Planning for Diversity Crucial to Solving Housing Crisis

There was a welcome boost for older Australians in last week’s federal budget in the form of $6.5 billion for Home Care Packages.

This will help an additional 80,000 people to receive care and support in their own home, and delay moves into high-care residential settings.

Will this see a shift to more integrated villages, providing both self-care and high-care options? 

Despite this boost for seniors, there remain significant supply challenges to meeting this anticipated demand as our population ages.

In order to cover a spectrum of needs ranging from residential full care to lifestyle retirement villages or independent living units and assisted living in the community, we need to grow all of the different layers of “seniors housing”.

We also saw plenty of media around the rent versus buy debate. 

Regardless of where you might sit, there is an increasing “middle market” of Australians who are happy to rent but want a standardised quality of dwelling with professional servicing.

This high growth build-to-rent market, when the housing stock is owned corporately, has huge potential for the over 55s or those seeking to downsize but remain close to amenity and their community.

Another, area of increasing demand is the “co-living” segment or the new-age boarding house. 

This product caters to those entering housing market for the first time, often young professionals and key workers. The pricing out of key worker has become a vexed issue in our growing cities, forcing them to live a considerable distance from their workplace. 

We argue that when state and local governments plan their cities and regions for the future, these housing sectors—seniors, co-living and build-to-rent—as well as affordable housing have to be factored in, and that executing them successfully necessitates a certain amount of planning flexibility and incentives, so the private market can innovate and compete with market priced housing.

▲ The private sector must be allowed to respond to changing needs in the senior living sector.

Seniors living

We have a good insight into these current planning challenges because Ethos Urban was recently commissioned by the NSW Department of Panning and Environment to assist on the Seniors Living of the Housing State Environmental Planning Policy (SEPP).

Getting a private planning firm involved in the policy process helped ensure “seniors living” policy setting could respond to market demand, mindful of private sector expertise.

If government is to be the facilitator and the broker of good housing outcomes, it needs policy and planning that allows the private sector to respond to market demand from discrete segments.  

However, the tricky balancing act is to create policies that minimise poor outcomes without stifling market innovation.

This is particularly relevant in seniors housing as we adapt to Australia’s ageing population.

We must acknowledge the different spectrum of needs and financial capacity that exists in this growing and disparate housing sector as there are seniors with high financial capacity and low-care needs, and there are seniors who rely on social housing who also have high-care needs.

The review identified the importance of this product through state significant development assessment pathway. 

Similarly, the build-to-rent product is also of state significance. 

The outcome of the policy work in NSW is something that we would hope the Victorian and Queensland governments incorporate into their planning processes and response-to-market elements, for alternative housing products over the next few years.

Build-to-rent

The build-to-rent space is another area in which government can create the strategic direction and guidelines, and the private sector is allowed to innovate and invest in distinct markets within a broad segment.

While the NSW government has taken strides to facilitate this new asset class, build-to-rent is currently hobbled because of a raft of allied and ancillary tax and other issues, as well as insufficient flexibility in the planning regulations.

These rules are keeping build-to-rent from reaching its potential because build-to-rent providers cannot meet the market segments they want to serve in competition with “on market” housing.

▲ Build-to-rent has the potential to alleviate housing shortages, but planning laws need to catch up.

Co-living

One of the key issues with co-living is that it offers a separate segment of the market: call it low[er] cost housing as it doesn’t meet the more extreme classification of “affordable” housing. 

The product is lost in a twilight zone yet has the potential to serve a huge part of the market that has historically fallen between the cracks. 

We have seen enormous potential for the private sector to step in with the backing of funds to deliver a more affordable form of housing to bridge the gap between demand and supply that government simply cannot manage.

However, good will has been stifled by restrictive policy settings.

While it is a positive first step to recognise this new form (particularly in NSW planning legislation), the required reforms in other areas around tax have not followed. 

It is clear that a new approach is needed in our fast-evolving cities and towns. 

While overall housing supply will always be a concern, there is a deeper and growing issue which relates to housing diversity and affordability.

There is still much conjecture as to whether simply increasing supply will result in increased affordability: while this Keynesian approach may work as a simple theory, many suggest the problem is far more insidious.  

What we do know is that reduced supply will indeed lead to rising costs in a market economy.

What we are certain of is that flexibility and incentives that enable the market to deliver alternative housing forms such as build-to-rent, seniors living and low-cost housing will be critical.

However, what we have seen is that planning alone cannot be the only lever pulled to address housing affordability and diversity. 

It must work in consult with a wide range of reform to deliver on the promise of housing Australia’s growing, and ageing, population.

Tom Goode
Director of Planning
Ethos Urban Development Consultancy