Australia is facing a severe housing crisis presenting a bleak future for owners and renters. Social issues for the homeless and occupants of poor housing create severely debilitating outcomes for the whole community. Housing is a right, not a privilege.
As the current lack of affordability for housing develops, lack of stock will further escalate the cost of housing and further compromise affordability, particularly for first home buyers. At the same time, finding and affording a suitable rental property will continue to increase in difficulty.
The simple solution would be to increase the supply of housing. However, the housing construction industry continues using inefficient and wasteful methods. This increases costs and results in poor productivity, thereby creating scarcity.
Another issue for those who cannot afford to buy is finding a place to live at all. For those renting, scarce housing means increasing rent and, therefore, their ability to save diminishes.
The cost of building sites is a significant factor, for greenfield and brownfield sites. Building site cost can be contained by logically addressing density and the cost of future infrastructure. This is not just a major city issue, it applies to the regions.
Consideration of long-term leased sites for housing using government-controlled land is a model that dramatically reduces the initial cost of housing. Further, the funds levied by governments to create infrastructure must be expended in a transparent manner, particularly regarding efficiency and sensible goals. Rigid over-the-top standards will not achieve affordable results.
Innovative methods are available in Australia to mitigate supply and affordability problems. Recently "build to rent" projects have been developed to improve the supply of dedicated rental accommodation. The aim is to offer security of tenure for desirable accommodation at reasonable market rents so that the idea of renting, rather than buying, is more attractive and, importantly, without stigma.
Innovative methods are available in Australia to mitigate supply and affordability problems.
Expanding the "build to rent" model could be a significant part of the housing solution by providing an appropriate supply of accommodation. This would relieve pressure on those seeking a house (buy or rent) by providing affordable and secure accommodation.
The model could be improved by encouraging not-for-profit NGOs funded by government grants, a model that exists for social housing and could easily be adapted to a market model. Sale of government bonds specifically to finance housing and investing superannuation funds provide suitable sources of finance.
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Not for profit ensures motives can be focused on people. In examples of this model in the UK and Europe, some projects offer the tenants the right of purchase, improving the social mix for communities.
Designs of the accommodation would need to be of a standard that would enhance the experience for the occupiers and match community expectations of a quality lifestyle.
As noted, current construction methods exhibit poor characteristics for time, cost and quality, alternative systems must be employed. Exacerbating these problems is a chronic shortage of trades and apprentices, unlikely to be remedied in the short term.
The industry must adopt a manufacturing model for housing, a model which, as has been observed for other consumer goods, delivers affordable products compared with traditional methods.
Off-site manufacture of components that need only assembly on site including "plug and play" for services will result in certain and faster housing procurement. These models deliver quality factory outcomes with economies of scale and importantly transfer site tasks into a safe environment reducing accidents.
There are proven commercial examples in Australia of off-site manufacture producing the desired certainty of reduced time frames, tight cost control and factory quality. The products of a nationally recognised quality housing provider are on offer now, delivering off-site-manufactured housing flexible in accommodation and style.
The housing industry has resisted use of (let's use the word) prefabrication due to perceived consumer resistance, however, my recent research has proven this position to be false.
Importantly, a bonus of improving the supply and quality of rental housing will enable future house buyers to save while enjoying secure accommodation.
Greater supply of housing will help contain cost increases for existing stock.
- Edward Duc managed an architectural practice for 40 years and has designed and patented an off-site manufactured (OSM) housing system. He recently completed research at the University of Newcastle on the topic of consumer attitudes on OSM housing and was awarded a Doctor of Philosophy.