Housing Affordability

Housing Affordability

(Private Member's Statement, 21 February 2017, Legislative Assembly, NSW Parliament)

The rapidly declining supply of affordable housing impacts on Sydney’s liveability, social diversity, functionality and economy, especially in the inner city where land values are escalating.

For purchasers, deposit-to-income ratio is the highest on record and principal repayments are rising rapidly against stagnant wages and have almost doubled since 1970, despite low interest rates. Shelter NSW identified that 54 per cent of lower income households with a mortgage are in housing stress. 

Renting is the only option for many, but rental affordability is low, particularly for low or moderate income earners. The Rental Affordability Index established by National Shelter, Community Sector Banking and SGS Economics shows that Sydney has the lowest rental affordability in the country with the average household spending 28 per cent of total income on rent. In the City of Sydney region, rents have risen by 70 per cent over the last decade. Only one per cent of Sydney rental homes are affordable to the lowest income households, none of which are in the inner city.

Between 2006 and 2011, average rents increased by 47 per cent while household income only grew by 38 per cent. The Rental Affordability Index identifies the inner city as extremely unaffordable and other inner areas as severely unaffordable.

The government’s response has been to increase construction of homes. While this is vital in the face of a growing population, it has not improved housing affordability and other measures are needed.

Any increase in housing supply must guarantee an increase in social and affordable housing supply through mandated targets. San Francisco has an affordable housing target for developments of 12 to 33 per cent; Montreal: 30 per cent; Vancouver: 20 per cent; South Australia: 15 per cent; and Washington DC: 8 to 10 per cent.

New South Wales has a meagre target of one to four per cent of gross floor area.

Barangaroo south will only provide 2.3 per cent per 100,000 square metres of residential floor area for key worker housing for police, nurses, teachers and paramedics and I understand Lend Lease wants to provide this offsite.

Shelter NSW is calling for a 15 per cent affordable housing target. The Greater Sydney Commission plan recommends Sydney adopt a 5 to 10 per cent affordable rental housing target in major housing redevelopments – this should be adopted immediately and apply to the Central to Eveleigh, Bays Precinct and Fish Market projects.

Councils should be able to require developer contributions for affordable housing across their region without having to get state approval. The government approved levies in Ultimo-Pyrmont and Green Square and over 500 affordable homes have been delivered. The City’s draft Central Sydney Planning Strategy would impose a one per cent levy on new commercial, and three per cent on residential, CBD developments and could yield 300 to 520 additional affordable homes.

We must stop dividing Sydney into rich and poor. Public housing sales in Millers Point reduce diversity and inner city social housing stock. I am pleased that the government agreed to retain 28 homes and I will work with the new minister to get the best outcome for the most disadvantaged and vulnerable tenants.

Shelter NSW wants stamp duty, which can discourage homeowners from selling, withdrawn and replaced with a revamped land tax. A broader land tax system would need to have protections for people who are asset rich and income poor. Shelter NSW recommends an IPART inquiry to investigate benefits and disadvantages of reform.

There is much evidence that negative gearing drives property prices up while the evidence that it keeps rents low is open to dispute. Some reform is needed particularly for investors with multiple properties. Nearly half of all home loans are for investors and they generally get a return on losses when they resell their property. Although this is a federal issue, there are opportunities for state governments to advocate for reforms.

We must boost social housing supply. The government established the growth Social and Affordable Housing Fund and other options include expanding the Waratah Bond to finance affordable rental housing.

The government must investigate the impact online holiday let platforms like AirBnB are having on rental and sales markets and ensure any changes to short term letting laws do not reduce housing affordability. 

The Affordable Housing Taskforce 2012 interim report committed to develop a clear policy framework including a new SEPP, standard LEP clauses, development standards and integration with strategic planning, but there seems to be no progress. I welcome the Premier’s commitment to a housing affordability strategy for first home buyers informed by former Reserve Bank of Australia Governor Glenn Stevens.

We need a multifaceted approach that ensures affordability across Sydney for renters and purchasers, including in the inner city, so that Sydney can house workers who help the city function and support a diverse population to keep it a lively and interesting place to live, work and visit.

Let's work together to celebrate and protect our great city!