Report reveals ‘undersupply’ of affordable homes in NSW

The Supporting affordable housing supply: inclusionary planning in new and renewing communities from the Australian Housing and Urban Research Institute (AHURI) has identified an “undersupply” in NSW’s affordable housing market.

The study compared the inclusionary planning approaches (government mandates that incentivise the development of affordable housing) of the NSW and South Australian governments. 

AHURI found that such incentives delivered a “much smaller proportion” of affordable housing in NSW in comparison to South Australia, despite “much greater population growth”.

The research discovered that affordable homes made up between 0.5 per cent and 1 per cent of Sydney’s total housing supply between 2009 and 2015.

In comparison, in the period between 2005 and 2015, affordable homes made up 17 per cent of total housing supply in South Australia. 

AHURI has called for the extension of inclusionary planning approaches and voluntary planning incentives across the country, which it claimed could be mandated when “land is rezoned for residential development, when planning rules are varied for particular projects, or following significant infrastructure investment”.

Executive director of the NSW Property Council Jane Fitzgerald expressed support for such measures and pointed to the Greater Sydney Commission’s recent finalisation of an affordable rental housing target for new residential developments of between 5 per cent and 10 per cent.

Ms Fitzgerald, however, called for a consistent, transparent and strategic approach brought about by a single scheme.

“Consistency and transparency in the scheme is critical; it is really important that any affordable housing targets are clear before land gets rezoned so the amount paid for the land reflects the requirements,” the executive director said.

“If this doesn’t happen, the costs of the scheme will be passed on to average home buyers, worsening affordability for them.”

Ms Fitzgerald urged the NSW government to develop a Housing Affordability Policy to “stimulate the supply of affordable housing”.

“The AHURI report highlights that we must have a strategic approach to more affordable housing, not piecemeal or arbitrary action,” the official added.

“Ultimately, the NSW government should develop a NSW Affordable Housing Policy governing not only how local councils apply affordable housing levies but exploring potential incentives, state and local, to stimulate the supply of affordable housing through a range of planning and/or taxation measures including supporting build-to-rent.”

[Related: NSW Productivity Commission will tackle housing affordability]