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Affordable Rental: the missing part of the Canberra housing market

By Rebecca Vassarotti - 29 June 2017 2

Tried to rent in Canberra recently? If so, you won’t be surprised to learn that Canberra’s rental market is extraordinarily tight. The census data reveal high median rents and the latest figures from Domain confirm it’s a story of high rents and few properties, and one that has not changed for many years.

When we talk about housing affordability, the focus is often on first home buyers and how to enable people to purchase homes. However, with home ownership becoming unattainable for many individuals and households, there is a need to urgently look at how the rental market is working for people with different needs and circumstances.

If you have a low or moderate income, finding something that is affordable to rent outside the public housing system (increasingly becoming the landlord or last resort) in Canberra is almost impossible. We judge affordability against the measure of spending no more than 30% of your income on housing – any more than this, and other essential costs such as food, transport and utilities are hard to cover. Anglicare’s Rental Affordability Snapshot that was released in April found that there were very few rental properties on the market in Canberra for people who were on low incomes. One example is a family of four that had two minimum wage incomes coming into the household. For this household type, there were only 2.3% of advertised properties that met your needs and would not put you in housing stress.

It doesn’t have to be this way. There are things that could be done locally to create and stimulate this missing part of the market – that is creating housing stock that sits between market-based private rental and public housing.

We are not going to solve this issue without addressing supply. While there are a small group of community-based housing providers that are building and renting homes that can be offered below market rent, they cannot do this at scale under the current policy settings. If we are serious about creating housing that is affordable we need to work out ways that we can deliver land more cheaply to enable the development of properties that are available for a more affordable rental than what the market currently offers. There are many ways that we could do this. One option is for the Government to provide land at discounted rates to providers who will use the land to build housing stock to be rented below market rent. Another is to create government, community, and partnerships where all parties can come together to deliver affordable rental stock.

We also need to think about where this supply is and to ensure that there are incentives in place so affordable housing can be offered in both greenfield sites and as part of urban renewal. We need to ensure that we see affordable rental options along the north and south light rail corridors so we can see employees in service and retail industries able to live close to jobs, schools, services and transport.

Design can go a long way to addressing affordability. Products can be developed that use clever design to reduce the cost of building, that create options for individuals to share accommodation without giving up independent spaces and privacy or pick up new housing trends such as tiny houses. Flexible planning needs to play its part in enabling this in a way that does not erode the integrity of streetscape.

We also need to create interest for potential investors to invest in affordable housing products. We have seen a not-for-profit real estate company established in Melbourne and there are small investors who could be interested in reasonable returns that affordable housing investment models could deliver. We know that there is work occurring nationally and hopefully there will soon be federal incentives through mechanisms such as supply bonds and tax concessions. There is a real opportunity for local planning to occur so that we can see the most of these incentives when they emerge so that we can increase the numbers of affordable rentals in the ACT.

These are just some ideas but there are many others. What do you think we need to do to ensure everyone can have a safe home in Canberra, even if they are not high-income earners?

Rebecca is a board member of Community Housing Canberra, a not-for-profit affordable housing organisation.

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2 Responses to
Affordable Rental: the missing part of the Canberra housing market
Grail 1:09 pm 04 Aug 17

Rather than specially earmarking land for affordable housing, what about progressive taxation given rental incomes. The ACT can’t modify federal tax benefits for negative gearing, but we can make territory taxes on properties scale to the income derived from that property.

To increase interest in affordable housing, the ACT might consider a scheme similar to Defence Housing Association, where properties selected by the ACT are released for sale to investors with low guaranteed returns, with the ACT serving as property manager.

We could also update housing standards to ensure that houses built in Canberra are affordable to live in (so no large unshaded windows facing North, for example).

The rate of aparment construction in Canberra is helping ensure that apartment prices are kept reasonably low. As an example I bought my apartment in Holt for $350k ten years ago and it is still worth $350k, with similar property around Canberra selling for $345k in Watson through to $800k in Turner.

“Clever design” must not make housing less affordable to live in. Building a house out of expanded polystyrene foam might reduce the cost of construction, but it drastically increases the maintenance cost and flammability.

Requiring all homes built in Canberra to meet minimum standards such as external doors that seal, walls that are weather sealed and insulated, double glazing on all windows, and other features commonly found in similar climates such as Canada, will mean that the cost of the features comes down. Rather than $1000 per window for double glazing, the increased scale might bring prices closer to $300.

As for public housing, I’d suggest providing rental support to tenants rather than government owning properties directly.

wildturkeycanoe 8:10 am 29 Jun 17

The government cannot even get their own public housing stock to sufficient levels to help those who are homeless, so how can they be expected to lead the rest of the developer community to build enough housing stock for disadvantaged families? Census data just showed that Canberra’s population just exploded recently. What is that going to do to rental prices? Of course it is going to pressure them upwards, with more demand than availability. With all the construction going on with the tram corridor development, builders will be quite happy at charging significant prices for new housing and it will be difficult to find any builders who are struggling for work. This means you won’t get any cheap labour to reduce the costs of housing any time soon. The same goes for materials, which will be in high demand, so you won’t be able to save there either. Knock down rebuild options on older properties in the ACT are money makers, so it’d be hard to find any existing land that is affordable to purchase, whilst the micro-blocks being released in new suburbs are so overpriced, nobody can make it affordable for moderate income families.
Face it people, you can not live in Canberra unless you are earning nearly a six figure salary or you share your living costs with other people. Families can’t do this, so they are being forced to move interstate. Real estate agents also won’t consider a low income tenant because of the fact they will struggle to make the rent payments on time. While there is an abundance of wealthier candidates out there, the poor have little chance of getting a rental, as there will no doubt be someone else who can offer the landlord ten or twenty dollars a week more. The system sucks.

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