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Thread: Affordable housing: key issues and housing stress

  1. #1

    Affordable housing: key issues and housing stress



    While studying my Bachelor of Planning degree at university, I completed quite a few assignments on affordable housing as I felt it was an important topic to the urban planning and property industries. Two years later I am still very intrigued, to the extent that I will publishing a series of articles on this epidemic. Additionally, I have dedicated a page for resources on The Planning Boardroom website which are located on the Affordable Housing Portal.

    Some of the areas I will be focusing on in future articles include; key issues, Government policies, Generation Y, relevant statistics, my personal struggle, renting vs buying, property investment, and I will attempt to offer suggestions.

    I will be undertaking interviews with key stakeholders in the property industry to find out their opinions and I will be presenting their findings. If you would like to share your thoughts or have any suggestions please email me at eli@theplanningboardroom.net.


    Affordable Housing: Setting the Scene
    To start off, below is a list of the key contributing factors to the affordable housing problem. There are probably more but this is just a quick list I compiled on the train to work. In the articles to follow, I will focus on some of these issues.

    -House prices
    -Interest rates
    -Demand outweighs supply
    -Housing choice

    -Demographic changes
    -State and Local Government charges
    -Construction costs
    -Low income
    -Struggle to save for deposit
    -Rental market
    -Reduction of first home owners grant

    Housing Stress

    The determining factor of housing affordability is ‘housing stress’. A household which falls in this category is usually spending more than 30% of their income on home repayments. I browsed the web for some relevant definitions and they appear below.

    A generalised definition of housing stress according to Wikipedia is “a situation where the cost of housing (either as rental, or as a mortgage) is high relative to household income. It may also be used to describe inadequate housing for a proportion of the population.” (Wikipedia)

    Tony Kryger wrote about ‘Mortgage Stress’ in 2003 which was published on the Parliament of Australia’s website. The research is not current but it still demonstrates the housing affordability problem was fairly prevalent almost 10 years ago. Kryger used data sourced from the National 2001 Census, which revealed “more than one in ten Australian homebuyers are experiencing ‘mortgage stress’,” and he defines in his research where a homebuyer is paying “35 per cent or more of their income on home loan repayments”. (Parliament of Australia)

    In a paper published in 2008 in conjunction with the 3rd Australasian Housing Researchers Conference, it examined the variety of definitions used to measure ‘housing stress’. The three definitions use 30% as a basis point but it is based on different variables. These are;

    a. More than 30 per cent of the household’s income is being spent on housing costs

    b. More than 30 per cent of the household’s income is being spent on housing cost and the household is in the bottom 40 per cent of Australian incomes

    c. More than 30 per cent of the household’s income is being spent on housing costs and the household earns between 10 and 40 per cent of Australian incomes and two types of income, disposable and gross.

    It is noted in the abstract of this paper that these different definitions can have a large influence on the number of households faced with ‘housing stress’.

    (NATSEM University of Canberra)

    The Australian Real Estate and Property website is a fantastic resource for property-related issues. They define housing stress also as 30% or more of a household’s income on their property repayments. (Australian Real Estate and Property)

    Additionally, the website refers to a speech made by Tony Richards from the Reserve Bank of Australia in September 2009. Richards declared that Australia’s strong economic position averted the possibility of a major recession, even though housing prices are still considered high.

    Richards stated “over the past five years, housing prices have risen less rapidly than incomes, after a long period when the reverse was true. This was a positive development, which reduced the vulnerability of our economy going into the global financial crisis. Nevertheless, the ratio of Australian housing prices to incomes is still high relative to earlier decades, or compared with other countries” (Reserve Bank of Australia)

  2. #2
    Cyburbian DetroitPlanner's avatar
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    Please send all hard working Australians in search of affordable housing to Detroit. We will take them with open arms. Cheap housing abounds here. Not just affordable, but bargains!
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  3. #3
    Cyburbian Linda_D's avatar
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    Quote Originally posted by DetroitPlanner View post
    Please send all hard working Australians in search of affordable housing to Detroit. We will take them with open arms. Cheap housing abounds here. Not just affordable, but bargains!
    Buffalo has more than its share, too, and if they'd like a laid-back, small-town life-style with city amenities, Jamestown will welcome them with open arms!

  4. #4
    Cyburbian DetroitPlanner's avatar
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    Quote Originally posted by Linda_D View post
    Buffalo has more than its share, too, and if they'd like a laid-back, small-town life-style with city amenities, Jamestown will welcome them with open arms!
    You forgot about the Lucielle Ball festival!
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  5. #5
    Cyburbian Mud Princess's avatar
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    For what it's worth, paying more than 30% of household income for housing is referred to in the U.S. as housing cost burden, rather than housing stress.

    What about the stigma associated with affordable housing? Is that an issue in Australia as it is here? I am referring to the fear factor - neighborhood residents who rally against the creation of affordable housing because they are worried about its impact on their property values and crime rates.

  6. #6
    Cyburbian Cardinal's avatar
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    It seems to me that the issue of housing affordability is intrinsically tied up with other issues including location, employment, and housing standards or preferences. And of course, it is all complicated by the ongoing market collapse.

    Detroitplanner and Linda_D are right, there is plenty of affordable housing in Buffalo and Detroit, in many other cities, and across vast swaths of the rural parts of the country. Are there jobs there and are people willing to move there? A few, but most stay where they are and deal with higher housing costs. It gets more complicated when you stop to consider what people think they "need" in a house. A three car garage, five piece master bath, a bedroom for each kid plus a spare for guests, two-story great room, etc. It all adds costs that help to create the "stress" felt by many households.
    Anyone want to adopt a dog?

  7. #7
    In Australia I believe there the issue of an affordable housing complex or public housing is not as pressing as the issue of affordable housing itself. Australians are very choosy when it comes to housing and they are obsessed with 'having it all'.

    The 'Great Australian Dream' is an ambition by many to purchase their own home. I am planning to write more on this topic on my website so I encourage you to visit it. www.theplanningboardroom.net

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