With new research revealing a net supply shortfall of over 250,000 homes by 2028[1], could ‘Fonzie flats’ supplement housing stock and alleviate Australia’s rapidly escalating housing crisis?

Mike Day, at urban solutions provider Hatch Roberts Day, who recently returned from the company’s US Study Tour with urban planners and business leaders, observed how the US is tackling a similar problem with a newly popular but old housing idea.

Accessory dwelling units (ADUs) or ‘Fonzie flats’, which derive their name from the star of the hit 70s TV show ‘Happy Days’, are seeing a boom in California, with building laws being relaxed to encourage more construction. With this style of housing resulting in 7000 new homes being approved in LA alone this year, compared to 1200 traditional houses in 2022,[2], Day is advocating for Fonzie flats to be developed in Australia as a potential solution to help ease the country’s crippling accommodation shortage.

Fonzie Flats

Societal impact of high house prices

Australian property is among the most expensive in the world, with Sydney and Melbourne regularly featuring on the list of least affordable housing markets.

“The young, the elderly and others in low-paid or part-time work are particularly at risk. And our inadequate supply of public or community-owned housing leaves us ill-equipped to take care of our most vulnerable or reduce existing backlogs as 1.7 million[3] net new immigrants flood into the country between now and 2028,” says Day.

“Australian governments pay out billions a year[4] in subsidies to help low-income renters. The hidden costs of the housing crisis, however, damage the fabric of our society through car ownership costs for residents who are forced to buy affordable property in the outer suburbs of our capital cities, social inequity, and long commutes into the city.”

How California is tackling the issue

There’s a building boom across California for basement suites, garage apartments and backyard cottages, thanks to a law passed in 2017 that forced cities to relax their restrictions on ADU construction. In 2022, California homeowners applied for over 30,000 ADU permits[5] – twice as many as in 2018, and accounting for almost one-fifth[6] of all housing units permitted and built last year.

Similarly, many cities across the US are taking the ADU route to address housing shortage. Seattle, for instance, saw a 25% year-over-year increase in ADU permits submitted last year, outpacing even California.

According to Day, Australia’s restrictive planning laws should be adapted to cater for innovative ways to increase housing densities in existing and emerging neighbourhoods.

“Changing the entire Australian housing industry simply isn’t feasible in the short term, but we can finely tune our existing housing model. For instance, we should be utilising the existing space that many Australians have by building granny flats in backyards and by putting Fonzie flats on top of existing garages.’’

Small footprint

Going by the US example, Fonzie flats and granny flats are a great way to increase housing stock without drastically altering neighbourhoods; therefore, Australian governments should change regulations to make them easier to build here, observes Day.

“They don’t have a major impact on communities or add many new cars to the roads, and they are well suited to seniors who want to live on the same piece of land as family members, or for younger people dealing with a tough housing market.

“It’s a cost-effective and environmentally sound housing solution, which can be adapted to existing urban areas or emerging metropolitan growth areas. It would also assist communities to be more connected by accommodating multiple generations and different familial structures into neighbourhoods.

“Councils could restrict their use for Airbnb purposes so that extended families and key workers in the community would have access to a greater attainable housing pool.’’

Changing states

In Queensland, where an additional 900,000 new homes[7] will be needed by 2046, the state government is showing a willingness to address the housing crisis.

“We cannot only rely on traditional models and new greenfield development as the answer for housing choice and affordability given what we know about people’s preferences,” says Deputy Premier Steven Miles[8].

In response to the housing crisis, Queensland last year pushed through a new law[9] to allow people to rent out granny flats, which is still not permitted in other states such as Victoria[10].

“At the end of the day, the only way to provide more attainable housing is to foster diversity in housing forms and build more of it where people want to live,’’ concludes Day.

References:

[1] Institute of Public Affairs, https://ipa.org.au/publications-ipa/research-papers/australias-housing-shortage-international-student-intake-exacerbating-nationwide-housing-supply-shortfall

[2] Wall Street Journal https://www.wsj.com/articles/only-zoning-reform-can-solve-americas-housing-crisis-b5869860?page=1

[3] Institute of Public Affairs, https://ipa.org.au/publications-ipa/research-papers/australias-housing-shortage-international-student-intake-exacerbating-nationwide-housing-supply-shortfall

[4] Aus Institute of Health & Welfare, https://www.aihw.gov.au/reports/housing-assistance/housing-assistance-in-australia/contents/housing-assistance

[5] Cottage Impact Report, https://www.cotta.ge/resources/california-adu-report

[6] LA Times, https://www.latimes.com/homeless-housing/story/2023-05-24/how-to-get-permits-for-an-adu-built-without-them

[7] Qld Government, https://statements.qld.gov.au/statements/98348

[8] Qld Government, https://statements.qld.gov.au/statements/98348

[9] Qld Government, https://planning.statedevelopment.qld.gov.au/planning-issues-and-interests/changes-to-secondary-dwellings

[10] RACV, https://www.racv.com.au/royalauto/property/renovating/granny-flat-building-rules-costs-victoria.html

Branko Miletic

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