According to The Australian Financial Review today, in the Sydney suburb of Willoughby, one developer, the Hyecorp Property Group, is building apartments for which the incoming tenants will pay 20 per cent less than market rent. In Melbourne, developer Canopi Homes sells its new products at or below the median in the surrounding suburbs.
It is possible. And necessary. The crisis in housing affordability is now a first-order issue for all Australian governments. Just as it is for all those involved in the housing sector – consumers, developers, builders and financiers.
But we need to understand exactly what we mean by affordable housing. And we need governments to stop adding prohibitive costs to new projects.
Canopi Homes in Melbourne has consistently sold new townhouses in Melbourne at prices below those of nearby homes. When existing homes in East Keilor sold near the $650,000 mark, Canopi was selling townhouses at nearby Canopi Valley Lake from $475,000 for two bedrooms and from $575,000 for three bedrooms.
"We offer something smaller but of high quality," says director Cameron Alderson. "The buyers are generally couples on $100,000-105,000 with one or two kids who have outgrown an apartment."
The buyers are making a decision that more and more Australians will make. They are forgoing the big home on the big block for a smaller home close to amenities like shops, parks – Alderson stresses the importance of parks – transport and grandparents.
For Alderson, the keys include good design to make the best use of the space, flexibility for the occupants, and innovation to constantly trim costs. Canopi townhouses have an open-plan ground floor, spilling to a courtyard, with two or three bedrooms upstairs, two bathrooms, on-site parking, though not necessarily a garage, and some storage.
In Sydney's Willoughby, Hyecorp is developing a block of 74 apartments, 43 of which will be leased out, through a community housing provider at a 20 per cent discount to the market rent for the next 10 years. Private investors have bought half the community housing stock, and Hyecorp will hold the rest, at a reduced market price, and at an initial yield of about 5 per cent.
There is no fancy financing here. Government provided a simple planning incentive. Hyecorp gained an uplift in floor space ratio, and therefore the number of apartments on the site, because the site was suitable for the application of the NSW government's Affordable Rental Housing State Environmental Planning Policy.
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