Housing is fundamental to every Australian’s health, wellbeing, security, and sense of community – so it’s critical and urgent that all parts of the complex, interconnected property sector tackle the housing problem fast.
Solutions to the current housing crisis will not be solved by looking at how we did things in the past – and our responses will shape communities for generations. To achieve a range of appropriate housing options with optimal community outcomes, developers and governments should look for progressive, future-focused professional support to de-risk delivery, optimise long-term value, and manage assets and facilities effectively across their longest possible lifecycle.
Whether renting or owning, we all need a place to call home. As the population grows, we’ll continue to need more dwellings, so the first challenge is supply. This comes with an opportunity: in addressing supply, we have a chance to look to the future and create the kinds of housing that will better suit the changing needs and expectations of our diverse communities.
Who has the power to drive strategy and supply?
Governments hold many levers in the housing sector. The federal government controls population; state governments control planning rules and government services; and local governments implement planning and process in their area. It’s natural, then, that we look to government for solutions – but greater alignment and coordination is needed among all levels of government to accelerate real change.
The primary task of governments must be to create an environment that can increase supply in the right places at the right time and price (a market-based price, not any price) – and, crucially, to ensure the infrastructure and services are in place for liveable precincts and thriving, diverse communities. This means getting on with housing and infrastructure in tandem – actioning whatever can be built most efficiently.
Despite the power of governments to move the needle, the private sector will undoubtedly play an enormous role – particularly large corporate asset managers, financiers, and investors. Governments can help catalyse the private sector’s contribution by creating the environment for the private sector to operate efficiently.
Government can support the private sector through planning credits and other measures that offer more carrots and less stick to incentivise risk taking at a reasonable margin. Government can then step in to fill any gaps that the private sector is unwilling or unable to fund. This will include opening their property assets to the private sector to develop and operate.
More flexibility in planning and permitting will also help developers with large portfolios to be more nimble and get projects up faster. By allocating flexible ‘in principle’ portfolio-wide permits, developers will have a greater pool of options across their sites, with opportunities to harness the highest and best uses for sites while still delivering on government priorities.
Housing is an interconnected, dynamic system - with opportunities for change
A crucial question is whether we still want people to be able to own a home or whether Australia’s housing culture needs to shift towards other models – such as a rental model that is structured and managed to provide tenants more security and stability.
If we do want home ownership to remain part of ‘the Australian way’, we’ll need innovation to enable more young people to enter the market. Shared equity is a start – but there are other opportunities, such as rent-to-buy and co-living, established through a professional management model but embedded by the occupants. More of these models are emerging and have the potential to create a new level of community.
If home ownership is no longer the primary goal, the focus needs to be on incentivising enough supply to maintain affordable rents and a spread of well-managed options for all market segments.
The housing debate tends to focus on young people and growing families, but it’s vital to consider other parts of the complex dynamic, such as students and older Australians. There’s a cycle of housing that creates supply if it moves smoothly, but blockages in the system will create problems for the market. These blockages also hinder delivery of services and other social infrastructure.
Developing enough purpose-built student accommodation is a highly efficient strategy that will alleviate pressure on the rental market while providing living options appropriate to students’ education and social development.
At the other end of the spectrum, our nation’s Baby Boomers will soon need to downsize into housing that they can maintain – or move into purpose-built residential facilities that provide a pathway from independence to higher levels of care when needed.
Crucially, governments should consider measures to enable older Australians to continue to live in their local area if they choose, so that they can continue to enjoy the benefits of the community and services they know and value.
Another important factor in solving the housing crisis in cities is density – but it’s contentious. Education will be needed to help residents of inner and middle-ring suburbs accept density as good for everyone.
These aspects of housing are inextricably interconnected, and we all have a role to play to enable the natural flow and maximise supply where and when it is needed. Together, we can plan and build the homes Australians need, want, and deserve.
By Fraser Main
About the author: Fraser Main is a Principal at WT Australia, a global project management consultancy.