According to a new report commissioned by Teachers Mutual Bank, Firefighters Mutual Bank, and Police Bank, Sydney’s overheated housing market has priced key workers from its inner and middle rings.
Although their jobs are spread out throughout the metropolitan region, the majority of Sydney’s 156,000 teachers, nurses, policemen, firefighters, and ambulance and emergency workers now live in the outer ring areas, as these are the only areas where housing is still affordable for modest income earners.
Consequentially, key workers have to spend hours each day commuting to work by private car and public transport, negatively impacting their work-life balance.
The same research team, led by professors Nicole Gurran and Peter Phibbs of the University of Sydney, has offered five key strategies to tackling this issue. “These [strategies] could make a real difference for key workers and other moderate income earners,” they told The Conversation.
Introduce a shared equity model
Key workers who want to enter the housing market have to contend with a median house price of around $900,000 in Sydney. An affordable price for the average key worker would be $650,000.
To make homeownership more widely attainable for this group, the researchers suggest implementing a shared equity model, which would allow key workers to buy up to 75% of the home’s value. This would reduce the deposit requirement to 5-10%, and make loan repayments more manageable.
Focus on collaborative development models
Collaborative development and financing models provide an alternative to conventional multi-unit housing developments. Under these models, individuals are supported in their collective development of residential projects.
“The group members collaborate to acquire a site, appoint an architect and manage professionals through planning and construction,” the researchers said. “Groups are able to save on developer premiums. They can also customise their building and apartments in ways that save on both capital and recurrent costs.”
Reduce costs with alternative tenure agreements
Alternative tenure agreements, such as community land trusts, can separate the cost of dwellings from the cost of land (which is retained by the government or trust). Under this model, homes are purchased with a conventional mortgage and the land component is rented at a marginal rate.
Save on construction
Implementing cost-cutting measures on housing design and construction could help increase the supply of affordable homes, provided the savings are passed on to eligible buyers.
Innovations in design and construction, as well as reduced requirements for facilities (such as the omission of car parks in highly accessible locations), could reduce cost by up to 25-30%. This equates to savings of $75,000 to $100,000 for two- or three-bedroom units or townhouses.
Increase inclusionary planning targets
Inclusionary planning requires that a proportion of new housing developments be rendered affordable for moderate and low income groups. This approach can support various combinations of affordable housing.
“Mandating that 20% of dwellings in all major new housing developments are affordable for moderate income earners, including key workers, could deliver 6,000 to 7,000 affordable ‘start-up’ homes per year in Sydney,” the researchers said.