Supplying affordable housing away from the urban fringe

There’s been an increasing government and private sector effort to get more affordable housing into the centre of Adelaide. However, so too is the effort on the urban fringe.

Between 2000 and 2010, the median house price in Adelaide jumped from about $150,000 to over $400,000, an increase of about 167% or about 10.3% per year according to RP Data! If this is any indication of the future, this is great news if you’re an investor but terrible news for low-income earners and those trying to break into the housing market. This story of rapidly rising house prices has been repeated in almost every major city around Australia.

According to the Australian Bureau of Statistics, as of May 2010 the average weekly wage in South Australia was $1139.90, which equates to an annual wage of about $59,000. For a house valued at $300,000 and assuming the banks don’t allow more than one-third of an individual’s income to be put to repaying a mortgage, a standard variable rate of about 8% p.a. and 80% loan-to-value ratio for the loan, this property could take over 30 years to pay off! Two incomes paying off this house would obviously lessen the financial stress.

There are a number of projects currently under way or in planning to provide affordable housing in a country where housing is rated as amongst the most unaffordable in the world. In central Adelaide, a non-for-profit housing company called Common Ground Adelaide has been establishing housing at three locations in cooperation with the State and Federal Governments as well as private sector supporters. One of these at the newly built bus station on Franklin Street and another has recently been completed on Light Square.

The largest affordable housing project currently under way in central Adelaide is the Uno Apartments project on Waymouth Street. This 16 level building will provide 138 apartments and began construction in December 2010.

The Uno Apartments project, currently under construction on Waymouth Street. (Source: Uno Apartments)

Affordable housing close to the city centre is a great initiative because it gives those who would not otherwise be able to afford to live close to transport, employment, recreation, retail, hospitals and other community services the opportunity to do so while also dealing with the problem of keeping the homelessness off the streets at night. It also contributes to making better use of underused buildings – as was the case at the Common Ground project in Light Square – and also improving the vitality and activity occurring on the streets of our cities.

By contrast, providing affordable housing on the urban fringes can create more problems than it solves. In January 2011, the release of land at Blakeview in Adelaide’s outer north was announced by the State Government’s Land Management Corporation to provide affordable housing. Even if affordable housing can be provided in this location, there is limited access to public transport, employment opportunities or community activity which does nothing to assist in helping individuals in finding their own feet. It also results in further urban sprawl and inefficient use of land and infrastructure.

If we can provide affordable housing in existing urban areas and solve a variety of social and urban development issues – more active streets and efficient use of buildings and infrastructure – in the process as has been demonstrated by Common Ground Adelaide, then what excuses do we have for continuing to use the disguise of affordable housing to continue building on our urban fringe?

Sources:

Affordable Homes Program

Australia Bureau of Statistics

Uno Apartments

Common Ground Adelaide

RP Data

Advertisements

Tags: , , , ,

3 Responses to “Supplying affordable housing away from the urban fringe”

  1. chris of brompton Says:

    “Affordable Housing” generally means the provision of a 20% subsidy by way of the Federal Governments program. This can either be through home ownership for those participants satisfying the income criteria, or a rent subsidy of twenty percent of market rent through a Social Landlord like WeslyCare. Therefore new affordable housing is in no way similar to the Public Housing of years gone by, where rent was charged as a percentage of tenants income up to 25%.

    The financing of Public Housing under the Commonwealth State Housing Agreement was therefore of limited impact on the private housing market, although it did tend to keep private rents lower than they might otherwise have been.

    The “affordable housing” system is on the other hand, directly participating in the private housing market. It has a twenty percent offset, but is never the less rationing housing supply by market price.

    The question to be addressed is whether the housing market is an efficient mechanism for housing supply. This cannot be assumed a priori, as the American and Irish examples have recently demonstrated.

    State rationing rather than market / price rationing of public housing supply, at least here in SA, has a good record when compared to these overseas examples in my opinion.

    And so, while the SA Government has a rationale for its 30 year plan and increasing urban density, it has chosen or been forced to accept only one mechanism for the provision of this housing supply – the market. If the housing developers require large development opportunities to be provided, either in the fringe areas or inner metro, that is what the State Government is determined to provide.

    You can’t make a silk purse out of a sows ear.

  2. Andrew Says:

    Hi Chris, some great food for thought.

    The second last paragraph you wrote holds a lot of truth I believe. And I believe it goes back to the idea of the Great Australian Dream which still lingers on in its modern form. You don’t need to look far to see governments bending over backwards to try and accommodate the suburban dreamers with schemes such as the FHOG. Even with a gradual shift towards living close to convenience, most people still want to live in a detached house in quiet suburbia or at least something that resembles it.

  3. score card Says:

    We’re a bunch of volunteers and starting a brand new scheme in our community. Your website provided us with valuable information to work on. You’ve done an impressive task and our whole neighborhood might be grateful to you.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: