The new research, ‘Urban regulation and diverse housing supply’ commissioned by the Australian Housing and Urban Research Institute (AHURIA) was led by research author Dr Catherine Gilbert from the Sydney School of Architecture, Design and Planning. It identified some of the challenges to developing diverse housing types in Australian cities, as well as potential solutions.
The report finds that land-use zoning laws can have a significant impact on whether diverse housing types, such as medium-density housing are permitted in residential areas, or whether they are financially viable to develop. But they are not the only factors challenging the delivery of diverse housing supply.
Our research found that the barriers to diverse housing are more complex than land use planning constraints and that housing diversity doesn’t simply mean high-rise housing.
“For example, where zoning laws do allow for apartment buildings, land prices are typically higher, meaning that medium-density housing forms, including townhouses, are not financially viable which prevents the development of much needed diverse housing.”
The report also finds that it can be difficult for housing developers to obtain finance for projects that are perceived as riskier or lower profit, such as those that deliver unique housing products, use deliberative and community-led development models and/or provide housing for lower and moderate income earners.
The high cost of land, particularly in accessible locations that are well suited to medium and higher-density buildings and non-speculative and affordable housing projects, presents as a significant challenge for site acquisition.
“Land vendor expectations typically reflect the highest and best economic use value of land,” says Dr Gilbert.
“This means that the projects that are best able to compete for sites are those that maximise density allowances and deliver housing for sale at market rates.”
Lack of government subsidies or support for affordable developments is a challenge for providing housing for low-income groups on a significant scale.
Governments have an important role to play in encouraging the development of more diverse housing. Recent examples in Australia, Canada and the UK have shown the value of governments either leasing or selling their land to organisations delivering diverse housing products aimed at vulnerable members of the community. Not-for-profit housing associations often layer land contributions with other funding streams to deliver affordable housing projects.
Similarly, the redevelopment of large government-owned land parcels can involve the subsidised lease or sale of land to private or not-for-profit sector actors in return for inclusion of affordable housing and has provided opportunities to demonstrate innovative housing types, particularly through master planning.
Reform to zoning laws and development approval processes has also helped by making diverse housing types permissible and more financially viable, such as projects incorporating affordable rental units as well as boarding houses in NSW.
“Our research shows there are a number of key areas where government needs to show leadership in helping the housing industry build different and diverse housing,” says Dr Gilbert.
“These include establishing targets and strategic directions for increasing the diversity of housing supply; providing long-term sources of funding to support not-for-profit housing developers to deliver new affordable housing supply; requiring a mix of housing types and tenures, including lower cost or affordable housing, as part of significant new residential development projects; and supporting projects that can demonstrate an affordability outcome or address an identified unmet housing need to progress through the planning system.”
Catherine Gilbert, The University of Sydney
Nicole Gurran, The University of Sydney
Christen Cornell, The University of Sydney
Steven Rowley, Curtin University
Chris Leishman, The University of Adelaide
Mike Mouritz, Curtin University
Katrina Raynor, The University of Melbourne