Sydney was recently reported as being one of the most unaffordable cities in the World. Attracted by the relative prices and coastal lifestyle in the Hastings, many people are moving here, which in turn is pushing up local prices. So can anything be done to address the affordability of housing in the Hastings?

Low income households are hit hardest by a lack of affordable housing in the local area. The concept of affordable housing refers to more than just the rental amount or purchase price of a house.

Houses need to be of an appropriate standard. We can’t build a shack, tin shed or bark hut and call it affordable housing just because it is cheap. There are living standards in Australia so that slums do not form around our cities and towns. However, those standards come at a cost that some struggle to afford.

The concept of affordable housing also takes in proximity to services, transport, shopping and employment opportunities. If we tried to lower the cost of housing by building on cheap land a long way from where the shops and jobs and schools are with no access to public transport, we create more problems than are solved.

Affordable housing also has to be accessible and adaptable to be able to accommodate the frail and disabled, many of whom make up the low-income households most in need of affordable housing. Things like wheel-chair accessibility are important, however these features can add to the cost of construction.

Closely related to housing affordability is the idea of housing stress. If you take the two fifths of households with the lowest income, those that pay more than 25% of their income in rent or more than 30% on their mortgage are said to be experiencing housing stress. In the Hastings, there are 750 low income renting households and 2,800 low income households with a mortgage in a position of housing stress.

Being in housing stress can be very distressing for individuals and put enormous pressure on families. There is a social imperative to do what we can to assist those experiencing housing stress. Housing stress contributes to crime, family break-up, depression and other social problems, the community cost of which is much greater than dealing with the underlying problems.

There is also an economic imperative, as there are many low-income jobs important to the functioning of the local economy that may be unfilled if those people cannot afford to live in the local area. If we don’t provide affordable housing for key workers such as teachers, nurses and maintenance workers, then we contribute to the skill shortage in the local area.

Following a motion I put up to Council, there have been a series of forums on the issue. Council commissioned SGS Economics & Planning to develop a Draft Affordable Housing Strategy for the Port Macquarie – Hastings area. This article explores some of the facts and solutions in that strategy.

Each of the three levels of government can play different roles is addressing housing affordability. Through the Commonwealth State Housing Agreement there is public housing provided for some households with low-income or special needs. Commonwealth Rental Assistance, or Rentstart, provides a partial subsidy to assist eligible people with their rent.

Local government influences housing prices indirectly by controlling the release of new residential land. Releasing more land increases the supply and eases the pressure off housing prices. However there are environmental and other constraints that limit where new development can occur. Ultimately there is only a finite amount of land.

Council also charges Development Contribution Fees to pay for the infrastructure needed for new residential development, such as new roads and the supply of water and sewerage. The developer passes these costs on to the home buyer by putting up the house price. The money for that infrastructure has to come from somewhere. If it is not paid for by the developer, then existing residents cross-subsidise new development.

One idea put forward in the Draft Strategy is applying a special rate, equivalent to 1% of the rate base. This would go towards an Affordable Housing Fund that would be used for projects and programs that directly ease housing stress.

The idea I like the most is to use this Fund to leverage significantly more money from superannuation funds and ethical investors. The money raised could be used to enter into a shared equity arrangement with home-buyers, where say 10% percent of the house is owned by the fund, reducing the mortgage repayments and housing stress.

When the house is eventually sold, the percentage originally invested goes back into the fund with a significant capital gain to be reinvested to help someone else realise their dream of owning their own home. This is not a welfare grant or gift. It is a sound long-term investment of rate-payers’ money that has a significant local social benefit.

Another idea is Inclusionary Zoning, which is a fancy term meaning that when Council rezones land for new residential development, it requires that a proportion is set aside for dedicated affordable housing.

Sweat Equity is a way to reduce the cost of a house by selling the shell with the fit out being done by the owner. It will be important to ensure that the owners have the skills to be able to finish the house to an appropriate standard and that they are covered by the relevant home-builders’ insurance.

Encouraging accessory dwelling units, or granny flats, can be a way of building up the stock of affordable housing. These can be ideal for older members of the family or young adults. It can also provide an income stream for the owners if rented outside the family.

Allowing more manufactured home estates and relocatable homes is an option to provide inexpensive housing. However, recent thinking has moved away from clustering low-income households because of the stigma and social issues that can arise. It is better to have affordable housing distributed throughout the area providing a range of housing options.

Residential parks are under threat. As the land values increase, so does the pressure to redevelop. It is important that as far as possible the existing residential parks are protected and that if they are developed, equivalent affordable housing is provided.

On of the most important roles Council can play is lobbying other levels of government to highlight the issue of affordable housing in the Hastings and partition them to put policies in place that improve housing affordability rather than make it worse.

The affordability of housing is a very complex issue with no easy or short-term answers. There are many more ideas in the Draft Strategy than could be mentioned here.