Wednesday, March 26, 2008

Making housing affordable

The NZ government has issued a request for proposals for research on investment in housing: "Research on institutional investment in residential rental accommodation" (DBH08/03/2, Department of Building and Housing). The issue is that, like Australia, home ownership is declining in New Zealand, making rental housing more important. Like Australia, private companies tend not to invest in rental property, it is mostly private investors with one or two properties or government or non-profit social housing.

The NZ Government want to work out why companies don;t invest and how to encourage them. This research would therefore seem to be applicable to Australia, where the government is considering how to provide tax incentives for such investments.

NZ have done quite a bit of work already in this area, with the Final Report of the House Prices Unit: House Price Increases and Housing in New Zealand , (March 2008), New Zealand Housing Strategy, and Policy proposals for Housing market (Cabinet Minute 1 February 200), Increasing choices and reducing costs in the housing market Cabinet 3 March 2008).

The NZ RFP mentions the Australian Federal Government's National Rental Affordability Scheme. This aims to provide 100,000 new rental properties by tax credits of $6000 a year for 10 years. The provider has to rent the homes at 20 per cent below market rates. State Governments will provide an extra $2000. However, there does not appear to be any research to show if this incentive will produce the desired outcome. So the NZ research could be very useful for Australia.

Open Source Low Cost Housing Proposal

One way to make housing affordable would be to reduce the cost of homes, by building them more efficiently and designing them to use fewer materials. This could be combined with energy efficiency to produce homes which cost less to rent and less to live in. As an example a home which is designed to be space efficient and so is 25% smaller, will cost about 25% less to build and use less energy to heat. Fitting an apartment with a $20 clothes drying racks in the laundry and on the balcony will save about $100 on the cost of a dryer, as well as saving electricity.

The Australian and NZ governments could jointly sponsor "open source" designs for low cost energy efficient housing. The plans could be made available free online and developers encouraged to use them. Local Government could pre-approve the designs to speed construction (or where councils refused to cooperate, state governments could override local planning powers to permit these buildings).

Modular construction techniques could be used to build housing quickly and cheaply. The modules could be clad to blend in with local housing styles and suit the local climate.

1 comment:

Gye Greene said...

Good points.

One counterpoint: The effectiveness of $20 clothes drying racks would depend on the climate. Even in subtropical climes like in Brisbane, for example, you'd be waiting 2-4 days for your clothes to dry. Not bad for a single person or a couple -- with with a family of four, the backlog of semi-damp clothes would render that solution impractical.