On three frames of the housing crisis

This week the topic of housing slammed back to centre stage from three different frames.

First was a view from the broad market at the top end of town. It was via a so-called SyLon event, held simultaneously at Lendlease headquarters in Sydney’s Barangaroo and the London Centre in the UK on Tuesday night. As with most in-person events, the gems garnered off stage were just as insightful (if not all as repeatable) as those on stage.

On stage in Sydney were  Peter Murray of NLA; Earle Arney of AFK Studios; Kiersten Fishburn, Secretary of the Department of Planning NSW; in London speakers included David Lunts of Latimer and Clarion; Gary McLuskey of Greystar; Claire Bennie of Municipal.; Kimberley Jackson, executive director, origination, Lendlease;  Eamon Waterford, chief executive Committee for Sydney.

Kiersten Fishburn shone a light on the state government’s upcoming pattern book. The opportunity is to provide “quality designs that are affordable but suit the Australian climate and environment, suit different family lifestyles, and are there for people to be able to build in a way that is accessible, sustainable and beautiful,” she said.

What’s proposed in the pattern book is modest, she noted. But with “stunning interiors” and unobtrusive exteriors, clearly sensitive to the tone needed for a resource-constrained world.

Despite the constant calls from some parts of the development industry for faster sleeker planning rules, Fishburn politely noted that there’d been a lot of rezoning and reform work completed in recent times.

In fact, a “sophisticated urban development program that understands the infrastructure needs of Sydney now and into the future.”

It meant delivering the kinds of priorities you learn are important as a council general manager – that “you build the park before you build the suburb”, or you spend the next five years taking phone calls from aggrieved residents.

“We can harmonise our rezoning with our infrastructure. It’s a big, bold, ambitious program. We are very proud of what we’re doing in Sydney,” she said.

Lendlease’s Kimberley Jackson pointed out the developer’s challenges of needing to not only meet shareholders’ expectations and leaving a “positive impact on community and environment” but the increasingly challenging need to ensure feasibility.

Costs had skyrocketed and that seemed to be a global problem, and hard to control, she said.

 “So we look at what levers we can pull in terms of making these projects viable and being able to actually take them off the drawing board and start work and that would, I guess, talk to certainty and efficiency of delivery.”

This is where developers looked to “that upfront part of planning” to ensure speed to site “and we’re not just spending millions and millions of dollars in rehashing designs.”

What does good look like?

Eamon Waterford wanted to know what “solved” looks like for housing. It’s the elephant in the room, he said.

“What does success looks like? In this case, is it there is a house for every person? Is it that people are spending only 30 per cent of their income on housing? Is it that, you know, people who want to move here can move here? Is it that creatives and nurses and essential workers are able to remain in our city and are not leaving in droves? Yes, I think it’s all of those things.”

Most would agree.

How we get there is another story.

Waterford pointed out later in the session that despite the similarities between London and Sydney there were significant differences.

A jarring number was that London had 19 per cent of social housing Sydney had just 4 per cent. (Which aligns with North America.)

“We’d love to be in a position where we’re discussing whether affordable housing inclusion of zoning target of 30-35 per cent is appropriate. At the moment, we’re looking at affordable housing targets somewhere between 5-10 per cent.”

But the biggest challenge was climate. Western Sydney, which is designated as major destination for housing buildup has experienced 50 degrees temperatures and is forecast to have one in seven days likely to reach those levels after 2050.

We need to “quite quickly come to terms with a new built form that responds to heat,” he said.

Among the audience later there was praise for the event, but critique that things are worse that appear on the surface. For instance Rob Pradolin’s claim that Melbourne had 8000 unsold empty apartments was not too dissimilar to Sydney, said one audience member. Things were just not selling, he added.

Pradolin, of Housing All Australians, by the way, is trying to get a deal for federal government to buy the empty completed apartments for affordable housing for key workers. It would certainly remove the risk premium from planning delays.

But that starts to skirt around to the other elephant in the room – not so invisible after Waterford told the story of Sydney’s shameful dearth of public housing. Australia-wide, it’s actually worse – 3.8 per cent according to AHURI.

So it was surprising to learn from another expert in the housing field on during a conversation on Thursday that of the 1.2 million houses the federal government has promised just 2 per cent would be public housing.

In our humble view – that we share with anyone who will listen and which to our surprise gets lots of nods of agreement – a big percentage of public housing, say 30 per cent, just to be wild, through a reconstructed housing commission would do much to kick this housing crisis out of the ballpark. It would alleviate pressure on the private housing market, it would train tradies who on graduation would immediately go to the private sector where they are sorely needed, and it could do a lot to underpin a proper Future Made In Australia.

It would dramatically shift the dial on inequality, which is a critical source of the poor productivity we now have. (Danielle Wood take note.) Consider: why give a damn to work harder, faster, longer if you can never buy your own home, when work takes two precious hours or more out of your day and when all you see is a lifetime of working primarily for the landlord or if you’re lucky enough the bank shareholders?

And by the way, how is it that everyone in a cost-of-living crisis has to tighten their belts except residential landlords? (Commercial landlords, they’re another matter; businesses can simply shut down if the rents are too high – you don’t get that choice with housing.)

The nerdy-economists

On Wednesday night in Darlinghurst there was another housing event –  this time on the nerdy economic front, from the Planning Institute of Australia. It comprised data laden presentations and drop dead arguments to prove that the simplistic indirect correlation so often cited between upzoning and prices in Auckland is not much more than a virus that’s gone global from Canberra to Ottowa, and almost as damaging as the last pandemic.

It works if you bend the data and omit critical facts said Cameron Murray of Fresh Economic thinking. Such as assuming that a city the size of  Auckland with about 1.6 million behaves like a small town of a few thousand. And so on. Murray said he’d gone through the entire schemozzle with a fine tooth comb but just check out his website; we sense he’s getting over the fun of repetition.

One of the stunning insight of the night was from director of policy at The Policy Institute Henry Williams who noted the enormous transfer of public wealth that can happen from the “have nots” to “have lots” when swathes of land are rezoned for housing and so on – but without value capture.

Value capture is the way that windfall profits can be shared with the public purse and fund the things that keep society from becoming a kleptocracy.

This notion of vast transfers of wealth from the poor and young to the rich and old is a recurring and urgent theme from the increasingly influential podcaster business economics and politics podcast Scott Galloway… look him up; he makes a powerful case for better distribution of wealth, while remaining a steadfast capitalist.

In the US, he says he feels all us economic policies are a “thinly-veiled transfer of wealth” in those directions.

Housing is one of the ways that’s happening

Along with Williams and Cameron Murray was Tim Helm of Prosper Australia

Marrickville

Third, at the visceral local level there’s a rising anger at the amount of weight some suburbs are being expected to carry on behalf of Sydney’s rising population.

Local resident Keren Lavelle says in our pages that the Inner West Council’s “Our Fairer Future” proposal “attempts to outbid the state government’s own transport oriented development LEP, striving for substantially more dwellings than the TOD proposed.”

She says the distribution of the density within the local government area is unfair and Marrickville and Ashfield in particular are slated for the greatest number of dwellings.

“Infuriatingly, the housing won’t be ‘fairer’, she says.  “Federal tax policy keeps housing expensive. YIMBYs (yes in my backyard) cherish the idea that more supply means “more affordable to buy”, but with rampantly rising construction costs – now 30.8 per cent higher than before the pandemic – this will not occur.”

This well-argued piece nails the issues behind the need for higher density is delivered – it’s not what needs to be done, it’s how. And you suspect that if the housing that was planned to be delivered was public housing there’d be a whole different slant on the argument.

The housing that the industry and the YIMBYs are clamouring for won’t solve the affordability problem.

At the PIA event there was a moment when the panellists said we don’t have a housing crisis we have an affordability crisis.

Interesting.