AFFORDABLE HOUSING FOR SYDNEY:

SUPPLY PLUS

Eamon WaterfordHead of Strategy & Advocacy, Committee for Sydney

I want to talk about:

• Affordable Housing vs. Housing Affordability

• The context that Australia (and Sydney) is in

• Supply is important

• Supply can’t solve this problem

• 5 things that can solve this problem

Everybody’s talking about affordable housing ...or housing affordability

Including us…

Housing affordability

• As much about demand as supply• Prices brought about by money supply as much as

housing demand: and a lack of alternatives for investment

• Perverse incentives for multiple ownership• Enabling higher leverage by existing home-owners and

investors• Squeezing out first time buyers• Supply increases have marginal impact: 2% of new supply

each year• No politician wants to reduce house price inflation

significantly

Affordable housing

• Asset class rather than just about cost• Includes sub market rental and shared equity• Inclusionary zoning: conditions of success and private sector

acceptance• Improving capacity of CHPs through Stock transfer, Long

leases, Estate renewal and Diversification• Boris Johnson and TODS: 22% affordable and social at the

heart of Westminster• Who for: Just for bottom quintile or also for key workers • Should we subsidise people or bricks? One leads to mixing,

one to division • Are mixed communities a virtue?

Many causes of high prices

• Tax incentives

– Negative Gearing

– Capital Gains Exemptions

Sydney is Globally expensive

Source: Demographia, 11th Annual International Housing Affordability Survey 2015

Sydney is Globally expensive

Source: Demographia, 11th Annual International Housing Affordability Survey 2015

Broader trend: Cities – where the world’s population and wealth going

2010 Metropolitan Population

Broader trend: Cities – where the world’s population and wealth going

2050 Metropolitan Population

Global wealth is shifting south and west

Where is the wealth going?

• Top 20 cities for commercial real estate momentum, 2015

Source: Jones Lang LeSalle

City economies are at the heart of the current national economic picture

• Sydney’s GDP growth:4%

Financial Services = Mining in WAGreater Sydney = 23% of National GDP

Sydney GDP per sector: leading to spatial pressures

Jobs moving east, houses moving west

GDP concentrated east of Parramatta population concentrated west

What does this mean for the population?

The health divide is following the economic divide

Across health indicators

At the edge: vulnerable communities are pushed out

Homes are not being built where people work

• Source: Grattan Institute

At the same time this has been going on…

Australians: addicted to sprawl

Supply is vital to fixing this problem

• Supply must keep up with population growth

• Supply must reflect an increasingly dense and urbanised city

• Supply must grow where people work

• NIMBYism must be combatted

Supply alone will never fix this problem

• How many is enough?

• What number will see prices stagnate?

• What number will see prices drop?

Australia is building more dwellings than the UK

Population Dwelling completions

Australia 2013/14 23.7 Million 156,000

United Kingdom 2013/14

64.6 Million 138,380

Australia vs. UK

0

50,000

100,000

150,000

200,000

250,000

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Australia United Kingdom

Caveat: Pre-2013/14 figures for Australia are dwelling starts,

not completions

5 ‘Game-Changers’

1. Maximise the use of public land

2. Government action to trigger private investment

3. Build the market

4. Commit to major renewal of social housing

5. Private development to enhance the affordable end of the market

30

Maximise the use of public land

• An affordable housing register

• Incentivise the release of land for affordable housing

• Partner with the private and not for profit sectors

• Take the lead from London on Transport Oriented Development

31

Government action to trigger private investment

• Options for leveraging private investment

– Seed funding for an investment fund

– A ‘Bond-wrapping’ agency

• A new investor class?

• Policy certainty comes free

32

Build the market

• Community Housing Providers – stepping up

• Property transfers from public housing

• Government leadership on Key Worker Housing

• Getting the roles and risks right

33

Commit to major renewal of social housing

• Existing resources are insufficient

• Social housing as the foundation for opportunities

34

Private development to enhance the affordable end of the market

• Inclusionary Zoning – it’s time to walk and talk

• Investment in the affordable end of the market

35

Current Government projects

• Communities Plus

• $1 Billion Social & Affordable Housing Fund

• Govt. wide Affordable Housing policy

• Residential Tenancy Act review

Extra points

Housing Affordability

• New entrants/new models required

• City management required to connect places with homes and no jobs with places with jobs and no homes

• Polycentric Sydney?

• Rent here to stay

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