Thursday, 22 February, 2018
The HRF Centre’s First Home Buyer (FHB) affordability index was at its highest level (most unaffordable) in June 2017. At the Hunter economic breakfast on 16 February, we asked a panel of local experts to comment on housing affordability in Newcastle and the Hunter.
Dane Crawford is a member of the Property Council’s Hunter Future Directions committee and Director of Project Marketing at Colliers International. He said that the NSW Government’s investment in the light rail project had heralded a rapid rise in capital investment in private housing in Newcastle. It had attracted large companies not seen in the region before.
When questioned about what would make developing affordable housing more attractive to private investors, Mr Crawford said that the government should provide incentives.
“The cost of getting a plan through the system is ridiculous, and construction and holding costs are rising,” he said. “We need a clear incentive and a commercial outcome for everyone involved. Developers will not deliver affordable housing at a loss.”
Compass Housing’s Group General Manager Greg Budworth agreed. He noted that government incentives like the now defunct National Rental Affordability Schemes helped to ensure that developers can continue to be developers. He also said that other nations mandate for affordability and density in housing.
“In Singapore, the government mandates a whole range of things around housing development including density and distribution relating to socio-economic status or religion,” he said.
Planning was critical to solve Australia’s housing affordability crisis, Mr Budworth said. Compass Housing recently released Towards a National Housing Strategy.This report assembles evidence from academics, published academic research, policy documents, conversations with experts, and the many non-academic publications that address varying aspects of Australia's housing crisis. It makes a number of recommendations that build towards the creation of a national housing strategy.
Sharon Pope, Manager Integrated Planning said Lake Macquarie City Council was looking to improve the economics of developing housing in Lake Macquarie. They were reviewing planning controls to reduce some of the uncertainty faced by developers.
“We need to improve certainty for developers and decrease the time it takes to navigate the planning system,” Ms Pope said. “As well as streamlining our processes, however, we need to get the community on board when it comes to medium density housing proposals.”
Council had encountered community resistance to medium density housing development applications.
“The community do not support clearing bushland on the city margins for development,” Ms Pope said. “But we also get opposition to medium density housing development applications closer to town centres.”
When asked whether the conversation needs to shift from affordable housing to affordable living, the panellists agreed.
Ms Pope said that reducing household spending on energy and cars would enable them to better afford housing. Council’s long-term strategies consider how to encourage building where people are adjacent to employment opportunities or able to access effective public transport options.
Mr Crawford said Hunter people needed to shift their thinking about how we should live.
“We expect to be able to drive our cars to work and have a car parking spot,” he said. “In Europe, where they have high density housing in their cities, they don’t provide parking because they have developed good transport links.”
Mr Budworth agreed that Australia and the Hunter currently have an affordability crisis that goes beyond housing.
Asked whether changes to negative gearing and capital gains tax would help first home buyers, Mr Crawford thought that would be an ineffective band-aid solution.
“The population in increasing, we are not producing any more land, so the answer to solving affordability is bringing supply to the market,” he said. “One of the barriers to boosting supply is the time it takes to develop new projects.”
Greg Budworth said that although negative gearing and capital gains tax concessions needed to be reviewed, there is a case for retaining them. He also said negative gearing could be more targeted to new residential builds to spur supply.
“Negative gearing was promised to my generation to encourage us to try and create our own wealth, rather than relying upon the public purse in retirement,” he said. “It shouldn’t be ripped away from us.”
View presentations on housing affordability by Greg Budworth and HRF Centre’s Dr Anthea Bill.