Many developers have been concerned about the shortage of housing for our existing population prior to the current crisis becoming a headline act. The existing chronic undersupply of housing will be further exacerbated by the approximately 650,000 migrants expected to arrive in Australia over the next two financial years; this is in addition to the 480,000 migrants who arrived this financial year.
Alice Maloney, Director of Planning, Ratio
At present, the eastern seaboard has fallen short by hundreds of thousands of houses, with Victoria alone short 23,000 dwellings annually for the past decade. The housing supply shortage and affordability crisis are not just restricted to Australia either – these challenges are experienced on a global scale.
So, where to from here? The oft-quoted line about ‘crisis’ being both danger and opportunity is certainly as relevant as ever with significant opportunities to provide housing along the eastern seaboard. It is estimated that over 1,000,000 dwellings are required nationally by the end of the decade with 1 million residences required in Greater Melbourne by 2050 and around 900,000 in New South Wales by 2041.
However, this demand for housing supply needs to be understood in light of substantial hurdles, including tax structure, rising construction costs, interest rate rises, and uncertainty with planning from both an approval and timeframe perspective. However, within these myriad complexities lies the opportunity.
The opportunity
Changing tax structures, with Queensland taking the lead in recent times, makes Build-To-Rent (BTR) an increasingly viable option in some markets, while growth is occurring in student accommodation, retirement villages/accommodation, and land-lease communities.
It is imperative that there remains continued pressure on both State and Federal Governments to assist the private market in meeting the demand for housing. Planning reform is often flagged as being an answer to unlocking housing supply by addressing uncertainty associated with the planning process.
The Australian Government announced the Housing Australia Future Fund, with funding of $10 billion which will enable the delivery of 30,000 social and affordable dwellings over the next five years (subject to the bill being supported by the Coalition and Greens when voting occurs in October). The National Cabinet more recently announced a planning and housing reform agenda, comprising $3 billion in incentives for states to deliver an additional 200,000 homes to the National Housing Accord’s previously announced 1 million new well located homes. Jurisdictions that achieve more than their share of the targets will achieve funding. In addition to this, a National Planning Reform Blueprint was agreed, including planning, zoning, land release and other measures to improve housing supply and affordability.
What does it mean in each State
In Victoria, Planning Minister Sonya Kilkenny has been emphasising the Plan Melbourne objective of delivering 70% new housing in established areas and 30% in greenfield areas as a priority, particularly since only 56% of new dwellings since 2014 were achieved in established areas. Planning reform is apparently imminent and could involve centralising approvals for housing within activity centres or within nominated precincts, with community consultation still a matter to be resolved, similar to the Development Facilitation Program established by the State Government during the COVID-19 pandemic. The recent findings of the IBAC for Operation Sandon could provide the Andrews government more justification to centralise decision making for major planning projects.
New South Wales faces similar challenges when it comes to delivering housing. The State Government announced incentives for development with a capital investment value of $75 million+ comprising a minimum 15% affordable housing, with approvals to be fast-tracked via the State Significant Development (SSD) planning approval pathway and development able to achieve a 30% floor space ratio boost and a height bonus of 30% above local environment plans. While the $75 million threshold is significant, the benefit was that it would facilitate some affordable housing, while enabling traditional housing to take advantage of this fast-track process. However, the reform has been deemed ‘impractical and unfeasible’ by industry figures, meaning it is likely to be further reviewed.
The common theme with Victoria and New South Wales appears to be the idea of centralising (key) planning approvals to the State. The rationale being that decisions can be fast-tracked, enabling the States to better deliver on their respective strategic framework (such as Plan Melbourne and the Greater Sydney Region Plan, with further work being undertaken by the Greater Cities Commission).
Another solution could be the setting of housing targets, or similar quantitative targets, for each municipality by the State, which would provide a benchmark to assess Council performances while still enabling the Councils to maintain control. While targets exist in New South Wales, it remains unclear what ramifications, if any, occur if the targets are not met and what benefits occur in municipalities meeting their targets. The National Planning Reform Blueprint flags the need for state, regional and local strategic plans to be updated to reflect their share of housing supply targets.
This contrasts with Brisbane City Council. In this case, more inner-city land has recently been opened up for high-rise residential apartments, albeit without a stated requirement to provide social or affordable housing. With Brisbane, a key market for migrants and interstate migration, the pressure to construct housing in well-serviced areas will only increase as the city prepares for the 2032 Olympics.
The future challenge
While there are challenging times ahead, the consistent stream of migration to Australia combined with existing demand will only create opportunities for more housing in Australian cities. As an industry, we need to continue to innovate and promote solutions to State and Federal decision-makers to ensure the fair and reasonable access to housing for all Australians, as well as our economic prosperity. The National Cabinet’s planning and housing reform agenda appears a positive first step, but how it is implemented in each state will be key to its success. We look forward to the State governments stepping up with proactive solutions to ensure housing is delivered quickly.
Article featured in The Monark Minute, written by Alice Maloney, Director Planning, Ratio, ratio.com.au