Boosting the supply of affordable housing in NSW

The ideal model for ensuring a strong pipeline of affordable housing in New South Wales must be found to support growth over the next two decades, according to the Property Council of Australia.

The council went on to reference a new report from the Australian Housing and Urban Research Institute (AHURI). Entitled Supporting affordable housing supply: inclusionary planning in new and renewing communities, the report provides “food for thought on how NSW could boost the delivery of more affordable housing in the years ahead.”

By comparing the models for inclusionary affordable housing zoning in the United Kingdom, United States, NSW, and South Australia, the report “provides policy development options to produce more affordable housing.”

The AHURI report found that inclusionary planning tools leverage significant quantities of affordable housing supply in many parts of the US and UK. For instance, 12,866 affordable housing units (43% of total affordable housing output) were delivered via inclusionary planning requirements in England from 2015 to 2016. Meanwhile, about 12% of annual housing completions in San Francisco are affordable dwellings produced via inclusionary zoning or impact fee requirements.

In comparison to international practices, inclusionary planning for affordable housing isn’t as widespread in Australia. However, SA delivered 5,485 affordable homes from 2005 to 2015 via an inclusionary planning target applying to new residential areas. This amounts to about 17% of total housing supply in that state.

“In NSW, a planning incentive scheme introduced in 2009 has yielded around 2,000 affordable rental dwellings in Sydney, equivalent to about 1 per cent of the city’s total supply,” the AHURI report said.

“The AHURI report provides an overview for how different jurisdictions are tackling the challenge of building more affordable housing; in NSW we are only now beginning to catch up on an undersupply of housing and that pushed up house prices especially in Sydney,” said Jane Fitzgerald, NSW executive director of the Property Council of Australia.

“The Property Council supports approaches that help ensure we have great built spaces and equitable growth – but adding more complexity or cost to our planning system is not the way to go.

“The plans recently finalised by the Greater Sydney Commission included an affordable rental housing target for new residential development of between 5 and 10 per cent … and this seems a measured response to a difficult problem. 

“Apart from ensuring housing supply is not perversely affected, there should also be only one scheme – a consistent scheme – across Sydney. The target should also be matched with density bonuses and other incentives [that have] worked well in the UK and US. 

“Consistency and transparency in the scheme is critical; it is really important that any affordable housing targets are clear before land gets rezoned so the amount paid for the land reflects the requirements. If this doesn’t happen, the costs of the scheme will be passed on to average home buyers, worsening affordability for them.

“The AHURI report highlights that we must have a strategic approach to more affordable housing, not piecemeal or arbitrary action.

“Ultimately the NSW Government should develop a NSW Affordable Housing Policy governing not only how local councils apply affordable housing levies but exploring potential incentives, state and local, to stimulate the supply of affordable housing through a range of planning and/or taxation measures including supporting Build-to-Rent.”