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BALLINA SHIRE COUNCIL DRAFT AFFORDABLE HOUSING STRATEGY November 2009 EXECUTIVE SUMMARY CONTENTS The purpose of this draft strategy is to 1 Introduction _______________ 1 outline a range of strategies that 2 Background ______________ 3 Council may pursue to improve 3 Demographic trends _______ 11 affecting housing affordability in 4 Factors in Affordable Housing 20 Ballina Shire. The viability of these 5 Policy Strategies __________ 32 strategies are dependent, however, on References: ______________ 44 a number of factors 'coming together', in terms of Federal and State Government activities, private and/or 'third-sector' interests and financial circumstances. The strategy provides the following: • an outline of the statutory and regulatory framework that affects housing affordability; • an outline of the key demographic characteristics and trends in Ballina Shire that have a bearing on housing affordability issues now and into the future; • a brief discussion on what needs to be achieved, the implications of low housing affordability on the local economy and social fabric of Ballina Shire, and the range of factors that have contributed to the present situation; • the presentation of a number of policy options or strategies available to Council to address housing affordability issues. VERSION MANAGEMENT: These are presented along a spectrum of 'facilitation' of Title Ballina Housing Affordability Strategy outcomes to direct 'intervention'. Version version prepared/reviewed These strategies will form a 'tool- history kit' for Council to utilise as 06/11/09 SMS / RAK circumstances allow. 1 Introduction 1.1 Introduction stable household incomes, are less able to enter the housing market. Housing is a fundamental human need, and the cost, suitability and The impact of poor housing availability of housing each play an affordability is not, however, limited to important role in an individual's ability those individuals and families who are to participate in community life. unable to access housing, as it can Housing affects a number of important potentially have broader impacts on aspects of community living including the local and national economy. High lifestyle, spending, community house prices threaten the health of the interaction and wellbeing. economy, due to the impact interest rate movements can have on the The development of healthy, presently high levels of household sustainable communities is dependent debt. As interest rates rise, on a range of factors including households must pay more to cover housing. Housing plays a fundamental the cost of housing and so have less role in building connections between disposable income available to spend people and place. The creation of on other items within the economy. jobs, the building of infrastructure such as schools, hospitals and other A lack of affordable housing may also community facilities are also key impact on the local supply of workers, factors. There is a need to tailor the particularly for 'key workers'. Key housing and community solutions to workers in Ballina Shire include those meet the emerging population trends. in the service industries (such as retail and hospitality trades), construction, The competition for housing in Ballina health and education sectors. These Shire is strong, due to rapid and essential sectors traditionally have low sustained population growth and to moderate level wages, making it tourist pressures, particularly because difficult for some workers to access of the increasing popularity of the area affordable housing. as a 'sea change' destination for retirees. If key workers are unable to gain access into the home buyer's market The Ballina Shire is an area where they will have to rent privately in a incomes are relatively low, while rents market where there is currently little and housing prices are relatively high. choice. They may also be forced into The level of income an individual or shared housing, commuting long household earns has a significant distances to work or retraining to a impact upon the type of housing that higher-paying profession. It is they are able to access. possible, therefore, that as many of our key workers find it increasingly difficult to access housing there may 1.2 Implications of low well be a 'recruitment crisis' in many housing affordability service industry areas, which could have significant long term impacts Ballina Shire, like much of Australia, is upon the wellbeing of the broader currently facing a major challenge in community. housing affordability, particularly for first homebuyers who, as a result of There is a possibility, therefore, that increasing housing costs and relatively high housing costs may lead to labour Page 1 shortages as families and individuals Workshops held on Tuesday June 16th become less able or willing to pay the 2009". higher house prices required to live in the region. This situation may well The groups were in broad agreement worsen with the ageing of the with respect to each other regarding population as the demand for several what Council's key direction or focus 'key worker' groups increases in the should be, in addressing housing future (particularly in the health affordability, namely: sector), while the overall demand for • Providing leadership housing increases at the same time, • Actively facilitating partnerships due to the much anticipated mass migration of relatively wealthy retirees • Advocating on a state and national level to the region. • Encouraging/forcing diversity in The consideration of housing housing stock supply affordability is required under the State • Utilising existing skills, resources and Government's Far North Coast experience Regional Strategy (FNCRS). • Ensuring key issues, such as public Therefore, the Local Environmental transport are considered Plan (LEP) and Council's growth • Developing an Affordable Housing management planning needs to Model Village consider housing affordability in conjunction with development in existing urban areas and in future development areas. This needs to What is Affordable Housing? occur in the context of Council's and the State's planning framework. Housing is generally considered to be "affordable" if households have to pay no more than 30% of their income on housing costs (eg. rent, mortgage, rates and maintenance). If 1.3 Consultation in the households are paying more than 30% of their income for housing, such households are preparation of the strategy referred to as experiencing "housing stress". During the preparation of this strategy Council consulted with a number of Affordable housing for whom? government and non-government organisations and representatives of When we talk about housing affordability, it is the development industry. Two important to define for whom. workshops were held, facilitated by an Clearly, households on low to moderate external facilitator. A discussion paper incomes are more vulnerable to housing stress. was prepared and distributed prior to Low to moderate income is defined as the workshops. households with 50-120% or less of the median non-metropolitan household income, which includes households with an annual income of The purpose of the workshops was to less than $49,608 (2006 Census). canvas the extent to which Council should, and can, be involved in The housing affordability situation has become addressing affordable housing issues, so acute, however, that now even households on higher than moderate incomes are identify potential barriers and discuss vulnerable to housing stress. The housing a range of potential strategies. affordability challenge is therefore one which affects a broad section of our community. The outcomes of these consultations Thus, providing affordable housing means providing housing options that are affordable are detailed in a document titled for a cross section of our community. "Report to Council on the Affordable Housing Strategy Discussion Paper Page 2 2 Background - governance framework 2.1 Introduction Council's capacity to address housing The Framework advocates a range of affordability is affected by the strategies within these visions, which governance framework within which are relevant to housing affordability, local government in New South Wales namely: operates, including the statutory framework that guides the • Promote built spaces & constitutional and land use planning infrastructure that minimize aspects of Council operations. The intrusion on natural areas & following section outlines key beaches legislative opportunities and • Promote principles for constraints that apply to councils in infrastructure & urban relation to housing affordability. development that minimize impact on natural habitat areas Firstly, however, Council's • Develop & enforce principles for comprehensive long-term community infrastructure & urban strategic plan, which forms the basis development that minimizes for Ballina Shire Council's strategic negative impacts on water framework, is outlined. quality • Create built environments & 2.2 Ballina Shire Sustainability infrastructure that promote social Strategy interaction & an active community Council's comprehensive long term • Develop diverse types of housing strategic plan, People, Place, to meet community needs Prosperity: A Framework for a more • Encourage adaptive reuse sustainable Ballina Shire 2025 is • Promote distinctive villages & intended to guide the future of the towns shire for the next 20 years. The • Design built environment & Framework embraces the principles of infrastructure to minimize sustainability and establishes eight fragmentation of land areas core visions (see below) and a series • Find ways to integrate heritage & of aims and strategies for the contemporary aspirations in the achievement of the visions. These design of built environments visions, aims and strategies will, where • Encourage building & site design relevant, guide Council's strategic land that provides transition between use planning. urban uses • Identify significant & iconic heritage items & places throughout the shire • Build links between sectors to better coordinate land use efficiency Page 3 • Attract & retain business, services, & facilities in • Create opportunities for informal neighbourhoods social interactions for all age • Encourage new business sectors groups to the shire • Encourage multiple use of public • Promote diversity of & within spaces sectors • Make public spaces attractive & • Develop tourism options that user-friendly preserve our social & • Restrict the development of environmental assets environmentally inappropriate buildings & infrastructure • Identify the features of villages & • Support efforts to adopt best towns that make them different practice in all forms of land use from one another & that contribute • Protect prominent areas of to the sense of place associated vegetation, waterways, & with them geological landforms • Promote better understanding of the needs of different land users • Develop information about the • Develop planning guidelines & needs & activities of various land instruments to direct good uses & where they occur in the environmental design shire • Promote the 'sense of place' for • Develop strong links between local different localities business & communities • Maintain or develop transition • Build sense of community & areas between urban settlement belonging areas • Facilitate access to health • Define appropriate & compatible services, regardless of age, socio- uses for different areas in the shire economic circumstances or • Establish planning controls that location enable integrated land use • Develop diverse housing stock • Develop transition areas between within localities to cater for different land uses different age groups & economic • Develop criteria for circumstances status when buffer areas are desirable • Build transport infrastructure that is • Encourage more passive equitable & meets needs movement within & between localities • Locate land uses to maximize • Encourage less reliance on transport & resource efficiency individual car use • Locate land uses to maximize efficiency & effectiveness of • Promote positive social resource use. interactions at neighbourhood level • Improve the overall health status of individuals 2.3 The Statutory Planning • Facilitate access to health Framework promoting programs, activities & facilities The statutory planning framework • Promote holistic & integrated relating to housing affordability issues understanding of health centres on the following key NSW legislation: • The Local Government Act 1993 and Regulation 2005 Page 4 • The Environmental Planning and New South Wales. The Objects of the Assessment Act 1979 Act at Section 5 include: (a) to encourage:… (viii) the provision and 2.3.1 The Local Government Act maintenance of affordable 1993 housing. The Local Government Act 1993 and The plan making provisions of the Local Government (General) EPAA (s. 26(d)) allow for local Regulation 2005 requires NSW environmental plans to include councils to prepare social plans to provision for: assess, plan for and promote the wellbeing of their communities. A key providing, maintaining and indicator of such wellbeing includes retaining, and regulating any the provision of a diversity of housing, matter relating to, affordable including affordable housing, to meet housing the community's needs. When assessing a development The Local Government Charter (s.8 of application, the EPAA requires that the the LG Act 1993) includes the determining authority (the Council, following principles that are to guide a Minister or the Court) consider "the council in the carrying out of its likely impacts of that development, functions: including environmental impacts on both the natural and built • to provide directly or on behalf of environments, and the social and other levels of government, after economic impacts in the locality" due consultation, adequate, (s.79C). Such impacts could include equitable and appropriate services the social impacts of development and facilities for the community likely to reduce opportunities for low and to ensure that those services cost housing. and facilities are managed efficiently and effectively Division 6A of the EPAA makes • to exercise community leadership specific provision for the levying of • to properly manage, develop, developer contributions for the protect, restore, enhance and purpose of affordable housing, through conserve the environment of the contribution plans or developer area for which it is responsible, in agreements. The capacity of local a manner that is consistent with government to levy development and promotes the principles of contributions for affordable housing is, ecologically sustainable however, subject to the area in development. question being identified in a State Environmental Planning Policy (SEPP) Arguably, seeking to ensure an (s.94F) that identifies there is a need adequate supply of affordable housing for affordable housing in that area is an objective that is consistent with (SEPP 70). Whilst Ballina Shire is not the above elements of the Local currently identified in SEPP70, the Government Charter. legislative framework exists for it to be included, should this be considered by 2.3.2 The Environmental Planning Council and the State Government as and Assessment Act 1979 being appropriate. For more information on SEPPs see the The Environmental Planning and following section. Assessment Act 1979 (EPAA) is the key planning legislation in the state of The EPAA also provides for local councils to enter into planning Page 5 agreements with developers to collect State Environmental Planning Policy contributions for any public purpose, (SEPP) (Seniors Living) 2004 including "the provision of (or the This policy aims to ensure a sufficient recoupment of the cost of providing) supply of accommodation for older affordable housing" (s 93F (2)(b)). people and people with a disability by These provisions provide a relaxing local residential development transparent framework for the use of controls, subject to strict locational and planning agreements (including design criteria, to ensure that such requirements for public exhibition) and housing is of a high quality, well the capacity to register an Agreement located, and consistent with the with the Registrar-General and thereby character and feel of local bind successors in title to terms of the neighbourhoods. Agreement. Agreements must be voluntary and a planning authority State Environmental Planning Policy cannot require an applicant to enter an (SEPP) 21: Caravan Parks agreement as a condition of making an This policy ensures that development application or of development consent is required for new caravan consent. However, when determining parks and camping grounds and for an application, a planning authority is additional long term sites in existing to take into consideration any relevant caravan parks. planning agreement. Significantly, the legislation provides for planning State Environmental Planning Policy agreements to be negotiated at the (SEPP) 36: Manufactured Home rezoning, as well as the development Estates application stage. This policy aims to ensure that manufactured home estates (MHEs) State Environmental Planning are well designed and well serviced, Policies and situated in appropriate locations. The policy enables MHEs to be State Environmental Planning Policies established on land where caravan (SEPPs) relate to matters of parks are permitted, subject to criteria significance to New South Wales, and relating to location, access and the affect local planning in two main ways. provision of services. The SEPP also SEPPs may specify directions about permits, with consent, the subdivision the content of local plans (either Local of estates by community title or by Environmental Plans or Development lease up to 20 years. There is Control Plans, discussed below). For provision for a council to be excluded instance, they may enable or require from the SEPP if its LEP is consistent certain local government areas to with the Section 117 Direction on include particular housing related Manufactured Home Estates and provisions in their local plans. SEPPs Caravan Parks. More information on may also contain directions about the Section 117 Directions is provided way in which particular types of below. developments are to be assessed – for instance, matters to be considered or State Environmental Planning Policy special consultation procedures to be No. 65 – Design Quality of Residential followed. Flat Development (SEPP 65) This SEPP is intended to improve the SEPPs of particular relevance to design quality of some forms of affordable housing, in Ballina Shire, residential flat developments by currently include the following: introducing a series of design principles and providing for the establishment of Design Review Panels to provide independent expert advice to councils on applications for Page 6 residential flat developments. In NSW) to undertake development assessing residential flat (including subdivision) without consent developments under the SEPP, only where such development would planning authorities are required to not result in buildings taller than 8.5 consider Design Principle No. 9 – metres or result in more that 20 "Social Dimensions", which states that: dwellings on a single lot, and only in • "Good design responds to the areas where such development may social context and needs of the (otherwise) be lawfully carried out with local community in terms of consent. Housing NSW must, prior to lifestyles, affordability, and access carrying out such development, take to social facilities. into consideration any issues raised by • New developments should the Council (within a timeframe optimise the provision of housing provided for such comment) and take to suit the social mix and needs in into account the NSW Government's the neighbourhood or, in the case Seniors Living Policy. of precincts undergoing transition, provide for the desired future The SEPP provides 'density bonuses', community." in the form of additional permissible 'Floor Space Ratio' (FSR) for infill State Environmental Planning Policy development where affordable housing No. 70: Affordable Housing (Revised is to be provided. It also places Schemes) (SEPP 70) restrictions on the reasons for refusing This SEPP identifies a need for consent. affordable housing in a limited number of local government areas This SEPP also enables a consent (Sydney/Wollongong/Newcastle) and authority to grant consent to amends relevant local and regional development for a residential flat environmental planning instruments to building or multi dwelling housing in enable mandatory levying of areas where such housing is not development contributions to provide permissible in the LEP, where such for affordable housing. If these development is carried out by on the provisions were to be extended to behalf of a 'social housing provider'. other areas of NSW, an amendment to This provision only applies to land in the SEPP would be required. Ballina Shire within 400 metres of land zoned Commercial Core or Mixed Use Affordable Housing State (or equivalent) in the Local Environmental Planning Policy (SEPP) Environmental Plan. The consent 2009 authority can refuse to grant consent if This SEPP aims to facilitate the it considers the development would development of affordable housing by not be compatible with surrounding relaxing certain development land uses. standards where affordable housing is to be provided. The SEPP contains a The SEPP also relaxes development number of mechanisms to achieve controls relating to a number of other this. development types including group homes and boarding houses. The SEPP makes secondary dwellings ("granny flats") complying In most instances the affordable development provided it meets certain housing developed in accordance with criteria, thus requiring certification by a the SEPP must be leased to and building certifier rather than requiring managed by a community housing development consent. provider for a period of 10 years, able to be sold thereafter. The SEPP enables the NSW Department of Housing (Housing Page 7 Section 117 Directions standardise the format of LEPs. NSW local government areas are currently Also at the State level, Section 117 of developing new plans in line with the the EPAA enables the Minister for standard LEP. The standard LEP Planning to make special directions allows for a mix of types of housing in about the content of local most residential and mixed-use zones. environmental plans. Section 117 The standard LEP also allows councils Directions guide local plan making by to specify their own local planning specifying matters to be addressed, objectives and provisions relating to included or retained in local housing, subject to approval by the environmental plans. Currently, there Department of Planning. are two Section 117 Directions of particular relevance to affordable Local environmental plans can be housing in Ballina Shire. important local instruments to protect existing sources of low cost housing Direction No. 18: Manufactured Home and promote additional affordable Estates and Caravan Parks housing stock within an area. This Direction aims to ensure that councils retain existing zones of land Development Control Plans that permit caravan parks, when preparing new local environmental Development control plans (DCPs) plans, and specifies additional may contain more detailed provisions for caravan parks and development controls than LEPs. manufactured home estates. They are also prepared by local councils and do not need to be Direction No. 21: Residential Zones approved by the Minister for Planning. This Direction contains requirements There are opportunities for Council to governing the creation, alteration or use it's DCP to promote affordable removal of a residential zone boundary housing. or provision. A central requirement is that draft local environmental plans 2.3.3 Far North Coast Regional should not reduce the permissible Strategy 2006 residential density of a zone; rather, as much as possible, provide for a variety The purpose of the Far North Coast of housing forms and increase Regional Strategy (FNCRS) is as permissible residential density of land. follows: "The purpose of the Regional Local Environmental Plans Strategy is to manage the Region's expected high growth rate in a A council's local environmental plan sustainable manner. The Regional (LEP) is the main planning instrument Strategy will protect the unique that applies at the local level. LEPs environmental assets, cultural are prepared by local councils but values and natural resources of must be approved by the Minister for the Region while ensuring that Planning. Local environmental plans future planning maintains the typically contain overall planning character of the Region and objectives, a system for land use provides for economic categorisation such as zoning, opportunities. In addition, future significant development controls and growth will be managed by special provisions for certain preventing the spread of coastal developments or types of development and encouraging the developments. development of non-coastal centres — ensuring adequate land The NSW State Government has is available and appropriately recently introduced a standard LEP to Page 8 located to sustainably e. the effect on the market of accommodate the projected government intervention in the housing, employment and housing sector including planning environmental needs of the and industrial relations laws; Region's population over the next f. the role of financial institutions in 25 years." home lending; and g. the contribution of home ownership One of the key stated objectives of the to retirement incomes. strategy is to: "protect the region's coastline from excessive population Ballina Shire Council made a pressure, provide affordable and submission to the Select Committee. appropriately located housing and diversify and grow the Region's The Select Committee report, released economic base." in June 2008, brought down 32 recommendations addressing a broad The Actions of the Strategy include range of issues including taxation (relating to 'Settlement and Housing') policy, labour, planning, construction the following: standards and finance related matters. "Local government will consider a range of affordable housing 2.4.2 Policy Initiatives strategies, including forms of low cost housing, suitable zonings and The Federal Labour Government has development controls to improve recently introduced several policy housing choice, and specific initiatives to address housing schemes. These strategies must affordability. These are outlined be consistent with relevant State below. policies." Housing Affordability Fund 2.4 Federal Government The Housing Affordability Fund aims to Housing Affordability lower the cost of new, moderately Initiatives priced homes by encouraging all levels of government to work together to 2.4.1 Senate Select Committee address planning blockages for new developments and reduce The Federal Government recently infrastructure charges. established a Senate Select Committee to inquire into and report The scheme aims to achieve an upon the barriers to home ownership improvement in housing affordability in Australia, including: by providing funding to State or local government to support two key a. the taxes and levies imposed by outcomes, namely: State and Territory Governments; • To 'streamline' development b. the rate of release of new land by assessment processes. The hope State and Territory Governments; is that this will result in a reduction c. proposed assistance for first home in development timeframes, which owners by State, Territory and the will reduce the holding costs for Commonwealth Governments and developers and that these savings their effectiveness in the absence will be passed on to home buyers; of increased supply; and d. the role of all levels of government • To reduce infrastructure costs in facilitating affordable home associated with development. ownership; Direct funding (to a value of no more than $10,000 per dwelling) of Page 9 some infrastructure would be provided on the condition that the It is worth noting, however, that whilst Council and the benefiting there is a need for affordable rental developer/s ensure that cost housing, a supply of rental housing savings will be passed on to home does not replace the need for buyers. affordable home ownership. The benefits of home ownership over rental The main challenges with respect to housing are well documented. These this scheme appear to include the benefits include the following: following: • increased community stability; • Local government 'processes' and • greater 'sense of belonging' for 'procedures' are not the only residents; issues with respect to the timely • improved incentive effects for resolution of planning matters. house maintenance and upkeep Other important factors include: (which also reduce administration o Inadequate, incomplete or and maintenance burdens on incompatible development government or other agencies applications; responsible for rental housing); o Staff shortages; and • Difficulty with ensuring that • a range of health and infrastructure cost savings will be psychological benefits. passed on to home buyers. Benchmarking is required to demonstrate that savings are being made, but these are difficult to define, and it is unclear that such a scheme would be in the interests of developers (required to essentially be 'locking-in' a future below benchmark sale price). National Rental Housing Affordability Scheme The National Rental Housing Affordability Scheme (NRHAS) aims to increase the supply of affordable rental housing units by providing an annual $8,000 financial incentive per dwelling to investors who rent-out approved dwellings at 20 per cent or more below current market rates, to low and moderate income households. A number of potential financial and organisational models are proposed, including utilising not-for-profit housing companies, private development companies and investment funds. There is potential for this fund to be utilised to increase the availability of affordable rental housing in Ballina Shire, via several of the strategies outlined further in this paper. Page 10 3 Demographic trends in Ballina Shire 3.1 Demographic summary The following summarises key demographic facts about Ballina Shire (LGA): • LGA population of 40,265 in 2006, from 38,158 in 2001; • Population growth of 2,107 (approx) people between 2001 and 2006; • Household growth greater in lone person households and couple families without children relative to couple families with children (the traditional nuclear family); • The majority of population growth during the 2001 and 2006 period occurred in the over 50 years old age groups; • Declines occurred in the under 15 year age group and the 30-49 year old age group between 2001 and 2006; • Overall the population continues to age with the median age increasing from 41 years old in 2001 to 43 years old in 2006; • In 2006 the LGA's median weekly household income was $779, compared with $1,027 for Australia as a whole; • Between 2001 and 2006 the number of households that fully owned their dwellings fell from 6,535 to 6,166 (a 5.6% decline); • Between 2001 and 2006 the number of households in the process of purchasing their dwelling increased from 2,941 to 3,907 (a 32.8% increase). Key housing related demographic statistics for Ballina Shire are provided in the following table. Table 3.1. Summary of key demographic statistics, Ballina Shire 1986-2006. Year 1986 1991 1996 2001 2006 Population (raw Census 23,416 30,120 34,702 37,218 38,971 Count) Population (Estimated 23,416 30,192 34,650 38,158 40,265 Resident Population) Total Dwellings N/A 12,099 14,779 16,127 17,129 Occupied Dwellings 9,519 11,239 13,412 14,921 15,837 Population Growth Rate N/A 5.2 2.8 1.9 1.1 (%) Between Census Years Average Annual Increase N/A 1,355 892 702 421 (persons) Percentage Change in Population between N/A 28.9 14.8 10.1 5.5 Census Occupancy Rate 2.46 2.68 2.59 2.49 2.46 (persons/dwelling) Page 11 3.2 Population distribution The 1986-1991 period had the highest and growth rate of net migration to the shire of an average of 1,138 persons per year, The resident population of Ballina with the growth rate since 1991 Shire is estimated (as of 2006) at trending downward, although still at a approximately 40,000 people. In the strong rate (over 600 persons per year twenty years between 1986 and 2006 on average). the population of the shire increased 1,200 by 60%, at an average rate of 728 additional residents per year. Annual Average Net Migration 1,000 However, consistent with the regional 800 trends, the rate of population growth has declined more recently. For 600 example, between 1986 and 1991 the 400 population growth rate was 4.3% per annum; between 2001 and 2006 it was 200 1.1% per annum. 0 The areas within the shire that 1976- 1981 1981- 1986 1986- 1991 1991- 1996 1996- 2001 2001- 2006 experienced the most growth, between 1996 and 2006 were Skennars Head Figure 3.2. Net migration Ballina Shire 1976- (5.6%), Lennox Head (5.0%), Wardell 2006 (3.1%, from a low base), West Ballina (Source: ABS 2007) (2.1%) and Wollongbar (2.0%). The areas within the shire that experienced The major demographic trends the least growth in the same period affecting migration rates in Ballina were East Ballina (0.3%), and Shire include the following: Alstonville (1.1%). The population of • The inflow of older migrants to Ballina Island declined (-0.7% per lifestyle (particularly coastal) year) between 1991 and 2006. The regions; likely reasons for this decline include a • The outflow of younger migrants declining occupancy rate (fewer from rural and regional areas to people per dwelling), and the inner metropolitan regions; and relocation of the Tinkerbell Caravan • The nation-wide ageing of the Park off the island during this period. Australian population, particularly The distribution of the population the transition of the post-WWII throughout the shire, as of 2006, is generation, the 'Baby-Boomers', shown in the following chart. into retirement. 18,000 16,000 Projections of future population growth 14,000 (prepared by the NSW Department of 12,000 Planning) suggest that the population of Ballina Shire is likely to increase at Persons 10,000 8,000 a rate of approximately 540 additional 6,000 people per year (on average) over the 4,000 next 20 to 30 years. This rate of 2,000 growth would result in a shire 0 population of approximately 54,000 Ballina Alstonville Cumbalum Rural Wollongbar Lennox Head Wardell persons by 2031. Locality Figure 3.1. Population of Ballina Shire by Locality, 2006 (Source: ABS 2007) Page 12 Projected Population Growth The degree of change occurring in 2006-2031 household types is shown in Figure 60,000 3.5 below, which shows the composition of the change in Estimated Population 50,000 40,000 household types that occurred in Ballina Shire between 2001 and 2006. 30,000 20,000 10,000 0 1986 1991 1996 2001 2006 2011 2016 2021 2026 2031 Year Figure 3.3. Population projections, Ballina Shire 2006-2031 (Source: NSW Department of Planning). The population of Ballina Shire is anticipated to age significantly over the forthcoming 20 year period, as shown in the following graph, mirroring demographic trends in Australia as a Figure 3.5. Composition of change in whole. household types, Ballina Shire 2001-2006. 65+ years The above figure shows that of the 50-64 years 784 additional households in Ballina Age Group 30-49 years Shire between 2001 and 2006, 38% of those households were comprised of 15-29 years lone person households, 31% were 'couple families without children' 0-14 years households. Only 2% of the additional 0% 10% 20% 30% 40% households were the 'traditional family' % of Population type, 'couple families with children'. 2006 Actual 2031 Projected This trend is anticipated to continue Figure 3.4. Ballina Shire age profile, actual and further increase in the future. (2006) and projected (2031). (Source: ABS 2007) 3.3 Housing Trends Population ageing, combined with 3.3.1 Dwelling form projected higher rates of family dissolution, is expected to result in a The single detached dwelling continued fall in average household (separate house) has traditionally size. This reduction in household size been, and continues to be, the most has the effect of increasing the common dwelling type in Ballina Shire. number of dwellings required to house Specifically, three-bedroom dwellings the same population. This may have are the most common dwelling type in implications for some localities of Ballina Shire with over 6,799 occupied Ballina Shire, where capacity for (or dwellings, comprising 45% of the total rates of) redevelopment and occupied dwelling stock. The share of expansion are low, meaning that the four bedroom dwellings and of one population capacity of those localities bedroom dwellings has, however, may stabilise or decline over time, if increased the most over the 1986 to intensification of development does 2006 period, as shown in Figure 3.6 not occur. and Table 3.1. Page 13 identification of significant areas of 60.0% Proportion of dwelling stock land that appear to have potential for 50.0% future residential development. These areas appear sufficient to 40.0% accommodate the population demand 30.0% projected for Ballina Shire beyond the next 20-30 years, as shown on Figure 20.0% 3.7 below, for each of Ballina Shire's 10.0% urban localities. For the purpose of the figure 'Ballina' includes Ballina 0.0% Island, West Ballina and North Ballina. bedsitters) bedroom bedrooms bedrooms bedrooms (includes Four or The red dot on the figure represents One Three more None Two the number of dwellings required in Number of bedrooms 2031 to accommodate the projected population for the locality. 1986 2006 8,000 Figure 3.6. Dwelling size by number of bedrooms Ballina Shire 1986 and 2006 7,000 (Source: ABS 2007) 6,000 Dwellings with four or more bedrooms 5,000 increased in terms of total dwellings Dwellings 4,000 from 17.3% in 1986 to 27.9% in 2006. One bedroom dwellings also increased 3,000 from 2.8% in 1986 to 3.6% in 2006. 2,000 Three bedroom dwellings and two 1,000 bedroom dwellings both declined as a proportion of total dwellings between 0 Lennox Head Ballina Cumbalum Skennars Head Alstonville East Ballina Wollongbar Wardell Rural 1986 and 2006, from 50.4% to 45.0% for three bedrooms and 29.5% to 20.8% for two bedrooms, even though Potential additional dwellings (candidate investigation areas) Potential additional dwellings (zoned land as of 2008) the total number of dwellings Existing dwellings (2006) Projected dwellings required (2031) increased (in the case of three bedroom dwellings substantially). Figure 3.7. Dwelling Supply, Existing 2006, Potential and Required, Ballina Shire. 3.3.2 Dwelling Tenancy As the above figure shows, the main future growth areas in the shire are the The housing tenure characteristics of localities of Cumbalum, Lennox Head Ballina Shire are shown in the Table and Wollongbar. 3.2 on the following page. The majority of dwellings within Ballina This forecast of housing demand and Shire are fully owned or in the process supply suggests that sufficient supply of being purchased (64.6% of all exists in lands identified in the local dwellings). More of Ballina Shire's growth management strategy to dwellings are fully owned or being accommodate the forecast population rented, and less are being purchased, demand, over the long-term. compared with the State as a whole. In the shorter term however, supplies of urban zoned land need to be 3.4 Housing Demand and regularly augmented (via rezoning of Supply Forecast suitable lands) to provide a diversity of residential opportunities within the Ballina Shire Council's planning over various urban settlements and distinct the last 20 years has resulted in the housing markets (or sub-markets). Page 14 Table 3.1. Dwelling type characteristics Ballina Shire 1996 & 2006 New South Ballina Shire Wales Dwelling Type 1996 2006 1996 2006 2006 Occupied Occupied % % % Dwellings Dwellings Separate house 8,916 10,698 66.5% 67.5% 69.7% Semi-detached, row or terrace house, townhouse etc: One storey 1,194 1,326 8.9% 8.4% 4.9% Two or more storeys 603 667 4.5% 4.2% 4.8% Total 1,797 1,993 13.4% 12.6% 9.8% Flat, unit or apartment: In a one or two storey 1,303 2,023 9.7% 12.8% 6.6% block In a three storey block 150 131 1.1% 0.8% 6.0% In a four or more storey 9 59 0.1% 0.4% 6.3% block Attached to a house 83 37 0.6% 0.2% 0.2% Total 1,545 2,250 11.5% 14.2% 19.0% Other dwelling: Caravan, cabin, 811 826 6.0% 5.2% 1.0% houseboat Improvised home, tent, 43 14 0.3% 0.1% 0.1% sleepers out House or flat attached 78 52 0.6% 0.3% 0.3% to a shop, office etc. Total 932 892 6.9% 5.6% 1.4% Dwelling structure not 227 7 1.7% 0.0% 0.1% stated Total 13,417 15,840 100.0% 100.0% 100.0% (Source: ABS Time Series Profile (Table T15), 2007) Table 3.2. Tenure type characteristics, Ballina Shire 1996 & 2006. Occupied Dwellings % of Dwellings NSW Tenure Type 1996 2006 1996 2006 2006 Fully owned 6,323 6,357 47.1% 40.1% 33.2% Being purchased 2,455 3,924 18.3% 24.8% 30.2% Rented 4,057 4,545 30.2% 28.7% 28.4% Other tenure type 205 237 1.5% 1.5% 0.8% Tenure type not 380 776 2.8% 4.9% 7.4% stated Total 13,420 15,839 100.0% 100.0% 100.0% (Source: ABS Time Series Profile (Table T16), 2007) Page 15 The projected supply and demand for an increase of 27.8% over five residential zoned land is shown in the years; following figure, on the basis of • The median dwelling sale price projected population growth and (houses and units combined) in anticipated land releases. Ballina Shire increased from $178,500 in 2001 to $370,000 in 70,000 2006, an increase of 107% over 5 Estimated population capacity of candidate years. The median sale price for 60,000 release areas assuming it is rezoned and separate houses increased from developed 50,000 Estimated population capacity of zoned land $190,000 in 2001 to $405,000 in as it is developed 2006, an increase of 113%. The 40,000 price of units increased from Population Estimated population capacity of projected 30,000 infill development $129,000 in 2001 to $268,000 in Estimated population 2006, an increase of 108%. The 20,000 capacity of existing dwelling stock change in the median sale price for 10,000 Projected population houses and units is shown on Figure 3.9; 0 • Housing costs have risen 06 09 12 15 18 21 24 27 30 20 20 20 20 20 20 20 20 20 substantially between 2001 and Figure 3.8. Projected Residential Zoned 2006, with high rates of 'housing Land Demand and Supply, Potential stress' being apparent throughout Population Accommodated 2006-2031. the LGA; • The median weekly rent for Ballina What this broad balance between Shire increased from $150 to $210 demand and supply does not reflect, per week between 2001 and 2006, however, is the availability of an increase of 40% over the five 'appropriate housing'. Changing years; household types and population ageing mean that a greater diversity of • The median monthly housing housing types (traditional single repayment for Ballina Shire detached housing, units, townhouses, increased from $884 in 2001 to apartments and seniors living) will $1,287 in 2006, an increase of likely be required into the future. 45.6% over five years.; • The large jump in monthly housing 3.5 Housing affordability loan repayments, for Ballina Shire residents, which occurred over the The affordability of housing is five-year period between 2001 and fundamentally a matter of the balance 2006 is shown on Figure 3.10; between income and housing costs. Household incomes are set by the $500,000 broad economic conditions, while $450,000 housing costs are a combination of $400,000 house prices, transaction costs (such $350,000 Median Sale Price as conveyance and stamp duty) and $300,000 Houses $250,000 Units financing costs (interest rates). $200,000 $150,000 The extent and severity of the housing $100,000 affordability challenge in Ballina Shire $50,000 is reflected in the following key facts: $0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 • The median household weekly income in Ballina Shire increased Figure 3.9. Median Sales Price, Houses and Units, Ballina Shire 1996-2007 from $607 in 2001 to $776 in 2006, (Source: Ballina Shire Council) Page 16 Table 3.4. Proportion of housing stock More than affordable for very low to moderate income $2,000 households, Ballina Shire 2005-2007. Monthly Mortgage Repayment From $1,600 to $1,999 Proportion of housing stock June June June 2006 From $1,200 to $1,599 affordable for Qtr Qtr Qtr 1996 households 2005 2006 2007 From $550 to on: $1,199 Very low 0% 0% 0% Less than $550 incomes Low incomes 1% 0% 0% 0% 10% 20% 30% 40% 50% 60% Moderate Proportion of Households 15% 10% 11% incomes Figure 3.10. Monthly Housing Loan (Source: Valuers General & Rental Bond Board*) Repayment, 2001 & 2006 (Source: ABS 2007) The following table identifies the Over $550 number and percentages of very low, low and moderate income households $350 - $549 who are in home purchase stress*. Weekly Rent 2006 $225 - $349 2001 Table 3.3. Proportion of very low to $100 - $224 moderate income households in home purchase stress, Ballina Shire 2006. $0 - $99 Household Households % of income group in home household 0% 20% 40% 60% 80% purchase income group Porportion of Rental Properties stress Very low 184 79% Figure 3.11. Weekly Housing Rental Costs, income Ballina Shire 2001 & 2006. Low income 310 62% (Source: ABS 2007) Moderate 322 40% The housing stress situation is (Source: Valuers General & Rental Bond Board*) particularly acute for low to moderate income households, as shown in the The following table shows the following table*. proportion of the housing stock that is considered 'affordable' for very low to moderate income households, in Table 3.5. Proportion of very low to Ballina Shire. moderate income households in rental housing stress, Ballina Shire 2006. Households % of in home Household household rental stress income group income (total rental group properties) Very low 753 (808) 93% * Based on Census data: Very low Incomes = incomes of income less than 50% of non-metropolitan NSW median household income; Low Incomes = 50-80% of non-metropolitan NSW Low income 202 (262) 77% median household income; Moderate Incomes = 80-120% of Moderate the non-metropolitan NSW median household Income. 179 (857) 21% Average Weekly Earnings (AWE) are used to index the income household incomes. A property is regarded affordable if the loan repayment is less than 30% of the household incomes. (Source: Valuers General & Rental Bond Board*) A 30-year loan period and 10% deposit are assumed. The most recent interest rate during the last two quarters of each The State housing stock does not period is used. The proportion (%) of affordable purchase is reported only where 30 or more properties are sold, based have a substantial dampening effect on transfer date (not contract date) for the previous two on the level of housing stress, due to a quarters. Page 17 decline in the Department of Housing stock over recent years (DOH). What is a low to moderate income household? The level of housing stress evident in Ballina Shire (at the 2006 Census) is shown in Figure 3.12. The level of A 'very low income household' is defined as a household having an income of less than housing stress in Ballina Shire is 50% of non-metropolitan NSW median compared with other local government household income; A 'low Income areas in the region (and some parts household' has 50-80% of non-metropolitan thereof) in Figure 3.13. The level of NSW median household income; and a housing stress in Ballina Shire in 2006 'moderate incomes household' has 80-120% of the non-metropolitan NSW median was comparable with Lismore City and household Income. the majority of the Tweed Shire, greater than Kyogle, Richmond Valley and rural parts of Lismore Local Based on 2006 Census data: Government Area, but less than the Very low income household = annual overall housing stress level in Byron income of less than $20,670 per year. Shire. Over the region as a whole, Low income household = annual income approximately 22-23% of all between $20,670 and $33,072 per year. households were paying 30% or more Moderate income = annual income between of their gross household income on $33,072 and $49,608. housing. Figure 3.12. Proportion of households for which rent or mortgage costs comprise over 30% of their gross income, Ballina Shire 2006. Page 18 Figure 3.13. Proportion of households for which rent or mortgage costs comprise over 30% of their gross income, Far North Coast Region of NSW 2006. Page 19 4 Factors in Affordable Housing housing that is not available in 4.1 What needs to be their community; achieved? • A resident loses their spouse or partner and can no longer afford The aim of the Housing Affordability the rent on the family home; Strategy is to identify and respond • Adult children in a local family effectively to key concerns of the require independent housing; community with respect to the availability of affordable housing. • Working households want to start a family but will lose some of their Adequately addressing the housing earning potential and, therefore, issues facing Ballina Shire, however, capacity to pay for their housing; requires a dual focus, namely: • The capacity of a family to pay for • Affordability - seeking to ensure their existing housing is reduced that housing (either rental or through long-term illness or owner-occupied) is fairly disability; accessible for all members of the • A lower paid worker can obtain community; and employment in the local area but • Appropriateness - seeking to cannot afford to live there. ensure that the 'housing stock' reflects the housing needs of the Thus to be effective, housing policy community. needs to address issues of affordability for a broad cross section These two compatible concepts are of the community. further explained below. 4.1.2 Appropriate housing 4.1.1 Affordable housing Population projections for Ballina Shire The term 'affordable housing' simply suggest a significant aging of the refers to the need to ensure that the population will occur along with a cost of housing (rental or owner- major shift in household types, occupied) is not excessive in terms of including a significant increase in the household income, focusing number of lone person households particularly on low to moderate-income and couple families without children. households. A benchmark often used Both of these trends are likely to have in determining if housing is affordable major implications for the adequacy of is that no more than 30% of household existing dwelling forms and types to income should be needed to cover the meet future housing needs. cost of housing. Three-bedroom detached dwellings Beyond the phenomenon of rising are the most prevalent housing type in house prices, which essentially the Ballina Shire. These dwellings are 'freeze-out' prospective first being, and have been built primarily to homebuyers, local residents may face meet the needs of families with affordability problems in circumstances children. The housing needs of our such as the following (New South community, however, are likely to Wales Department of Housing 2006): undergo significant changes over the next 20 years for various reasons. For • A resident retires and needs example, over the next 20 years: smaller and more affordable Page 20 • Many of today's children will be and changing health and income, tend looking to find their own place to to change as they age. This can mean live; that staying in existing housing can • As this group's needs are different become impractical or simply not to those of families it is reasonable possible. Finding appropriate and to assume that they will be looking affordable housing, within the person's for alternative types of housing that community, can then become a major are affordable and appropriate to challenge, during a personally difficult their particular needs; period in that person's life. • Many of today's parents will be approaching retirement and they To be adequate, accommodation are also likely to be looking for needs to be accessible and suited to alternative housing, as their residents' needs. Ideally, housing existing family homes may well be should be located close to key larger than they need; and services and infrastructure to • It is anticipated that the number of maximise opportunities for people to single person households and access and use such facilities. At the couple only households will same time such housing needs to be increase substantially. These affordable. For many people, following groups of people may well be retirement, the capital value of existing seeking appropriate types of dwellings is likely to comprise their housing such as villas, units and major asset. The option of 'down- townhouses. scaling' dwellings may, therefore, be a major source of savings management The housing needs of the ageing for many people during retirement. population represent a particular challenge which, due to its scale, is The available housing stock may, worthy of special consideration. An however, be slow to change, ageing population requires a broad particularly when such significant range of accommodation types demographic change (as we are likely ranging from independent 'seniors to see) is to occur within a period that living' establishments through to full is shorter than the average care facilities. In particular, the need replacement age of dwellings. for full care places is likely to increase due to the expected rise in the Future housing development should numbers of persons over 80 years of seek to be appropriate to the needs of age. However as the population ages, both existing and future residents. generally, there will be a demand for a Attention should be paid to ensuring broad range of housing appropriate to that there is a diversity of housing older people at various stages of life options for people across the spectrum and levels of health and mobility. of age and lifestyle choice. Ideally, Council should encourage the Understandably, most people want to development of variety in the housing remain independent as they age. stock, to meet the anticipated future However as people age their house housing needs of the community. design needs change, e.g., wider doors and stair support may be It is apparent that a diverse range of required. Whilst existing dwellings can dwelling types will be required in the be retrofitted, it is less costly in the future, and that it is likely that future longer term to consider these issues demand will be higher for housing and provide basic 'accessible' features appropriate to smaller households, as when the dwellings are constructed. the number of single-person However, people's personal households and couples without circumstances, such as housing needs children increase. The challenge is to provide opportunities for our towns Page 21 and villages to change and adapt with is that the demand for workers, and in the changing needs of residents to particular aged care workers, will likely provide flexibility in lifestyles and increase at a time when the rates of finances, as people's circumstances labour-force participation are expected change. An inability to provide for this to be in decline. flexibility may result in the occupation of inappropriate housing (too large or Thus, a lack of affordable housing may too small) and/or in inconvenient also impact on the local labour supply, locations (distant from friends & family particularly for a range of 'key or services). workers'. For Ballina Shire 'key workers' include those in the service It is anticipated, therefore, that the industries (such as retail and future demand for housing may require hospitality trades), construction, a greater component of higher density health, childcare and social support development in some locations in the sectors. These essential sectors future. That said, the three-bedroom traditionally have relatively low to house is, and is likely to remain, the moderate level wages, making it most prevalent dwelling type in Ballina difficult for some workers to access Shire. Low density residential areas affordable housing in the vicinity of are highly valued by residents for their their workplace. low scale, ample private open space, residential amenity and 'family friendly' The 2006/07 NSW State of the character. The availability of this Regions Report (National Economics lifestyle option should be retained. 2007), prepared for the Local However, maintaining an adequate Government Association, identifies mix of housing will be necessary to other possible legacies of the recent meet the diverse and growing housing boom in house prices, including: needs of the present and future residents of Ballina Shire. A household sector which is divided between active beneficiaries of the 4.2 What are the implications boom, stay put passive beneficiaries, and the victims of the boom - both of low housing over-indebted first home buyers and affordability? households locked out of home ownership by high land costs. The impact of poor housing affordability is not limited to those individuals and families who are 4.3 What has caused low unable to access housing, as it may housing affordability? potentially have negative impacts on the local economy and the broader To effectively address the housing community. High housing costs can affordability challenge, consideration threaten the health of the local of its causes is required. The following economy, due to the potential for high section broadly discusses the causes housing costs to affect spending on and contributing factors to the current other goods and services. housing affordability situation. The fact that the population of Ballina House prices are affected, directly or Shire is ageing also presents a indirectly, by a number of key factors, particular set of challenges. An ageing including: population means that there is an • Housing production costs; increasing ratio of older persons to • The cost and accessibility of younger persons (which is the same finance; as saying that the 'dependency ratio' will increase). The implication of this Page 22 • Macro-economic / demographic Population growth trends affecting household incomes; Population growth is both a local and a • Taxation settings promoting home nation-wide issue. Demand for ownership/housing investment; housing in Ballina Shire is high, due to and a combination of the warm temperate • The supply of housing and the climate, attractive coastal environment availability of substitutes. and proximity to higher order services and infrastructure that make Ballina While aspects of these factors relate to Shire an attractive retirement Ballina Shire's particular destination. The difference in house circumstances, the housing prices between capital cities and the affordability situation is not confined to North Coast of NSW had also specific local government areas. It is traditionally been a factor, however the necessary, therefore, to look at both convergence of city and coastal house local and broader factors that are prices may have dampened this effect contributing to low housing in recent times. Much of this affordability. anticipated 'retirement migration' is, however, yet to occur, with members of the baby-boom generation only now approaching retirement age. Household purchasing power An increase in the households' purchasing power available for housing is an obvious prerequisite for a rise in house prices. A rise in purchasing power can come from either one or a combination of the (Source: Gurran et al 2008) following: • increasing real (inflation adjusted) For the purpose of this paper, the household incomes; above factors affecting housing • a reduction in other household affordability have been divided into two costs so that a greater share of the distinct sub-sets, namely: household budget is available to • demand side factors; and meet housing costs; and • supply side factors • an increase in the availability of and/or a reduction of cost in 4.3.1 Demand side factors borrowings. Factors which affect the demand for The influence of all three of these housing include the following: factors has been apparent over the • Population growth; past decade, through a rise in real • Rising real incomes; household incomes, falling consumer • The availability of credit to finance prices due to a high currency housing purchase by owner exchange rate and booming imports occupiers and investors; from Asia, and significant growth in • The treatment of housing for borrowing. taxation purposes; and • Expectations of future capital Low interest rates and an increase in gains. the variety of housing related finance products, which include reduced down-payment and household income requirements, and home loans with Page 23 redraw facilities and revolving credit Despite the increase in the value of lines has substantially increased the household assets (most significantly availability of credit to households and the value of housing), the costs of investors. housing purchase (relative to income) have also increased, as shown in The boom in housing credit evident Figure 4.3 which plots housing-related since the mid 1990s is shown in Figure interest payment costs relative to 4.1, which also shows that the majority household disposable income. of this housing related credit growth has gone towards the purchase of Interest payments as % of disposable income 16 existing dwellings rather than 14 construction of new dwellings or the 12 purchase of newly constructed dwellings. 10 Interest on total household debt 8 Interest on 160,000.0 6 housing related Dwelling Commitments ($ Million) household debt 140,000.0 4 Purchase of established 120,000.0 dwellings– $ 2 million 100,000.0 Construction of 0 dwellings– $ 1978 1984 1990 1996 2002 2008 80,000.0 million 60,000.0 Purchase of 40,000.0 newly erected dwellings– $ million 20,000.0 0.0 Figure 4.3. Interest payments as a proportion of disposable household 1976–77 1980–81 1984–85 1988–89 1992–93 1996–97 2000–01 2004–05 income, Australia 1977-2008. (Source: RBA Bulletin Statistical Table B21) Figure 4.1. Dwelling finance commitments, Australia 1976-2008. The above figures indicate that (Source: ABS Australian Economic Indicators Table Australian households have, as a 3. (inflation adjusted, 2008 dollars)) whole, increased their level of debt in both absolute (funds borrowed) and Household gearing (borrowing as a relative (relative to assets and income) proportion of the value of household terms. The above also shows that assets) has increased as a result, as households are now affected to a shown in Figure 4.2. higher degree than in the past by changes in interest rates, as mortgage 35 repayments consume a larger proportion of household budgets. 30 Debt as % of Value of Assets 25 A major contributor to the rise in house 20 Debt to assets prices over the last few decades has Housing debt to been the increasing perception of 15 housing assets housing as an asset above and 10 beyond the value of housing as an 5 item of consumption (involving the consumption of 'housing services'). 0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 This has had implications for house prices due to the nature of asset- Figure 4.2. Household gearing, Australia related decision making combined with 1988-2008. easily obtainable credit. This has (Source: RBA Bulletin Statistical Table B21) been confirmed by studies of the decisions of house purchasers (of both Page 24 investor housing and owner-occupied of housing or land for housing on the housing) that have shown that market. expectations of capital gain outweigh 'economic fundamentals' (such as Supply side factors include the expected rental returns) in explaining following: house price rises (Duscansky & Koc • the availability of appropriately 2007). Further, due to the power of zoned land; these capital gains expectations, there • the availability of public is a tendency for rises in house prices infrastructure to service the to increase the demand for housing growing population including rather than decreasing it, contrary to roads, water, sewerage, and what the standard economic demand community and commercial and supply model assumes (Kholdy & facilities; Sohrabian 2008). This process has • ownership, finance and incentive been further reinforced by the impact arrangements that are conducive of rising housing equity during the to land being offered for sale in boom which provided balance sheet response to housing demand; and comfort and collateral to support • housing production costs. further borrowing. The availability of appropriately Further, expectations of capital gain in zoned land housing have been reinforced by certain incentives present in the Ballina Shire Council undertakes taxation system. These include: regular long-term strategic planning to • the exemption of owner-occupied determine local housing needs and housing from capital gains tax and facilitate housing provision by the land tax; market. This broad strategy is • the availability of negative gearing supported by more refined local for housing investments, that is the strategies that address planning and treatment of interest payments as urban growth issues specific to tax deductible against other individual urban settlements. income; • the rate of capital gains tax liability In the case of Ballina Shire, the for all assets including housing broader work considers potential land investment was halved in 1999, demands and identifies potential local thus increasing the potential land supplies. Local land supplies returns from housing investment. include the supply of undeveloped urban zoned land, assumed rates of The above factors, combined with the infill development and potential future easy availability of credit, have urban areas that have been identified contributed to a housing investment via a broad sieve-mapping process to boom (by both 'investors' and owner- identify potential development sites occupiers), beyond values that might (subject to subsequent assessments be supported by 'fundamental values' undertaken at rezoning stage). particularly household incomes. The outcome is low housing affordability In Ballina Shire's case, there is and increased household vulnerability approximately 400 hectares of to interest rate movements. undeveloped zoned land currently available for residential development. 4.3.2 Supply Side Factors This equates to a potential supply of 4,100 dwellings (at conventional Supply side factors are those that housing densities), relative to an impact on the availability, and or cost, anticipated total demand of approximately 320 dwellings per year Page 25 for the shire as a whole. When described above, house prices in considered in combination with the Ballina Shire have increased development potential of existing substantially in the last few years. vacant lots and potential This situation is of course not peculiar redevelopment (at current rates) within to Ballina Shire, and is mirrored existing urban areas this equates to throughout Australia and in a number approximately 20 years worth of of other advanced industrialised supply at current rates of population countries around the world, including growth. the USA, New Zealand and the UK. This suggests both that housing When potential future development supply may indeed be constrained at a areas are included, that is land not lower rate than demand, and that other currently zoned for residential 'supply side' factors may be development (but identified in contributing to this situation. Council's Growth Management Strategy), there is an additional Infrastructure availability potential 4,500 dwellings (on top of the 4,100 dwellings referred to above). Infrastructure impacts on housing Thus, in the case of Ballina Shire, total affordability in two key ways, namely: potential land supplies as described • adding to the cost of development above are, in theory, sufficient to via the imposition of costs on accommodate the anticipated demand developers, for on-site and off-site for residential housing for 30 or so infrastructure, which are passed on years, at current rates of population to land purchasers; and growth. This assumes that land zoned • delays in the timing of for residential development is in fact infrastructure delivery can impact developed and at a rate on development timeframes. commensurate with demand, and that Where development is debt- anticipated demand projections are financed such delays can add accurate. substantially to holding costs (due to debt repayments), which are With regard to the second assumption passed on to land purchasers. it should be noted that the projections of housing demand are to a large Council determines future extent subject to what might be called infrastructure requirements based on a 'chicken and egg bias', in that the expected rates of population growth. rates of anticipated future population As such, the delivery of infrastructure growth are usually based on recent required to service future urban growth rates, which are themselves development is undertaken in affected by the supply of dwellings. response to demand (from Thus, basing future rates of land development) within the context of a release strictly on recent rates of longer-term infrastructure delivery (possibly constrained) land release program. could be a self-limiting strategy. This is a clear argument for providing an The levying of development adequate 'buffer' of lands available for contributions on development is development to provide flexibility and considered further under "Housing allow the market to respond to higher Production Costs' below. levels of demand, which is what Ballina Shire Other factors constraining land Council attempts to provide through its supply in Ballina Shire growth management framework. Population growth rates (and migration Notwithstanding the, 'in theory', rates), in Ballina Shire, have declined sufficient land supply situation over the past few years, relative to Page 26 earlier periods (outlined above), despite the widely anticipated high CASE STUDY level of demand. This suggests that Pacific Pines Estate, Lennox Head land supply may indeed be a factor contributing to high land prices in The Pacific Pines Estate (comprising Ballina Shire, at least relative to other approximately 90 hectares) was similar coastal regions - noting of rezoned in 1989 and staged subdivision occurred thereafter in a fairly straight course that land supplies in coastal forward manner (with approximately localities that have adequate 230 lots created by 2000). In 2002 the employment opportunities and State Government introduced a services are inherently limited. requirement for Ministerial (masterplan) approval for major developments in the However, as shown above, the coastal zone under State availability of land for housing is not a Environmental Planning Policy No 71 - simple matter of Council ensuring Coastal Protection, applications for there is an adequate supply of which were assessed by the Deartment appropriately zoned land, as Ballina of Planning in Sydney. Shire has a large potential supply of The developers of the land in question developable land. It is likely, sought and obtained Masterplan therefore, that 'other factors' are approval, but this took 2 years and four affecting the actual supply of urban months (Dec 2003 to March 2006) to land, such as the following: achieve. Following this, the State Government introduced a Major • delays in obtaining development Projects application process requiring consent due to State Government further concept plan approval by the involvement; Minister. The application was approved • disputes between landholders / by the Minister in December of 2008. developers; The majority of the property in question • incomplete, deficient or changed hands during the intervening incompatible development period. It is noted also that further proposals; action to proceed with development • timelines inherent in the could conceivably have occurred if the development process; and landholder was sufficiently motivated • perverse incentives inherent in the prior to the introduction of Part 3A of nature and structure of the the Environmental Planning and Assessment Act 1979. Consequently, it property development market. is eight years since the last subdivision stage was approved in this release State Government Involvement area. In Ballina Shire's experience State Government involvement has affected This case of the Pacific Pines Estate the timelines in obtaining development (see above box) highlights the time consent for at least one major urban implications of development proposals growth area. Introduced ostensibly to being determined by agencies far 'streamline' development consents, it removed from the local level. This would appear the opposite has in fact applies to infill development as much occurred (see case study box). as new release areas, as much of Ballina Shire's future growth areas are located in the 'coastal zone', with the implication that the Minister for Planning is now the Consent Authority for many development applications which were once the responsibility of Council. Page 27 Landholder disputes involved in releasing land to the market, ultimately increasing the price Dispute between landholders has paid for an allotment of land by stalled the development of another households. major urban growth area in Ballina Shire, the Wollongbar Urban Further, the price of lots released onto Expansion Area (see box). the market will depend on a number of factors, including what the market will bear (affected by demand) and CASE STUDY importantly at the local level by development costs, particularly the Wollongbar Urban Expansion Area price paid to purchase the land prior to The Wollongbar Urban Expansion Area development. If the development is was rezoned for residential purposes in undertaken by the original 2002 and comprises over 80 hectares of landowner/farmer the lots may be land in a number of separate marketed at a lower price than if the landholdings. Disagreements have occurred over the coordination and land was purchased by a land costs associated with the delivery of developer who must pass on the essential urban infrastructure and higher land cost to prospective design issues affecting the purchasers (in order to obtain the development yields of the various investor's required rate of return). parties. However, with low holding costs, there may be little incentive for the farmer- The case of delays in the development developer to release lots at the of the Wollongbar Urban Expansion "socially-optimal" rate (in response to Area demonstrate how competition demand). between developers can in some cases be seen as limiting rather than On this last point, in rural and regional facilitating development outcomes. areas in particular, the majority holdings of transitional rural-urban Incentives in the Property Market that land in an area are often held by a affect supply relatively small number of landholders (whether farmers, speculators or It is apparent that substantial profits developers), such that opportunities to can be made from the land exploit market advantage (monopoly development process simply through or oligopoly position) may also be a obtaining "development rights", that is factor in explaining land supply by rezoning land from rural to urban or constraints. This has been the case in by increasing the permissible yield of a number of instances in Ballina Shire. urban land, without any need to Arguably, the potential to achieve real actually create lots or construct and effective competition within local dwellings. Strategic planning land markets is inherently limited. undertaken by councils, while necessary to achieve a logical This then presents something of a development pattern, avoid urban challenge, with development more sprawl and facilitate the efficient likely to proceed with fewer provision of infrastructure, does to landholders rather than many (whose some extent assist land speculators as interests might conflict), however to where to focus their efforts. By having fewer landholders may reduce increasing the number of times the competition in the marketplace than land is transferred between parties might otherwise be the case. before it gets to households (with each party obtaining a profitable return) It should also be noted that even increases the time taken and cost where the intentional withholding of land from development (land banking) Page 28 is not the initial motivating factor of Local government policy can influence landholders, changing market the above, both positively and conditions can encourage withholding negatively, for example: land, if expected sale prices, and • Planning fees and charges, therefore profits, fall. In such including development application circumstances landholders are fees and infrastructure encouraged to hold onto the land until contributions, directly impact on market conditions (and therefore development costs; prices) improve. • The efficiency of development assessment processes and Timelines inherent in the land infrastructure provision can impact development process on the time and therefore holding costs of development; and There are inherent limitations to the • The availability of development speed with which supply can respond opportunities (land supply) can to a surge in demand. In the case of affect land acquisition costs (land Ballina Shire there has typically been a prices), as well as labour costs time lag of 2-3 years between when (indirectly affected by housing subdivision consent is granted and lots supply). become available at an established rate. This lag is related to the time Land supply considerations, with required to undertake complex and respect to Ballina Shire, are discussed involved construction works required above. to open up the new development areas. With respect to timelines for infrastructure delivery, Ballina Shire Housing Production Costs Council determines future infrastructure requirements based on Housing production costs are affected expected rates of population growth, by a range of factors, including: supported by data on development • Land acquisition and holding costs; activity. As such, the delivery of • The costs of building materials and infrastructure required to service future equipment; urban development is undertaken in • Planning fees and charges (State response to demand (from and local Government); development) within the context of a • Finance costs (interest rates) longer-term infrastructure delivery • Labour costs; program. • Marketing costs; and • Government taxes. The other major ways in which local government directly impacts on On top of these basic costs can be building costs is via the charging of added business related administration development application fees and the costs and the developers' profits. levying of infrastructure contributions. The transparency of these costs is also an important consideration, as uncertainty adds to risk and therefore to the finance-related costs for developers. Development application fees are charged to cover administrative costs associated with the assessment of development applications. Whilst these charges do add directly to (Source: Gurran et al 2008) development costs they are low Page 29 relative to total development costs and purchasers during buoyant market because these charges can be easily conditions, when market conditions calculated prior to development they are depressed (or an 'affordability have minimal impact on development ceiling' on house prices has been costs associated with uncertainty. reached) contributions and charges can act as an impediment to the Infrastructure costs are costs that are further supply of developable land and incurred due to the need to service therefore of new dwellings. The UDIA development with essential urban explains: infrastructure such as roads, water and sewerage and community facilities In many cases once development such as open space. Development feasibilities have taken account of contributions are usually provided by the suite of levies and charges developers as a mixture of in-kind applied to the land, the residual works and monetary contributions. value, or the amount the Additional voluntary infrastructure development can afford to pay the embellishments may also be provided, vendor, is below the value of the where developers consider these may existing use, which in most cases on improve the marketability of the the urban fringe is an agricultural development. use. Accordingly vendors are withholding their land from the To the extent that these infrastructure market, further constraining supply. charges (or requirements) are levied to (Source: UDIA 2007) provide local amenities, facilities and infrastructure, they provide direct Studies also suggest that local benefits to the future residents, with charges and contributions are not the respect to accessibility, amenities and major cost component attributable to aesthetic appeal which enhance the 'government charges'. Whilst detailed attractiveness of the neighborhood figures are not available for Ballina and thus the value of the dwellings. Shire, industry data available from Surveys of new residents suggest that Sydney's Growth Centres indicate that although the level of knowledge about State charges including the GST, development contributions is low, once stamp duty and State infrastructure the nexus between contributions and contributions amount to $99,000 per facilities is explained to them, lot. This is compared with $40,000 per residents appreciate these benefits lot for local (s94) infrastructure and have generally been willing to pay contributions (UDIA 2007). It is noted them (UDIA 2007). that total Council contributions in Ballina Shire are currently It is noted, however, that contributions approximately $20,000 per lot for new that are levied but do not directly release areas. provide or improve the facilities available to the neighborhoods Planning and the regulation of affected, such as State contributions development for public transport, health and education (which are levied in No discussion of housing development Sydney's growth areas and are would be complete without mention of foreshadowed for high growth regions the increasing complexity of the including Ballina Shire), may have a planning system and mounting negative impact on dwelling supply as requirements relating to threatened excessive charges discourage species protection, environmental development activity. health standards and urban design outcomes that have likely contributed Whilst infrastructure charges can to the time required to bring housing generally be passed on to home onto the market. What is also clear, Page 30 however, is that development that poorly designed, sited or intrusive does not achieve a balance with development, which might reduce respect to its impact on the broader the value of surrounding sites and environment would not be acceptable development; to local communities. • By reducing the potential for monopolistic behaviour, by It can also be argued that the NSW promoting a range of development land use planning system is opportunities; fundamental to providing profitable • By assisting in the coordination of development opportunities in essential shared services needed conjunction with healthy and attractive to support new development; and living environments (Gurran et al • By protecting the environmental 2008). This is achieved in a number of qualities, health and safety and ways, including: aesthetic values, which make • By reducing the potential for these places attractive places in negative impacts to occur from which to live, work and relax. neighbouring development, due to SUMMARY In summary, the above discussion of factors affecting housing affordability identifies a number of issues, namely: • a number of factors have contributed to the housing affordability situation, which can be grouped into 'demand side' and 'supply side' factors; • demand side factors include population growth, increases in household purchasing power and incentives in the taxation system towards housing investment. It is also suggested that credit availability has been a significant demand side factor in the recent surge in house prices; • supply side factors include the availability of appropriately zoned land, the availability of infrastructure and delays in obtaining development consent due to State Government involvement, disputes between landholder / developers, timelines inherent in the development process; and incentives inherent in the nature and structure of the property development market; • local councils are constrained in the degree to which they can facilitate urban development, to accommodate anticipated population demands. Notwithstanding, Council attempts to maintain an adequate 'buffer' of appropriately zoned land to facilitate a rate of residential development adequate to meet demand; • ensuring an 'adequate' supply of urban zoned land is only part of the land supply picture and a number of other factors, relating particularly to market structure, clearly come into play in explaining the actual supply of constructed dwellings. Page 31 5 Policy Strategies the scope and direct influence of local 5.1 Council's role in housing government. affordability The strategies that follow represent a As discussed above, the causes of the 'toolkit' that Council will utilise as present housing affordability situation circumstances and conditions allow. are complex and include a range of As noted above, delivering affordable factors that are subject to local, State, housing will require the concerted National and international influences. action of a range of parties, both The task for local councils is to identify government and non-government, ways in which local policy and or public and private (and 'third-sector'). action can positively influence housing Bringing these parties (organisations, affordability most effectively and subsidies & opportunities) together, by efficiently, given local circumstances brokering partnerships, is seen as a and available resources. key role for Council in facilitating affordable housing outcomes. The following section outlines a number of policy options that are relevant at the local level, and that 5.2 Facilitation - Intervention Council will seek to pursue under spectrum appropriate circumstances and conditions. Conceptually, the options that are available to Council lie along a Most of the opportunities for local spectrum, from facilitating certain councils to affect the provision of development outcomes (such as affordable housing are on the 'supply' through Council's role as local side of the issue (refer to the previous planning authority) all the way to section for discussion of the demand Council actively intervening in the local and supply side issues). The majority housing market, as a land developer. of demand side issues are affected by broader national and international This spectrum is represented in the circumstances including legislative and graphic below. tax arrangements and international financial conditions that are beyond Page 32 5.3 Affordable Housing Objectives The objectives of this strategy is as follows: 5.3.1 Objective 1 Objective: To engage in affordable housing policy, consulting with appropriate stakeholders to identify and develop opportunities to increase the availability of affordable housing. Rationale: • Delivering on affordable housing outcomes will require ongoing commitment. • Dealing with the issue will require a range of strategies to be implemented, from the broad to the specific. • Policy discussion and development is ongoing and new strategies continue to be developed at national, state and local levels. • A key role for Council in the area of affordable housing, identified through industry and stakeholder consultation, is providing leadership in addressing housing affordable issues. 5.3.2 Objective 2 Objective: To seek to improve Council's systems, procedures and frameworks to facilitate better affordable housing outcomes. Rationale: • Opportunities exist to encourage a greater diversity of housing stock and raise industry awareness of affordable housing opportunities. • While development controls aiming to facilitate affordable housing are already in place, due to the introduction of the State Government's Affordable Housing SEPP, Council's own internal processes for considering such matters, such as pre-lodgement meetings for affordable housing developments, may improve outcomes. 5.3.3 Objective 3 Objective: To facilitate partnerships between Government, private sector and community sector partners to increase the affordability of housing opportunities. Rationale: • A key role for Council in the area of affordable housing, identified through industry and stakeholder consultation, is partnering with other sectors to deliver housing affordable outcomes. • This role could take various forms, from bringing partners together to actively partnering with others to deliver affordable housing. Page 33 5.4 Affordable Housing Strategies Council acknowledges that there are limitations on the extent to which local governments can affectively address housing affordability. As outlined in the preceding sections of this strategy, affecting the affordability of housing is a significant and complex challenge. Consequently, addressing the issue will require a range (and combination) of appropriate strategies by the private sector agents, and Local, State and Federal Governments. This section presents a number of affordable housing strategies that Council will pursue to address housing affordability, where circumstances and opportunities allow. The following table thus provides the basis for Council's strategy for addressing housing affordability issues in Ballina Shire, by way of a strategy 'tool kit'. It is noted that the viability of a number of the strategies identified below rely upon a number of other factors coming together, such as motivated private-sector or third- sector (not-for-profit) developers, opportunities to leverage federal funding (subsidies), suitable development sites, the appropriateness of development incentives available through State policy (Affordable Housing SEPP) and compatibility with local circumstances and needs. Table 5.1 details the following: Strategy Strategy title - relates to the 'facilitation-intervention spectrum' (refer to Section 5.2) Outline Provides a brief description of the strategy Rationale Rationale of how/why the strategy might affect housing affordability Preconditions Lists the elements or conditions required for the strategy to be effective Responsibility Identifies the agent or body responsible for delivering the strategy The table is followed by further detail on each of the strategies identified. Page 34 Table 5.1. Affordable Housing Strategy Toolkit Strategy Outline Rationale Preconditions Responsibility Maintain an adequate supply • Council's Local Growth • Provides for population • Council's growth • Council of zoned land Management Strategy growth, thus seeking to management policy is being seeks to maintain balance housing supply with reviewed in accordance adequate supplies of demand. with FNCRS as part of the urban land and infill • Supports changing local Ballina Shire LEP 2010 development opportunities housing needs. project. to accommodate projected population growth. • Managed land release is necessary for coordinated and cost effective infrastructure provision. Development controls • Council's development • Clarifying development • Relaxing certain • Council control plan is being control requirements may development controls • NSW State reviewed, to improve reduce holding costs should only occur where Government development outcomes, associated with urban other community objectives user friendliness and ease developments. To the (for example infrastructure of implementation. extent to which these cost needs, residential amenity • The NSW Government's savings are passed on to and heritage values) are Affordable Housing State purchasers this may improve appropriately protected. Environmental Planning housing affordability. Policy (SEPP) has the • Relaxing development effect of relaxing a standards may increase the number of development construction of dwellings. controls relating to residential development. Page 35 Strategy Outline Rationale Preconditions Responsibility Development incentives • The NSW Government's • Can make providing • Motivated developer/s • Development Affordable Housing State affordable housing attractive • Appropriate development proponents Environmental Planning and profitable for private or site/s • Third sector Policy (SEPP) provides a third sector developers. developers new framework for • Developers need to • Understanding the understand local needs and • Council development incentives opportunities that may exist and relaxes certain be sensitive to the local (processes & and appreciating what is neighbourhood character. procedures) development controls required can be the major linked to affordable barrier to change by the housing. development / building • Council might facilitate industry. such development by raising awareness within the industry, streamlining through pre-lodgement meetings, managing community engagement & brokering partnerships. Encourage industry • Information events / • Affordability can be affected • Sufficient industry interest • Council innovation seminars for local building by innovation in the building • Funding available for event, • Peak industry and development industry industry, through new co-sponsorship & prize. bodies • Sponsor and organise products and construction methods. • State & Federal Innovation awards or Government affordable & sustainable • Understanding the grant housing products. opportunities that may exist • Industrial land rent and appreciating what is subsidies for affordable required can be the major housing 'start-ups'. barrier to change by the development / building industry. Page 36 Strategy Outline Rationale Preconditions Responsibility Development Subsidies • Council may investigate • The Federal Government's • Third sector partners • Council in opportunities to leverage HAF can subsidise partnership with Federal Governments infrastructure delivery for Housing Affordability Fund new housing estates where (HAF) & National Rental such savings are passed on Affordability Scheme to home buyers. NRAS (NRAS). provides a subsidy direct to rental investors where such housing is managed by a community housing provider for affordable housing for a period of 10 years. • Both schemes require appropriate structures to be in place. Support third sector • Not-for-profit development • Third sector development • Third sector partner/s • Third sector development companies are a growth companies delivering seeded and ready to partners in industry at present due to affordable housing projects participate in delivering partnership with opportunities to leverage are an expanding sector. affordable housing. Council federal funding and state legislation. Direct provision of affordable • Council engages in • May more easily leverage • Appropriate opportunities • Council's Land housing property development incentives available through and favourable economic Development from time to time, to HAS & NRAS, compared to conditions Committee & support Council's other private sector. • Monies invested in Commercial activities. Council's property Services. • Council may prioritise developments are required existing Council rental to achieve positive returns. stock to key workers. Page 37 5.4.1 Maintaining adequate land supply Maintaining sufficient land supply is a fundamental role of local councils in planning to accommodate growth in population and employment. Council seeks to maintain an adequate supply of residential zoned land, and achieves this via it's strategic planning framework and strategic land release program as outlined in the Ballina Urban Land Release Strategy (2000). As outlined in above, Ballina Shire currently has an adequate supply of residential zoned land identified through this framework. Maintaining such supply is, however, complicated by a number of factors such as those described in Section 4 of this strategy. Council does, however, seek to maintain and adequate 'buffer' of undeveloped residential zoned land to accommodate the uncertainties associated with residential development. It is noted that Council is currently reviewing its planning framework for accommodating future population growth as part of the comprehensive review of the Ballina Local Environmental Plan (LEP). Following this review the local growth management framework will be outlined in Council's Local Growth Management Strategy, in accordance with the NSW Government's Far North Coast Regional Strategy. 5.4.2 Development Controls Councils play a significant role in housing through the zoning of land. Council's framework for influencing future housing developments is provided via the NSW planning system in the preparation and implementation of its Local Environmental Plan (LEP) and Development Control Plans (DCPs), which stipulate what types of development are permissible within specific areas, and outline development standards to which development must conform. A fundamental role for Council exists in encouraging developers to provide a greater diversity of dwelling types in residential developments. In Ballina Shire's case, consideration may also need to be given to the potential for intensification of residential development in existing urban areas in proximity to commercial and community services and facilities. This will, however, require prior consideration of: • Infrastructure capacity to accommodate infill development (including roads, water and sewerage); • Urban amenity and community perceptions; and • The implications of climate change (and particularly the potential for sea-level rise). A number of strategies are available, should Council consider that encouraging infill development is desirable. Examples of affordable housing strategies relating to development controls, include the following: • Amending the Local Environmental Plan (rezoning) to allow for increased dwelling densities near major activity nodes, such as commercial and community facilities, supported by changes to the development control plan; • Require developments over a certain size/scale to provide a particular mix of dwelling forms (or subdivision lot sizes), via the LEP or DCP; and • Encouraging adaptable housing - this is housing for which the initial design of the building allows the structure of the dwelling to change over time, with minor internal renovations. This may involve allowing the structure of the dwelling to Page 38 change, relatively easily, from a four-bedroom family home, to two two-bedroom units (and possibly back again) as the needs of the community, and the occupants of the dwelling, change over time. The NSW Government's 'Affordable Housing SEPP' (State Environmental Planning Policy) has introduced a number of relaxations of development standards, to support affordable housing outcomes. The SEPP has the following effect: • 'Secondary dwellings' ("granny flats") are complying development where the development meets certain criteria. This means the development does not require development consent, but certification by a building certifier; • Restrictions are placed on the consent authority on reasons for refusing development consent, thereby relaxing certain development standards; • Allows residential flat buildings, which are to be developed by social housing providers or public authorities, to be approved where they are otherwise prohibited. The relaxation of development standards, provided for by the SEPP, does however require sensitivity to local circumstances, including neighbourhood character, transport and housing needs and infrastructure capacity. Engagement with Council on these issues, in relation to affordable housing developments, will therefore be required to achieve good outcomes. Pre-lodgement meetings with development proponents of affordable housing developments are one means of achieving better outcomes. 5.4.3 Development incentives The idea behind development incentives is to encourage private sector developers to provide affordable housing. This may be achieved by enabling developers (via the planning and or rating systems) to either reduce costs or increase the profitability of projects in circumstances where affordable housing is to be provided, by either facilitating an increase in development yield. Affordable housing can, in this instance, be provided via facilitating a portion of the dwelling stock to be affordable housing. The best example of a development incentive is a development bonus - Council could provide, via the local environmental plan, opportunities to increase the permissible development yield of a site where a proportion of the development is dedicated or otherwise made available as affordable housing. The affordable housing component of the development could be dedicated (or leased for a period, such as 10 years) to Council or a nominated Social Housing Provider for the housing to be sub-leased to low to moderate income households. The NSW Government's 'Affordable Housing SEPP' (State Environmental Planning Policy) has introduced a number of development incentives for affordable housing developments including: • 'Density bonuses', in the form of a higher permissible Floor Space Ratio (FSR), are given where affordable housing is to be provided. The affordable housing component of the development must be leased at a 20% discount to the market rate to a community housing provider for a 10 year period (available to be sold thereafter); and Page 39 • Restrictions are placed on the consent authority on reasons for refusing development consent, thereby relaxing certain development standards with associated cost savings, for developments providing affordable housing. 5.4.4 Encouraging Industry Innovation Innovation in the housing industry should be supported to provide a broader range of housing products, as well as products which better reflect (and to some degree anticipate) the significant demographic changes that will occur over the next 20 years. Innovative design, materials and construction techniques could improve housing affordability (and sustainability) through cost savings on materials and reducing construction times (and therefore building labour costs). Prefabricated dwelling construction could provide substantial benefits in this regard. There is potential for such innovation to support other compatible community objectives such as encouraging more sustainable urban forms and facilitating development appropriate to the coastal character of the region and that reflects the topographic constraints of some potential or future urban release areas. With respect to building to reflect topographic constraints, it is noted that a number of Ballina Shire's major urban release areas will involve development of sloping land. The majority of existing residential development, particularly modular homes, is geared predominantly to slab-on-ground construction that can require substantial landscape modification (cut and fill). Such works may add substantially to housing development costs. Thus, encouraging industry adaptation to light-weight and alternative methods of construction could both reduce the costs of construction and minimise the landscape impacts of future development. Council will, where appropriate, support industry innovation in the following ways: CASE STUDY • Innovation information events - Council may facilitate information events such The ACT Government as inviting prominent 'experts' in the In 2008 the ACT Government introduced the field of affordable and adaptable Chief Minister's Special Affordable Housing housing to give presentations to Award as part of the Master Builders and industry participants such as Boral Excellence in Building Awards. developers, builders, social housing In order to be eligible for the Special providers, State agencies and Council Affordable Housing Award, entrants were staff and Councillors. Presentations required to demonstrate a strong could include information about commitment to affordable housing through activities such as easing housing stress for innovative building materials and medium and low income earners; innovative construction techniques. and comprehensive multi faceted • Affordable housing innovation awards - strategies; affordable house and land An event could be sponsored (by products; easing entry into home ownership; and encouraging excellence in Council, other government agencies affordable dwelling construction and and industry groups) for an innovation design. in affordable housing awards. Criteria could be established relating to affordability, simplicity of construction, sustainability and site compatibility (such as flat land, sloping land etc). The winner/s could receive recognition and possibly the opportunity to display their product (housing) on a prominent (vacant) site. Page 40 • Industrial land rent subsidies - Ballina Shire Council is a major landholder of industrial land. It is conceivable that Council could provide a rent subsidy for affordable housing enterprises such as not-for-profit housing providers and /or prefabricated affordable housing 'start-ups'. A variation on this theme would be for Council to provide subsidised (or rent-free) space for the establishment of an affordable housing 'display village' in a prominent location. 5.4.5 Development Subsidies Development subsidies work by reducing costs of development, which may be passed on to homeowners. Infrastructure subsidies are the most obvious example of a development subsidy, although tax concessions can also be considered as subsidies. Such tax related subsidies are not considered here however as these lie largely outside the ambit of local council responsibilities. There are a number of development subsidies that could conceivably be applied at a local government level. These include targeted reductions to rates and development application fees, infrastructure subsidies and low interest loans or underwriting affordable housing developments. It is noted, however, that for any such subsidies given alternative sources of funding must be found to accommodate the short-fall in funding for infrastructure or services created by the subsidy. Council does not have, within its present budget, capacity to accommodate such shortfalls. It is further noted that a considerable challenge associated with such subsidies is how to ensure that the subsidy is passed on to home purchasers. Notwithstanding the above, it is noted that the Federal Government's 'Affordable Housing Fund' (HAF) is such an alternative source of funding. The HAF aims to reduce infrastructure costs associated with development by providing an infrastructure subsidy (to a value of no more than $10,000 per dwelling) on the condition that the Council and the benefiting developer/s ensure that cost savings will be passed on to home buyers. The viability of this strategy will rely on the right circumstances and appropriate partnerships coming together. 5.4.6 Third-Sector Development The 'third-sector' refers to non-government not-for-profit commercial entities that operate for a public purpose. Third-sector entities can include charities, consumer and legal advocacy organisations and special purpose not-for-profit organisations. There is potential for third sector organisations to play a role in housing affordability in a number of possible ways, including the following: • Managing affordable housing stock obtained through the implementation of other strategies, such as those outlined in this paper; • Directly undertaking affordable housing projects by acting as bridging organisations between government (Local, State and Federal), investors or other financial entities (such as banks) and affordable housing homeowners or renters. One of the key challenges with providing affordable housing subsidies or, in the case of certain developments approved in accordance with the Affordable Housing SEPP, is how such housing can be managed or administered, as well as how to maintain the subsidy to households over the long-term in a manner that does not require long- term administrative commitments by local government. Supporting the development of third-sector affordable housing entities could provide an appropriate mechanism for addressing this issue. Page 41 Examples of third sector strategies that may be pursued, depending on CASE STUDY opportunities, include the following: • Supporting community housing The Gold Coast Housing Company providers - Affordable housing stock, The Gold Coast Housing Company (GCHC) generated via other strategies outlined is an independent, not-for-profit in this paper or by other means, may organisation which provides affordable be head-leased to and managed by an housing in south east Queensland. GCHC approved not-for-profit community has a portfolio of affordable housing development that include rental units, housing provider. Such providers subsidised sales and market sales would then sub-lease the properties to dwellings, to meet the needs of a variety of eligible low to moderate income households. The company is also moving households; towards trialing a 'shared-equity' model of • Sponsorship of a not-for-profit affordable housing. development company - Would involve GCHC is structured to be tax efficient and supporting the development of a 'third- ensure residents' access to Commonwealth Rent Assistance, and to minimise GST. The sector' not-for-profit development Company uses income from rents and company vested with the task of market sales to manage and maintain its developing affordable housing stock properties, and any surplus to fund further within the region. Such stock could expansion. then be managed by a community housing provider, Community Land Trust or an arm of the same (or other) not-for- profit organisation. An example of this strategy is the Brisbane Housing Company (see box). • Establish a Community Land Trust - A Community Land Trust (CLT) is a not-for- profit organisation established to preserve the affordability of home ownership units over the long term. It does this by selling homes to qualified low to moderate-income families, but retaining ownership to the land under these individual homes and holding it "in trust" for future generations. Buyers of land trust homes agree that when they move they will sell their home to another low or moderate-income household at a price that is affordable (facilitated through the CLT). This strategy shares elements of affordable rental housing, home ownership and 'shared-equity' housing investment. 5.4.7 Direct provision of affordable land or housing The direct provision of affordable housing concludes the spectrum of affordable housing at the intervention end. This involves a major intervention to correct obvious market failures on the supply side. A number of strategies are available involving direct provision of affordable land or housing. The direct provision of affordable land or housing could involve Council obtaining developable land (either through the divestment of surplus public land or strategic acquisitions) followed by a combination (depending on the circumstances) of rezoning, precinct planning, obtaining development consent, servicing with infrastructure, constructing dwellings, then on-selling the land and/or housing to home purchasers. Alternatively, Council might obtain the land, then sell, on-lease or contract land developers, under competitive tender, to service (with public infrastructure) and market the land to home purchasers. An alternative example of this strategy would be where a Council over time gradually purchases potential redevelopment sites (underutilised land within existing urban areas) over time until Page 42 sufficient area is obtained to facilitate a more comprehensive and economical redevelopment of a site. The appropriateness of these strategies depends on several key factors including the following: • The perceived cost-benefits associated with the expected level of risk and CASE STUDY anticipated rewards from such intervention; The Ballina Shire Council (and it's prior • The fiscal position of Council, which incarnation Tintenbar Shire Council prior to might enable Council to be involved, 1977) has had a long history of involvement and to what degree, and the need for in the local property development industry, although not for the stated aim of Council to receive a commercial return addressing housing affordability. on its investment; and The Council's first involvement in housing- • Broader economic conditions which are related development involved the amenable to such strategies. development of Crawford Park estate in Alstonville, after the acquisition of the land Direct intervention, by government, into the in 1973. The development included 133 local land/housing development market single dwelling sites and a medium density site, as well as a shopping complex area could take the form of two separate but and blocks for recreation, sporting facilities related strategies as outlined below: and the Alstonville Swimming Pool. Profit • Land banking - This strategy aims to from the development provided funding for directly affect the supply of affordable the construction of Alstonville's Olympic Swimming Pool. developable land either by the development of surplus public land or Following the amalgamation of Tintenbar and Ballina Council's in 1977, the Council the strategic acquisition of land as an developed Prospect, Chikiba and Angels adjunct to Council's commercial Beach Estates at East Ballina. Whilst this operations, which is then released onto development was not undertaken with a the market in response to demand. view to providing affordable housing, the This strategy aims to facilitate a better income derived from the development provided funding for a number of balance between the demand for and community facilities including the supply of land for housing; acquisition of land now comprising the • Land development - This strategy is Ballina-Byron Gateway Airport and Ballina similar to Land Banking, except that Waste Facility and land for the Russellton and Southern Cross industrial estates, Council could, as an adjunct to which Council continues to development. Council's commercial operations, undertake the development of residential dwellings, for either sale or rental. Page 43 REFERENCES: Kholdy, S & Sohrabian, A. 2008, Capital Gain Expectations and Efficiency in the Real Estate Markets. Journal of Business and Economics Research, v6n4, April 2008.) Commonwealth Government of Australia, 2008. A good house is hard to find: Housing Affordability in Australia. Senate Select Committee on Housing Affordability in Australia. Duscansky, R & Koc, C. 2007, The capital gains effect in the demand for housing. Journal of Urban Economics v61 n2, March 2007.) Gurran, N., Ruming, K., Randolph, B., and Quintal, D. 2008, Planning, government charges, and the costs of land and housing. Australian Housing and Urban Research Institute. Positioning Paper No.109. Gurran N, Milligan, V., Baker D., and Beth Bugg, L. 2007, International practice in planning for affordable housing: lessons for Australia. Australian Housing and Urban Research Institute. Positioning Paper No.99. Murray, C., 1983, Across the Bridges; Island Base for Council 1883-1983. Ballina Shire Council. National Economics, 2009. State of the Regions 2008-09. Report prepared for the Australian Local Government Association. National Economics, 2008. State of the Regions 2006-07. Report prepared for the Australian Local Government Association. NSW Department of Housing, Local government Affordable Housing data base. Urban Development Institute of Australia. 2007, An industry report into affordable home ownership in Australia. UDIA Page 44
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