5 February 2010

A panel of the nation’s top property and finance minds have called for smaller house and land sizes and  an increase in funding for community and not-for-profit housing programs to help combat the spiralling issue of affordability, at a major summit on the Gold Coast today.

The event, held by Gold Coast Housing Company (GCHC) and Urban Development Institute of Australia (UDIA), featured the latest research and strategies for affordable housing from highly respected industry experts, including former ANZ chief economist Saul Eslake and Urban Land Development Authority CEO Paul Eagles.

Mr Eslake, who is also a program director at public policy think-tank the Grattan Institute, said Australia’s persistent housing shortage had been a major catalyst for escalating property prices.

“Australia urgently needs to address the gap between supply and demand – particularly at the lower end of the market,” Mr Eslake said.

“In addition to more flexible zoning and planning schemes, and lower up front charges for developers, funds currently spent on cash assistance to home purchasers should be redirected to community and not-for-profit programs which can directly increase the supply of affordable accommodation.

“Australia’s housing shortfall as of June 2008 was estimated by the ANZ to be 140,000, and this figure is expected to virtually double over the next eight years.

“There is a particularly pronounced shortage of affordable housing – stock levels for public rental, community and not-for-profit and crisis accommodation have remained fairly stagnant over the past decade, with an estimated shortfall of 90,000 units in 2008.

“Continuously rising rent will exacerbate distress among lower income groups, while upward trends in house prices will increase inequalities in wealth distribution.

“This may occur to the extent that increases in house prices are uneven across different regions, with people becoming ‘locked into’ or ‘locked out of’ particular cities and regions.”

Mr Eagles said the trend towards building large dwellings hadput pressure on property prices.


“Most new homes in Queensland are now built on sites that are typically more than 600sqm with a package price tag of more than $400,000, and market rent for the state now sits at approximately  $400 per week.

“These purchase and rental costs could potentially be significantly reduced  by not only decreasing the size of dwellings, but also facilitating the development of more not-for-profit and Department of Communities (DOC) projects.

“The delivery of affordable housing is a collaboration – developers, builders, council, community organisations and purchasers all need to work together towards a more streamlined and accessible system.

"Within our development in Fitzgibbon, for example, the ULDA is able to deliver two thirds of homes at less than the median Brisbane house price by working with our builder partners to achieve diversity of product which reflects the changing needs of the community.”

GCHC chief executive Jason Cubit said the delivery of affordable housing remained vital, particularly in areas like the Gold Coast,  which is widely recognised as one of the least affordable markets in Australia.

“Although we are starting to come out the other end of the global financial crisis, many people are still at risk of homelessness,” said Mr Cubit.

 “BIS Shrapnel has forecast property prices on the Gold Coast will increase by 14 per cent over the three years to June 2011.

“Although appreciation in the property market is good news for those already in the market, those trying to secure their first property will find it a burden on their financial situation, especially considering the Wage Price Index in Queensland is only expected to grow by 10 per cent over the next few years.

“For middle and upper income earners, this may mean cutting some discretionary spending or downsizing the family home.

“However, many low income earners experiencing housing stress are already paying a third of their wages towards accommodation alone and any increase in housing costs may price them out of the Gold Coast property market.

“GCHC’s new raft of affordable homes to be built over the coming years is a step in the right direction towards assisting these people.

“We have secured more than $110 million in federal, state and local government funding towards delivering more than 1,000 social and affordable housing dwellings throughout Queensland by the end of next year.

“Almost half of these properties will be situated on the Gold Coast, and will be offered through GCHC under a variety of means-tested subsidy programs, including social housing, shared equity, $10,000 off home purchase and 25 per cent off market rent.

“These incentives cater to a wide demongraphic, from young couples and retirees struggling to obtain or maintain a foothold in the property ladder,  to families with moderate incomes who have taken a hit due to loss of work or lower pay in recent months.”

 

Copies of the presentiations from the forum are available here.