08 May A View on Social Housing Projects
A lot has been made about the recent property down turn we are witnessing across the eastern seaboard. Commentators from far and wide are hailing it as an immense correction, one unseen in decades. Although I do not subscribe to the belief that we are in a downward spiral to oblivion, it is obvious across the board that we are seeing a adjustment to the median and require solid planning and foresight to weather this small trough. Recently, the Australian Financial Review published a number of statistics that taken unilaterally, could cause some alarm.
The current down swing has left close to 450,000 buyers in Sydney and Melbourne with homes worth less than what they paid for, with this having a direct consequence on the future supply pipeline’s in these two cities. Additionally, over the last 12 months, new home approvals fell to their lowest figures since October 2014, while Melbourne’s middle-ring suburbs have suffered a 27% decline in new dwelling approvals during the same period. The article in question was seeking to highlight the large increases in challenges facing our industry, however when I stumbled across another article emphasising a dissimilar yet intrinsically linked challenge, my mind went racing.
The Australian Housing and Urban Research Institute (AHURI) at the start of this year released a report titled ‘Social Housing as Infrastructure: An Investment Pathway’. In this document, the authors emphasise the inadequate investment in social housing Australia has witnessed over the last 25 years, with current projects underscoring a shortfall of roughly 433,000 dwellings. At current rates, social housing development cannot keep pace with the current backlog, not to mention the rising needs as our population exponentially grows! The 2016 census stated we have around 116,000 homeless in Australia, with some expected not to live alone, the AHURI estimates this requires around 47,000 extra dwellings on today’s current stock levels.
All of this is not to say we somehow convert the excess stock flooding our eastern markets at the moment, these will be needed with our population growth. But it does raise an interesting opportunity. As our industry is facing challenges with selling dwellings in a tightening market, and approvals plummeting across Melbourne and Sydney, is there not a prospect to reconcile this with the dramatic undersupply of social housing we seem to face? Currently, Australia’s public housing output of total house building is 14%, compared to between 20-30% in developed countries like the UK, Finland, France and Austria.
There seems to be an enormous opportunity here for those developers interested, government officials needing results, and most importantly the individuals and families who need a house over their heads. Much has been discussed about build-to-rent schemes overseas, and the federal government has raised a few policy options in preceding years budgets, however a fresh look at this may be required. If regulators, policy makers, developers, and financiers could somehow get together to create the right incentives, I truly believe we could harness the private sector to build long-term sustainable social housing affordable for those in most need. It is in these moments, when we come together to solve issues of great importance, that we can achieve real results.