The Property Council of Australia’s recent Unlocking Affordable Housing report indicates that changes need to be made at a state government level in order to unlock private investment into the Victorian affordable housing market.
Prepared by APP Group, the report identifies developer density bonuses, capital grants to support construction and rental subsidies as the most effective options to overcome a lack of affordable housing investment.
Property Council’s Victorian Executive Director Cath Evans believes support must be given by the public sector to its private counterparts to solve the current housing crisis.
“With last week’s National Cabinet meeting delivering a strong direction for governments across the country and a new nationwide target of 1.2 million new homes to be built in the next five years, we urge the Victorian Government to consider the mechanisms we propose in this report in the formulation of their upcoming housing statement,” she says.
“The measures modelled in our analysis, based on extensive consultation across the industry including with institutional investors, identify best scenario options that not only clear current investment hurdles but consider current budget constraints.
“Closing the current investment gap could unlock thousands of new affordable homes per year with the right policy solutions and incentives.
“The analysis concludes that developer density bonus policy options translate best for both supply and cost to government, but will need to be developed over a longer-term horizon and be accompanied by the anticipated significant planning system reform.”
The report has outlined a number of measures that may serve as incentives to the private sector. This includes land tax exemptions, discounted lease of well-located government-owned land, development density bonuses, capital grants equivalent to 50 percent of the construction cost, rental subsidies paid directly to the affordable housing asset owner, and finance reduction through a State or Commonwealth Government entity at a discount to market interest rates.
Evans says shorter term incentives are the key to unlocking investment quickly to address the pressing issues of the crisis.
“This analysis underscores what the industry has been telling Government for a long time now – there is no silver bullet to fix housing affordability,” she says.
“Reform to the planning system is the crucial foundation on which all other solutions rest. Planning reform, coupled with short-term support measures leading to a phased introduction of a robust, consistent and transparent system to deliver the density outcomes needed is the achievable roadmap we have laid out.”
“The much-anticipated Victorian housing statement must deliver a longer-term road map, with ongoing industry consultation, to put policies in place that incentivise ongoing investment in this critical part of the housing market.
“The property industry is ready and willing to have the conversations required to find a solution to the housing crisis and bring relief to the many Victorians suffering through it.”
