project’s main asset – not encouraging speculation – is also its main drawback – the residents walk away with no financial advantage at the end of the day. It will suit two types of people: those already with assets like a property and who would prefer to live here for community aspect, and people who have forgone any chance of future home ownership and happy to sub lease with no desire for future capital gain.
In the early 2000s, Byron Shire Council proposed an eco village rezoning plan across the shire in a number of locations. It was killed off by a strong NIMBY (Not In My Back Yard) backlash. I thought at that time that the proposal was good and was sad to see it is buried. I don’t think this one is perfect but if anywhere can do some more adventurous planning it should be here in Byron Shire. Otherwise we are left with more “brick and tile” developments like Tallowood Estate and West Byron. Bring it on, even if it’s not perfect
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