As Australians we enjoy some of the most liveable cities in the world but our cities face a number of long term challenges: the need to improve productivity growth; provide affordable and accessible housing; create safe community spaces; meet the needs of a growing and ageing population; ensure an inclusive and cohesive society; and address the implications of climate change. The 2015 Wesley Mission Report found that 44% of NSW Households are in financial stress and 38% spend more than they earn impacting health, safety and wellbeing of individuals and families. It is no surprise with such a bleak outlook in the financial status of households that the housing crisis is escalating.
Housing costs are unaffordable to the average Australian?
Australia has an estimated one in seven people living below the internationally accepted poverty line. (2)
According to the ACOSS 2014 Poverty Report, after taking into account housing costs, 13.9% of Australians are living below the poverty line, demonstrating the financial pressure placed on households by inadequate supply of appropriate affordable housing. The undersupply of appropriate affordable housing was evidenced by the ABS, ‘Housing and occupancy costs’ 2011–12 report which found in 2010 only 5.2% of housing sold or built nationally was affordable for low income households when almost 60% of lower income households were in rental stress.
There is more to the cost of housing affordability than how much rent or mortgage you pay. Transportation costs are the second-biggest budget item for most households. With fewer than 10% of jobs in the city being within a 45 minute drive from where people live, people more often are factoring in transportation and travel time costs when making decisions regarding where they live and work.(3)
The suburban sprawl is driving single parents, students, artists and low-income workers out to suburbs that are 20kmor more away from CBDs of capital cities where the majority of jobs are located. There are many side effects of suburban sprawl including effects on a city’s productivity, diversity, energy and social cohesion.
Diversity is good for cities
"You need all sorts of people to run a city. You need people to clean it, to wipe tables, work in banks – all those sorts of occupations," says Peter Phibbs, head of urban and regional planning in the faculty of architecture at the University of Sydney.
There are numerous impacts on social, health and wellbeing from suburban sprawl. With single parents, students, artists and low-income workers living in the outer suburbs, our cities risk losing their diversity and vibrancy. Disadvantage is compounded in cities where low-income residents are priced out of the housing market where better opportunities and more highly-paid jobs exist.
Traffic congestion is a real issue
Congestion alone costs NSW at least $5.1 billion in lost productivity annually
Each morning about 200,000 commuters leave western Sydney on crammed trains, packed buses and choked roads heading eastwards for work.
The Bureau of Transport Statistics 2014
Housing Stressed 2013 Report ‘Opening Doors to Employment’ found that housing is unaffordable in all of the 40 Australian regions where people were most likely to find jobs. Many of those employed endure long commutes creating congestion on both the roads and public transport. Extended travel time reduces the time available for connectivity with friends, family and the community. Studies show that diminished social engagement negatively impacts our health as it can increase obesity, diminish mental wellbeing ultimately reduce life expectancy.
Low income workers living far from employment opportunities are also more vulnerable to long-term unemployment. The long commutes place a heavy strain on families limiting women’s participation in the workforce and increasing family dysfunction. Typically women as the primary carer for young children and elderly relatives, need to find employment close to the home. The employment situation is slightly better for the male labour force with the participation rate in outer-Sydney suburbs about 25 per cent higher than the participation rate for females.
The housing crisis highlights the need to facilitate the supply of appropriate mixed income housing by having a range of housing types to suit diverse household needs across metropolitan areas and regional cities. This includes the development of aged persons accommodation, including medium and high care facilities to promote social integration and minimise social isolation that otherwise can occur.
We need affordable living choices that are located close to facilities and services, including jobs and public transport. Higher density mixed use developments in inner city areas will have people living closer to employment and improve productivity. Infrastructure support must become part of the plan to grow appropriate and affordable housing so that new outer metropolitan housing can access facilities, services, diverse education and employment opportunities.
So what can be done? Disincentives exist that impact the development and supply of affordable housing. If Government was to simplify complex planning rules and decision-making processes and review associated taxes, this would assist in the reduction of development and planning costs. This would make it much easier to build and therefore increase the supply of appropriate and affordable homes.
A review of tax policies is called for, with the purpose of encouraging rather than discouraging home ownership. By reducing the capital gains tax discount and levelling the playing field between investors and first home buyers through reform of negative gearing, the Commonwealth could facilitate affordable housing objectives while also growing the Commonwealth’s budget balance.
For first home buyers the financial barriers to entry are the taxes and the 5-10% deposit required for home ownership .Once in the housing market it’s about sustainability which is why housing affordability and infrastructure are critical to making this work.
Home ownership partnerships are one way of addressing sustainability of housing. Tax concessions for the purchase of new homes would drive new home construction while easing the burden of housing costs and financial pressures on households. Developers could also receive tax concessions for making available a proportion of affordable housing for a specified period of time in their developments. This would create a sustainable supply of affordable housing and with the review of all tax housing policies any tax concessions would be offset by growth.
Changing the road tax system so it is self funding would make available $17 billion that could be used to improve and increase the capacity of public transport infrastructure. This would have a positive impact in reducing travel time and costs associated with employment as well as the hidden costs of road congestion and vehicle collisions.
ACOSS 2014 Poverty Report
ABS, ‘Housing and occupancy costs’ 2011–12
Gattan Institiute City Limits Jane-Frances Kelly, Paul Donegan, 2014