Housing and Local Government Network

1
Housing and Local Government Network

• Aim
• To review why non-affordability is an important
  issue?
• To provide some framework for afternoon workshops
• To look at the form and scale of the
  affordability problem

2
Why is high housing costs and lack of
affordability important?

• ECONOMIC
• May create tendency to economic instability
• Create wage pressures and affect business
  competitiveness
• Affect investment in more productive areas of the
  economy
• Create labour market impediments

• SOCIAL
• Threatens provision and diversity of special
  needs housing stock
• Increases risk of tenancy failure and
  homelessness
• Accentuate poverty
• Trigger for relationship breakdown
• Through overcrowding increases health costs
• Through high mobility weakens educational
  performance

3
Why is lack of affordability important?

• SPATIAL
• Concentrates low income people in certain areas,
  weakens social cohesion
• Reduce local spending power, deters investment
  and creates areas of poor economic
  sustainability.
• Spatial Differentials in relative affordability
  across large metropolitan areas can create
  spatial polarisation and impair the economic and
  social sustainability of a city.
• Creates defensible space views and weakens sense
  of citizenship

• BUILT ENVIRONMENT
• Inhibits environmentally sustainable design
• Limits Housing Innovation

4
What is affordability

• Need to distinguish between
• Absolute i.e. when affordability generally
  exceeds some economic or social norm, e.g. if
  prices exceed the long term dwelling price to
  household income ratio by some factor such as 50
  percent above
• Relative when affordability problem exists for
  certain groups or locations but not it is not
  necessarily a general social or economic problem.

5
What is affordability?

• Income related measure of housing costs to some
  ratio of income, eg 25 or 30.
• An after housing cost measure of a housing cost
  which that sufficient to afford other necessary
  expenditures,
• A housing market measure where affordability is
  defined relative to local market circumstances,
  eg 75, of local average price
• A site specific notion of affordability which is
  how lower rent or purchase price can be created
  putting together what ever bundle of subsidies
  can be created for that site.

6
Key issues and policy questions.

• POLICY ISSUES
• To whom do we see affordability problem applying
  to?
• What has caused the problem?
• Is it a general problem or a locationally
  specific problem?
• Is affordability of ownership a problem?
• Do we have the institutional context and policy
  levers?
• Is public housings role survivability rather
  than affordability?

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What is the problem? what is feasible?

• What the data is telling us!.
• A large scale problem of rental and lesser but
  also a not unimportant home ownership
  affordability problem
• However no institutional context to provide
  solutions
• What is appropriate at the local level given
  Institutional context?.
• Small scale site specific development
• No home ownership programs

9
The limited options

• To address the problem in the absence of
  appropriate policy levers the local government
  options are limited to
• Office of housing funded rental housing
  associations
• 2 Pooled subsidy rental housing association
  developments whereby local government, builders
  developers including VicUrban, community
  agencies, Department of Environment and
  Sustainability and perhaps Office of Housing
  contribute collective subsidy for a number of
  housing association managed developments. These
  could be targeted at different client groups to
  OoH Housing Associations.

10
Issues for Local Government

• What is the affordability problem? Too much or
  too little?. Who has the problem?
• What can you do?
• Policy maker Is housing and housing affordability
  an explicit part of municipal strategy and
  policy?
• Provider. Land or properties including car parks
  but at what level of discount from market
  price?
• Planner Site identification
• Use of planning instruments, eg strategic
  objectives, overlays, development permits,
  parking controls, rate waivers
• Advocate Who carries affordable housing
  forward?
• Of what? for whom? to whom?
• The important need of a local area housing
  officer.