While Labor’s federal budget plan aims to remedy the shortfall in affordable homes by means of concerted government action, it also foresees a key role for private sector players when it comes to shoring up Australia’s housing supply.
The federal budget unveiled by Treasurer Dr Jim Chalmers last November outlined ambitious plans for increasing Australia’s housing supply, amidst worsening home affordability and a burgeoning rental crisis.
Chalmers set forth a national housing accord with the target of building one million new, well-situated homes during a five year period starting from 2024.
This target also includes 10,000 affordable dwellings, in addition to the 30,000 new social and affordable dwellings to be delivered through the Housing Australia Future Fund (HAFF).
“We want more Australians to know the security of decent housing and more Australians realising the aspiration of homeownership,” Chalmers stated, alongside housing minister Julie Collins.
The National Housing Accord gives a key role to the private sector for expanding the supply of affordable housing, and proposes collaboration between government, investors and members of the construction sector for the development of new units.
Planning process needs to accelerate
The ambitious targets set by the National Housing Accord mean that regulators will need to make amendments to planning and approval procedures, in order to fast-track development and ensure output stays on schedule.
Sue Holliday, Chair of the Hume Community Housing Association and Director General of Planning in NSW from 1997 to 2003, said that existing planning procedures will fail to keep pace with the ambitious demands set by the accord, which entail the creation of at least 2,000 new affordable homes per annum.
“The planning system is just not equipped at the moment to create that many social and affordable housing units each year,” Holliday said.
“For this reason changing the planning system, even temporarily, is absolutely essential from now until the end of next year, when the plan officially commences and money will start to come in.”
According to Holliday, it should be feasible for the government to make these changes by the end of 2024, given that similar measures were enacted during the global financial crisis (GFC).
“In NSW they successfully engaged in planning facilitation during the GFC, adjusting conventional planning systems to allow the construction of 20,000 units of social and affordable housing,” she said. “Government can really do this if it wishes.”
Marketplace lenders primed to play key financing role
In addition to accelerating the planning process, the Australian property sector also needs to step up financing for affordable home development in order to fulfil targets of the accord.
“Finding sites and working with the private sector to build partnerships for funding will be essential before the end of 2024,” Holliday said.
Non-bank financial institutions such as marketplace lenders could also play a critical role in channeling funds to the development of affordable housing as outlined by the accord.
This is especially the case given the conservatism of established financial institutions such as banks, and their failure to adequately serve the needs of small-scale developers who are still an underutilised source of new, affordable housing.
“Banks are by their very nature conservative lenders,” Holliday said. “ Oftentimes, they are not very happy about lending in rural areas for example, or to new types of projects that mark a break from precedent.“
“When we started to do redevelopment projects in Pyrmont, there was a huge market demand for one-bedroom units but in the early 90’s the banks refused to provide loans for anything that’s less than two bedrooms.
“This is where smaller and more innovative organisations in the non-bank lending sector can come in, to provide financing to projects that the banks refuse to support.”
Housing Accord still not a cure-all for shortfall in supply
Despite the ambitious target of creating at least 10,000 new affordable houses within a five year period, Holliday says the accord still fails to adequately address the problem of insufficient social and affordable housing in the Australian market.
“As generous as it is, the accord doesn’t even touch the seriousness of the affordable housing need in Australia,” Holliday said.
“Recent research from University of New South Wales indicates that almost 700,000 people are in need of social and affordable housing, but under current plans we’re talking about just 30,000 units over the next five years.
“We still have a long way to go before the whole housing market in Australia is working on a more equitable basis.”
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Sue Holliday is a highly experienced non-executive chair, director, urban planning consultant and academic with over two decades of board level experience across the public, private and not for profit sectors. Her executive roles include director general of planning NSW (1997-2003), the director of city strategy at DEGW Asia Pacific, and professor of planning practice at University of NSW. In a professional capacity she is a city planner and economist. Sue is currently chair of Hume Community Housing, and non-executive director at SGS Economics and Planning.
^The views and opinions expressed are those of the contributors and do not necessarily reflect the official policy or position of CrowdProperty Australia.