Thousands of affordable homes, some costing as little as $100 a week, could be built in inner-city Sydney within four years at no extra cost to the taxpayer, new research from the University of Sydney has shown.
Rather than dampening housing prices, COVID has seen them skyrocket, and without drastic policy action the great Australian dream of owning a home is off the cards for many.
The increase in house prices has spurred a rental crisis, which continues to grip cities across the country.
Homelessness is projected to surge across Australia by 9 per cent this year and housing stress could increase 24 per cent.
Now, modelling from the University of Sydney shows 2000 affordable homes could be built within four years at no extra cost to the taxpayer.
Gareth Bryant, a political economist from the University of Sydney, said the plan could deliver genuinely affordable homes with rents as low as $100 per week.
“Housing is obviously one of the key stress points and key causes of inequality in the city,” Dr Bryant told The New Daily.
He said Sydney City Council currently has $600 million in cash sitting in term deposits, earning 0.7 per cent per year.
“That money could be put to much better use in terms of making a social difference,” Dr Bryant said.
Under the proposal, $200 million would be redirected from low-yield term deposits and co-invested with social housing providers.
The partners could then seek further finance, with the interest paid by rents, to deliver around $1 billion in housing within four years, the modelling shows.
“The rents would be serving any debt from the co-investment, rather than paying it down,” Dr Bryant said.
“The proposal would not increase debt as any debt would be matched by the housing assets.”
Rather than giving out affordable housing grants, co-investment would allow local governments to expand housing more quickly and create a self-sustaining fund, Dr Bryant said.
The council would remain an investor, using the increase in asset values to fund more affordable housing in the future.
“On average you could charge rents of around $100 a week, and the city would have no negative financial impact,” Dr Bryant said.
He said it would have a “flow-on effect” making other rentals in the area cheaper, whilst making the city livable for the people who work in it.
“Both of those things will inject a huge amount of fairness into the rental market,” Dr Bryant said.
“And having a more affordable rental market will also reduce some of the pressure on property prices.”
Affordable housing urgently needed
Australian Institute of Health and Welfare data shows the proportion of social housing has declined nationwide between 2014 and 2020, going from 4.6 to 4.2 per cent.
In June, the Morrison government’s minister for homelessness, social and community housing Michael Sukkar announced $30 million to build more than 100 social housing dwellings in Greater Hobart by 2022.
House prices jumped by up to 9.3 per cent between January and April, according to CoreLogic’s June report.
The national rental market is also supercharged, with rents for houses increasing 15.1 per cent on average and those for units up 8.1 per cent in the past year.
According to modelling by analytics firm Equity Economics, 7500 additional Australians are expected to become homeless this year, and the incidence of mortgage and rental stress is predicted to advance by a quarter.
According to the modelling, Australia’s lack of long-term social housing leads to 7690 women a year returning to violent partners and 9120 becoming homeless.
The co-investment plan has been picked up by Greens City of Sydney Lord Mayoral candidate Sylvie Ellsmore, who said local councils had the capacity to step in where state and federal governments were failing.
“We’re about to have another big development boom and lose our last opportunity to have affordable housing in the inner city if we don’t act now,” Ms Ellsmore said.
“People want to live in communities that are inclusive, a radically unaffordable city doesn’t help anybody.
“That’s much more important than a few dollars of rent for owner-investors.”
Last week, advocacy coalition Everybody’s Home called for a complete overhaul of Australia’s housing model.
The shopping list includes more support for first-home buyers, more low-cost properties, a better deal for renters, immediate relief for stressed households, and a plan to end homelessness by 2030.
“We cannot have a situation where house prices rise at close to 10 per cent a quarter in some cases, while social housing declines,” campaign leader Kate Colvin said.
“That is a recipe for more housing stress, more homelessness and deepening inequality.
“On the current trajectory, housing stress is only going to worsen for people on low and middle incomes, which is why we need the federal government to make an urgent investment in social housing.”