THERE’S no debate about whether Australia is an expensive place to live — it is.
Our capital cities, especially Sydney and Melbourne, rank among the world’s priciest cities for cost-of-living while low income Australians and young people are being priced out of a booming real estate market.
So for the many who can’t afford to buy their own home, the other choice is to rent. But rental prices are becoming prohibitively expensive for anyone who wants to live within a reasonable distance to work. They’re also stuck in the cycle of paying high rents which hinders their ability to save for a home deposit, the amount of which is increasing as property prices rise.
Housing stress is officially classified as anyone who spends more than 30 per cent of their income on housing, whether that is on rent or mortgage payments.
So what’s the solution?
Affordable housing projects are being touted as something that are making inroads, albeit small, into the housing affordability crisis.
One of the newest additions is The Platform apartments in Eveleigh, Sydney, right on the doorstep of Carriageworks. The 88-unit development was completed last month and is reserved for key workers in low and medium income households. The Platform was built by City West, a developer established to build affordable housing in the City of Sydney local government area.
Key workers are being defined as people who hold a position that is essential to the city’s operations. But essentially, it’s pretty much a ‘normal’ job. City West chief executive Janelle Goulding said key workers can be a probationary police constable, a fireman or a cadet journalist. She said key workers in the new development include cleaners, childcare centre workers and retail workers.
The tenants get a discount on the market rent and don’t pay more than a percentage of their income on their rent, depending on how much they earn.
Tenants on a household income of less than $33,106 will not pay more than 25 per cent of their income on their rent. Those on between $33,107 and $55,436 won’t pay more than 27.5 per cent while those earning between $55,437 and $94,274 won’t pay more than 30 per cent.
While $94,274 sounds like a lot of money, Ms Goulding pointed out that in Sydney, a couple with kids wouldn’t get a lot of mileage out of that kind of money.
So what would you pay under this scheme?
For example, a couple and child family on a household income of $80,000 will pay around $460 a week for a two-bedroom apartment. Market rent for two-bedroom apartments in the area of a similar quality and floorplan typically go for between $650 and $800 a week.
These apartments aren’t the rundown commissions you might associate with affordable housing. They’re brand new with good light and airflow and have enviable kitchens and bathrooms. The complex has 39 car spots while every unit gets a bike locker.
Torunn Higgins and her partner, Toby Burvill, moved into The Platform just over a week ago with their newborn daughter, Ronja. Ms Higgins and Mr Burvill are both in their early 30s and have spent the past 10 years in nearby Redfern with the last three years in a sharehouse with three friends.
Even though they both have tertiary degrees, the couple don’t work in high-paying occupations. She is a designer and runs a small toys and homewares business, Herbert & Friends, while he works in a bookshop in Surry Hills and is also a radio presenter and musician.
Ms Burvill told news.com.au that the family is paying roughly half the market rent but that could change if their income changes.
“Sydney has become increasingly unaffordable, particularly for lower-mid income brackets,” she said. “It’s breaking up communities as people are being priced-out and forced to move further away. It’s sad to see people displaced and areas that were once vibrant become homogenised. Initiatives such as this are amazing for keeping communities socially diverse and culturally rich.
“It’s pretty incredible that we can pay a capped portion of our income. With having a baby we couldn’t afford to stay in the area which is close to friends, family and work. I don’t think people are necessarily entitled to live close to work but it definitely makes a huge difference.”
Ms Goulding said affordable housing is very different from social housing. “We try to keep people in housing to keep them employed. We effectively keep them out of the social housing system. That’s really the difference for us. It’s really people who can’t afford to pay the sorts of rents demanded in the area.
“Housing affordability is a growing problem and rents are becoming more and more expensive and people are being forced to move further and further away from the city. One of the people housed here is a woman that was travelling down from Gosford every day to maintain a low income role.”
However, as great as The Platform apartments are, the problem is being able to scale these sorts of projects. In 20 years, City West has built hundreds of units with another 500 units in development right now. But that makes little difference to the tens of thousands other families who are in housing stress.
Ms Goulding said: “I think we could probably double the quota of what we’ve got now without making a dent in Sydney.”
The Platform apartments were partly funded out the federal government’s Affordable Housing Fund and the National Rental Affordability Scheme. The NSW government, in its election campaign, also announced it had signed a memorandum of understanding with infrastructure bodies to try and fund a $1 billion social and affordable housing fund.
Should there be more government action on providing affordable housing around the country?
In London, it’s mandated that 35 per cent of new developments be given to affordable housing, while in Amsterdam, nearly half of housing is social rented housing with 30 per cent of new builds to be social housing.
The highest rate in Sydney is a 2 per cent mandate in the City of Sydney. The new Lend Lease Barangaroo development in the CBD is to dedicate 2.3 per cent of its residential floors to affordable housing but the developer is, according to a Fairfax report, was in talks with other groups to build those units away from the ritzy and valuable development. However, Lend Lease denies this is the case and said it is still committed to building the 2.3 per cent affordable housing within the Barangaroo development.
However, Ms Goulding believes there are other ways to think about affordable housing in the long term. She floated more private investment, shared equity schemes and sale-and-lease programs as ideas that could also work.
“I think everyone has to think outside of the square for affordable housing. There are a lot of changes that are necessary. It’s demand and supply and there’s a supply problem although the state government is moving in the right direction in freeing up more land.
“I think we now have enough interest from the government and they’ll be a group of like-minded people who will contribute to that. You’ll see a lot of changes and more innovative thinking.”
What do you think? What kind of affordable housing options would you like there to be more of? Let us know in the comments below.
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