Building Homes Where People Want to Live
Housing and rental affordability is a hot topic at the moment with the dream of owning your own home seeming less likely in today's market and rents rising as a result of increased immigration and less supply of new homes. Everyone has the right to an adequate standard of living.
As some of the best minds in the property sector both public and private navigate their way to try and solve this burning issue of providing affordable well located property where it is needed Mr Peter Acherstraat AM the NSW Productivity Commissioner released a white paper in May 2023 to the NSW State Government with some very interesting opinions and observations.
In summary the following details were noted by Mr. Acherstraat on the report;
To make housing cheaper and make best use of Sydney’s assets, New South Wales needs to build more housing, and build it closer to jobs
The best way to do this is to enable more homes in the places where people most want to live. This will require a focus on denser, infill development closer to the city than most of our recent new homebuilding. We particularly need to build more of this housing around railway stations in suburbs closer to Sydney.
Sydney has limited opportunities to expand out geographically, but many opportunities to become a denser city without great impact on the lifestyles of those of us currently living here.
Existing housing policies make housing scarce
Expensive housing has squeezed household budgets for owners and renters alike. This has pushed families to compromise on where they live—further from family, friends, and jobs. Worse still, our lowest-income households have the least ability to absorb high housing costs—so these households make the biggest sacrifices in their quality of life.
If we fail to meet current and anticipated future demand for housing, migration out of Sydney may eventually see the NSW capital lose the position it has held for more than a century as Australia’s pre-eminent city.
Housing scarcity drives up prices and rents
How much housing we have in Sydney helps to determine how much our homes cost. Studies have shown this repeatedly, even though not everyone in the public believes it. In this narrow sense, housing is just the same as other goods and services: so long as what’s on the market isn’t enough to meet demand, buyers will drive up its price. Couples with consulting careers will outbid teachers for run-down two-bedroom houses in Dulwich Hill.
We all know this has happened in Sydney. Figures confirm it: since 1992, New South Wales has built six dwellings per 1,000 residents on average, fewer than Queensland and Victoria (about eight to nine dwellings per 1,000 residents).
A rule of thumb is that in Australia, a 10 per cent increase in supply leads to a 25 per cent reduction in housing costs. So, Sydney needs to use every tactic it can find to get more homes built.
In recent years, Sydney has relied heavily on greenfield development. That has come at a heavy cost: it has driven up the need for expensive new infrastructure and has left many of Sydney's people too far from the city centre's facilities.
Locate more new homes in existing housing areas
In recent years, Sydney has grown outwards, especially to the west. But building on the suburban fringes is no longer the only or best path forward. To correct this problem most effectively, New South Wales should build more new homes in areas closer to Sydney’s centre. These areas offer both the richest collection of job opportunities, and a supply of already-built infrastructure and other amenities whose capacity can be leveraged and expanded.
Importantly, even if new supply targets the high-end of town, building more housing closer to the CBD will improve affordability there and elsewhere. This is true even for people who can't currently afford to live there. This is an example of what housing experts call ‘filtering’ and demonstrates how building more in expensive parts of the city can improve affordability everywhere. Realistically, new, more expensive homes around the CBD will initially be occupied by high-income families. But these families leave behind a high-quality house when they relocate that can be occupied by a middle-income family. In turn, the middle-income family leaves behind a house that can be occupied by a lower-income family. This filtering can assist with reducing the burden for social and affordable housing and so on...
We also need to make efficient use of land closer to the CBD to solve our housing affordability challenge. It’s more cost-effective to build efficiently and appropriately designed higher-density developments close to the CBD rather than only standalone houses in greenfield areas far from jobs and services.
To do this, we will need to reshape the current regulations on building houses, in ways that let more people build more homes in the right places, particularly by letting people build higher and build in their back yards.
Sydney has plenty of room to grow in these ways. Like all Australian cities, it is less dense that even cities such as Auckland and Montreal. Global cities like Paris, London, and New York benefit from much higher density still.
People should be free to live in their preferred style of housing. But many people currently cannot, because there have been too many obstacles to building the housing they most want.
Three specific changes will deliver Sydney more and better housing
To build more housing in Sydney’s existing housing areas, we should:
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raise average apartment heights in suburbs close to the CBD (and to job opportunities)
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allow more development around transport hubs so that we leverage our existing
infrastructure capacity
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encourage townhouses and other medium-density development and allow more dual- occupancy uses such as granny flats where increased density is not an option.
More well-located housing will mean cheaper housing
Building homes in suitable areas of existing housing brings a triple benefit:
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More people want to live there.
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These areas already have infrastructure.
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These areas bring people closer to more facilities, so they can spend more time with their families and enjoy Sydney’s assets.
By building selectively—near existing infrastructure—we can produce a richer variety of housing. Such a policy would also bring other benefits:
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Relaxing supply constraints would provide more workers with access to their best employment opportunities. US-based research suggests that supply constraints lowered economic growth there by up to one-third over several decades.
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Increasing density in targeted areas should allow us to expand with the minimum impact on the environment, both because we are sacrificing less land to housing and because we lower our transport pollution.
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These solutions also apply to regional cities.
Please click on the link below for the full report.
https://www.productivity.nsw.gov.au/building-more-homes-where-people-want-to-live