By Adam Carey
Stage 1 of the Allan government’s planned apartment and townhouse boom in Melbourne’s middle suburbs must include at least 10,000 affordable homes or risk squandering an opportunity to lift vulnerable Victorians out of housing stress, advocates say.
The Community Housing Industry Association is urging the state government to set an ambitious 16.5 per cent target for affordable housing in its plan for high-density homes in dozens of “activity centres”.
Planning rules are set to be changed this month to encourage more multi-storey apartment buildings in 10 Melbourne suburbs: Broadmeadows, Camberwell Junction, Chadstone, Epping, Frankston, Moorabbin, Niddrie, North Essendon, Preston and Ringwood.
Those 10 suburbs are the first of 60 activity centres the government has identified as suitable for more apartment towers and townhouses.
The new rules will fast-track planning processes and reduce councils’ and residents’ right to object, in an effort to build 60,000 new homes. But the government has so far baulked at setting any targets for inclusion of affordable housing.
The Community Housing Industry Association’s 16.5 per cent target is based on research of unmet housing need by the University of New South Wales. The UNSW has calculated that on current trends, 177,000 more affordable homes will be needed across greater Melbourne by 2041, with shortages worst in the inner city, the west and the south-east.
The association says setting targets is the only way to guarantee Victorians on low and moderate incomes will be able to buy a home or make rent in the activity centres.
“We need social and affordable housing targets for every suburb to ensure that individuals on low and moderate incomes can live near their workplaces, maintain social connections, and actively participate in their communities,” chief executive Sarah Toohey said.
The Victorian development sector has the opposite view, warning the Allan government not to set targets at a time when the industry is struggling to make projects stack up commercially.
“Current market conditions and construction costs are necessitating a price of as much as $12,000-$15,000 per square metre – or $1.5 million for a family-sized apartment. This is well above the borrowing capacity of most Victorian families,” said Linda Allison, Urban Development Institute chief executive.
Allison said affordable housing targets made it harder for projects to stack up where sales of market rate apartments are used to subsidise social and affordable homes.
“Industry recommends prioritising overall supply, which will put downward pressure on prices,” she said.
But one Melbourne developer has found a formula that is enabling it to deliver projects with close to 10 per cent social and affordable housing.
Eleni Modinos, a professional actor and director, moved into a social apartment in Kensington in August, after leaving a live-in relationship with a partner who had multiple addiction issues.
Eleni Modinos moved into a social apartment in August and says it saved her from a desperate situation. Credit: Justin McManus
Moving back in with her family was not possible. Modinos struggled to find an apartment within her price range, and what was affordable to her was barely habitable, she said. One apartment in South Yarra had cardboard instead of a glass pane in the bathroom window.
“That was $415 a week,” she said.
The Women’s Property Initiative referred her to Local: Kensington, a new $380 million build-to-rent housing development launched in inner Melbourne this month.
Modinos pays 30 per cent of her income on rent for a one-bedroom unit.
“I don’t know where I’d be without this. My life could look very different if I didn’t have this opportunity,” she said.
Forty-two of the 477 apartments at Local: Kensington are social and affordable homes, with 33 dedicated to women in need, and nine for people living with disabilities.
Kensington is Local’s first build-to-rent project. The company is developing two more in Box Hill and South Melbourne and has set a target of at least 10 per cent affordable housing in all of its projects.
Its co-CEO, Matt Berg, said the Kensington project was profitable overall, but lost a small amount on the affordable housing component.
Local: Residential co-founders Dan McLennan and Matt Berg are pushing for a minimum of 10 per cent affordable and social dwellings in their developments.Credit: Justin McManus
Berg backed the call to include targets in new developments and said that although 10 per cent was historically high for Australia, the figure paled in comparison to some other countries.
“If you try and develop anything in London, minimum 10 per cent, up to 30 per cent is the requirement. We think 10 years from now hopefully other people are doing the same thing and with higher numbers.”
Women’s Property Initiative chief executive Roberta Buchanan said the development’s 33 social and affordable homes for women were “like gold”.
“Like gold”: Women’s Property Initiative chief executive Roberta Buchanan said she could have filled the Kensington complex’s 477 apartments with women in need of secure housing.Credit: Justin McManus
“We could have filled this building with women in need of housing, that’s the reality,” she said.
Local’s build-to-rent developments are being financed by NAB, whose chief executive, Andrew Irvine, said that “Australia needs Local: Kensington”.
“Last year, we had something like 600,000 newcomers come to our shores, and we only built something like 100 [thousand] dwellings,” Irvine said.
Dr Kate Shaw, honorary research fellow with the University of Melbourne school of geography, said she did not know of any social democratic cities outside of Australia that do not require a percentage of social housing in large new developments.
Urban geographer at Melbourne University Dr Kate Shaw says Australia is an outlier for its lack of affordable housing targets in new developments.Credit: Penny Stephens
“Even in solely private residential developments a social housing component is routine,” she said.
Shaw said it was a scandal that a state-led pilot project would seek to build 60,000 new homes without stipulating one new affordable home.
“We are in an affordable housing crisis – the city is not short of high-end houses and apartments, it’s the low-cost end we need to focus on,” she said.
“Building more of the expensive dwellings that the market likes to provide is not helping those on low incomes – despite the trickle-down nonsense from the YIMBY [Yes In My Backyard] crowd.”
An Allan government spokesperson said its plan to build more homes around 50 train stations would give young Victorians the opportunity to rent or buy a place that is connected to public transport.
“We know the best way to make housing more affordable is to build more homes, and no other state is building and approving more homes than Victoria,” the spokesperson said.
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