Housing Affordability Watchlist for 2017
Thursday, 23rd February 2017 at 8:10 am
When it comes to affordable housing Australia needs to triple its efforts to catch up to the growing need, writes Community Sector Banking CEO Andrew Cairns who offers his housing affordability watchlist for 2017.
We farewelled 2016 and recovered from the festive celebrations but now it’s time to consider what 2017 holds in store.
Here’s a 2017 housing affordability watchlist, where we expect to see the most momentum on this hot button issue from the key players, including government, not-for-profit organisations and financial services.
Increasing supply of affordable housing
Last year, reams of data made it clear that Australia needs far more affordable housing. As we prepared to ring in the New Year, a new survey was released that showed the biggest concern for young Australians is – you guessed it – the country’s exorbitant property prices.
Most survey respondents believe it will take up to 20 years for them to be able to purchase their first property, while 12 per cent don’t feel they will ever be able to own their own home. It’s deeply concerning that so many young people believe they face a future of insecure housing. Thankfully, growing awareness of the size of the problem has resulted in a patchwork of action to increase the supply of affordable housing. For instance, last year we saw New South Wales councils setting targets for affordable housing in new developments.
I expect to see further action to increase the supply of affordable housing in 2017, with more councils taking the initiative to set affordable housing targets for developments – not only those in inner city areas, as reports show that the housing affordability crisis is spreading to regional areas, including the Central Coast of New South Wales, and will pressure local governments to act. We also expect to see more initiatives from private and not-for-profit players, such as the flatpacked, off-grid affordable homes from Big World Homes. It would be great to see innovative affordable housing projects flowing from New South Wales $1.1 billion affordable housing fund, yet it may be optimistic to predict much action on this front until the later half of the year at least.
Escalating need for aged care and disability housing
Rapidly rising demand is also expected to drive activity in aged care and disability housing in 2017. An aging country, Australia currently has around 2,725 aged care facilities housing more than 160,000 elderly people. But demand for aged care accommodation is expected to balloon in coming years – by 2050, the percentage of Australians aged older than 85 years is projected to increase from just 2 per cent population to up to 9 per cent.
Meanwhile, the National Disability Insurance Scheme faces a major shortfall in disability housing, which 6 per cent of the 460,000 participants are estimated to require. Most of the specialised disability accommodation, which at least 27,000 people will need, has yet to be built. As such, we expect to see increasing initiatives in both aged care and disability housing.
Not-for-profit organisations will also increasingly collaborate with other players to innovate solutions and overcome the numerous challenges faced in developing aged and disability housing. A great example of this is the Summer Foundation, which has undertaken several demonstration housing projects for people with disabilities, in partnership with housing and finance providers.
New financing models to broaden affordable housing options
New financial models are key to solve our affordable housing crisis, which is why we watch initiatives to this end with excitement. It helps that we at Community Sector Banking are also involved in much behind the scenes work to foster and innovate such financial models. One key action area we will watch in 2017 concerns new rental financing models.
Last year state and federal treasurers unanimously supported recommendations from the Affordable Housing Working Group, which included a bond aggregator aimed at improving the supply of affordable housing for low income families. How will it work? Simply put, bonds need less debt servicing, due to their fixed and long-term tenor. This will free up capital for community housing providers, which can then be used to increase supply of new housing.
Most importantly, down the track it could provide more safe housing for the growing number of Australians being shut out of our increasingly unaffordable rental market. This year, we hope to see governments set to work on implementing the report’s recommendations and await the launch of the bond aggregator – a potential game changer for the affordable rental market.
Beyond shelter – social services shift to deliver a holistic response
Lastly, the days of affordable housing being about just shelter are over. Instead, we expect to see not-for-profit organisations and other social services players in this space increasingly shifting to adopt holistic responses. This means going beyond providing just shelter for clients to deliver crucial supports and services that improve their wellbeing, such as training linked to job opportunities. For instance, in Melbourne, social enterprise HoMie is running a 12-month Pathway Project, partially funded by a grant from Community Sector Banking, which will see young people experiencing homelessness trained as retail workers who, upon successful graduation, will be employed by retailer Cotton On.
The great thing about the start to a new year is the heightened enthusiasm, momentum and action that comes from considering a fresh slate with many possibilities ahead. After unwinding over the break, we’re ready to kick into higher gear. When it comes to affordable housing, we need to triple our efforts to catch up to the growing need.
About the author: Andrew Cairns is the CEO of Community Sector Banking. He believes NFPs are at the heart of a healthy society – they create the social fabric of those communities and ensure their wellbeing. After more than 30 years working nationally and internationally in the corporate sector, he maintains that business can and should be a force for good.