What’s really needed to ease Sydney’s growing pains

Look out over the Sydney skyline and you will see the construction boom of recent years. A legion of cranes building new developments, many of them residential, to meet the persistent demand for housing.

This has come with a backlash and debates about the impacts of overdevelopment. Recent polling found that around two thirds of NSW residents want development to be pushed to the fringes of the city, claiming that Sydney is “full”.

But Sydney’s population is growing, and fast. There is already a shortage of homes, particularly those that are affordable to low- and middle-income families.

To stop housing construction is not an option.

Instead, we need to shift the debate to what kind of development we want, and what kind of housing is needed by the people who make up our communities.

Development done well can deliver liveable suburbs that are vibrant, inclusive and incorporate the services and open spaces that residents need. Importantly, it can also deliver mixed communities where housing is available for people on diverse incomes from diverse backgrounds, not just high-end apartments for those fortunate enough to afford them.

With rents at an all-time high, the cost of housing is now crippling for many households. Over 500,000 low-income households are living in rental stress, meaning that they are spending more than 30% of their modest incomes on rent.

Even with the construction boom of recent years, the market hasn’t delivered housing that is truly affordable to households on low to moderate incomes, either to buy or to rent. As the number of dwellings being built has risen, so have their prices.

For rental housing to be truly affordable to low-income households there would need to be a substantial discount on market rents. The market will not supply this without the right incentives and settings.

We need government intervention that is deliberate, certain and long-sighted. There are a range of policy and planning tools that are available to both the Commonwealth and State government that could have a meaningful impact on the housing affordability crisis. But the approach that’s been taken until now has been limited and piecemeal, which is inadequate for the critical task at hand.

In New South Wales we have seen only very narrow use of ‘inclusionary zoning’, a planning tool that requires developers to include a certain number of affordable homes in new developments. It is an effective and proven way to stimulate supply that is widespread across the United States but only has fragmented and small-scale use in Australia.

Along with planning experts and economists, Mission Australia has advocated for a minimum target of 15% affordable dwellings in new developments on private land, and 30% on government land.

The 5%-10% target proposed by the Greater Sydney Commission, which provides planning advice to the state government, simply won’t be enough to have a significant effect on the housing crisis. The state government can act now to implement a stronger target across the state, to bring long-term benefits.

These changes could be phased in over a number of years, so that developers can factor in the cost of the affordable housing into the purchase of the land.

The affordable housing that is delivered through inclusionary zoning should be managed by not-for-profit community housing providers, to ensure it is allocated to those with the greatest need and managed in a way that improves outcomes for tenants and creates connected communities.

Planning laws should also ensure that, when rezoning or public infrastructure investment brings a windfall profit to current property owners, some of that gain is captured for broader community benefit. This funding could be channelled into affordable housing projects, to provide new dwellings or to bridge the gap between rents that are truly affordable to low income households and the costs of delivering and maintaining the properties.

As a community housing provider that has partnered with developers to deliver social and affordable housing, we understand that certainty is needed around government policy before the private sector can commit to affordable housing projects. Our planning laws must be modernised and set to encourage the private sector to plan and deliver mixed-community projects that include truly affordable housing. It also must be recognised that the State Governments will need to subsidise projects that deliver affordable housing in some instances.

The NSW Government Communities Plus program is an innovative approach to the delivery of social and affordable housing. It brings together the private sector with not-for-profits to redevelop government land and deliver mixed communities. Clear targets for social and affordable housing are identified for each project, and those dwellings are funded by the sale of private housing on the site. However this is a model that can only work in housing markets where the revenue from sales can cover costs and still allow for the profit margin required by developers. In other markets, other government intervention may be required.

Allowing the urban sprawl of our cities to grow while pushing the people in our communities with the least to the fringes is not the answer. This will simply amplify inequality, as households surviving on low incomes will have reduced access to employment opportunities and to the services that can support them, while increased travel costs will have a significant impact on people already struggling to make ends meet.

We need smart and sustainable development that houses people from all walks of life close to jobs, transport, education and services.

The link between the lack of affordable housing and homelessness is very clear and very real. Without a substantial injection of social and affordable housing, more and more households will be pushed into dire financial situations and ultimately into homelessness. It is time for all governments to step up to the challenge and provide planning and policy solutions to this growing problem.

Photo of Catherine Yeomans, CEO of Mission Australia