Aspiration and reality collide

By Shane Scanlan

The City of Melbourne believes government should intervene in the housing market if low and moderate income earners are to continue to live in the municipality.

In its recently-released 70-page draft housing strategy, the council says:  “If current market trends continue, virtually all low and many moderate income households will not be able to afford to live in our municipality.”

The council says it wants cheaper housing, but the strategy recommends a series of measures that would actually add to the cost of development.

It wants greater developer contributions, bigger and better-built apartments, less density, more open space and at least 15 per cent of new developments reserved for “affordable housing” (to be paid for by other levels of governments).

On the cost-savings side of the development equation, the council suggests cutting out car parking, swimming pools and gymnasiums.

“Housing affordability could potentially be improved by reducing the amount of car parking and expensive communal facilities such as gyms and swimming pools within new housing developments,” the strategy says.

The strategy confines itself to the urban renewal areas of municipality, which are the same areas in which the City of Melbourne has limited actual powers in its own right. In these areas, which include the CBD, Southbank and Docklands, the State Government controls all developments over 25,000 sqm.

In the strategy the council acknowledges its impotence and confines its goals and actions largely to influencing, leading and informing.

“We will continue to proactively engage with the community to help shape planning scheme amendments and structure plans and to help increase awareness and knowledge of the benefits of good quality urban renewal and the need for socially mixed, sustainable neighbourhoods,” the strategy says.

“We are committed to continue to show leadership, provide direction and work collaboratively with all stakeholders and the broader community to help achieve better housing outcomes for the City of Melbourne.”

The authors of the strategy struggle to reconcile the realities of the market with their desire for social outcomes.

On acknowledging that developer levies increase the cost of housing, the strategy says: “They are, however, crucial to help retain the liveability of the city and build successful and sustainable neighbourhoods.”

The strategy says that 13,000 households in the municipality are currently considered to be in “housing stress”.

But the strategy rails against increasing densities and smaller apartments as a solution to affordability.  And the council doesn’t like the type of resident that these developments attract.

“High levels of housing supply isn’t delivering a good housing mix and social diversity in the community,” it says.

“A diversity of housing choices can foster a community which is inclusive of different household needs and circumstances, including family size, household composition, income and health. It can help to address social exclusion and avoid issues with gentrification and social polarisation.”

“The expectation that a development can have more, smaller dwellings can increase land value which in turn promotes even smaller dwellings. Given the need to create balanced communities, however, this is not a formula for the long-term social sustainability of Melbourne.”

Neither do the strategy’s authors have much time for property investors: “85 per cent of apartments purchased in the municipality as a financial product, not as a home for the purchaser,” it says.

“Investors’ requirements for a financial return are driving the demand for smaller, one or two bedroom apartments of around $450,000 or less. Larger apartments, can and will sell, but with longer lead times and marketing costs creating financial risk to developers and banks.”

“New housing needs to be designed as a home for people rather than solely a product for investors.”

“The demand from investors for smaller apartments, the lack of planning policy guiding internal amenity along with few enforceable density or height controls means that the apartment market in the municipality is in danger of leaving a lasting legacy of poor quality housing.”