Stanhope / Strangling land supply drives prices sky high

“I have struggled to understand why the government abandoned the Affordable Housing Action Plan and I refuse to accept that flooding the market with cheap, high-rise flats is a valid replacement plan,” writes JON STANHOPE

IT was heartwarming to read recently the story of Christine Van, an extremely determined, young, single, Canberra mother who has realised her dream of owning her own home.

Jon Stanhope

Jon Stanhope.

Christine has for the last seven years lived in affordable rental accommodation owned and managed by Community Housing Canberra (CHC), a tier one social housing provider established by the ACT government following the development of the Affordable Housing Action Plan (AHAP) of 2007.

As a tenant of CHC and consistent with its operating model, Christine paid rent set at 75 per cent of the market rate, which assisted her to save enough for a deposit for her first home, one of 10 homes built by CHC at Throsby on land acquired by it under the land-rent scheme.

The land-rent scheme, like the establishment of CHC, was an initiative of the AHAP.

With the greatest of respect to Christine it is possible that without CHC or the land-rent scheme that she, like thousands of other Canberra families, would still be locked out of the housing market. Perhaps even for life.

The establishment of CHC and the funding arrangements under which it was established and which assured its success over the last 10 years together with the adoption of the land-rent scheme have been acknowledged nationally as two of the most successful housing-affordability initiatives pursued anywhere in Australia in the last decade.

Upon its establishment, CHC was provided with a $3 million capital injection; title to 132 public housing properties; a $50 million revolving finance facility to enable 1000 new affordable dwellings within 10 years and was guaranteed access to 120 blocks of land a year, through an MOU with the Land Development Agency.

In October, the Australian Housing and Urban Research Institute (AHURI), following a national review, released a report, “Government Led Innovations in Affordable Housing Delivery”, in which it said: “CHC is now one of the most successful not-for-profit developers in Australia. Its 2016 annual report reveals that it is holding over $113 million in equity, and has cash reserves of more than $28 million. They have developed 859 properties since 2007-08 and have taken 515 to market. Their growth has been a direct outcome of the AHAP, and is an excellent case study of how a reasonably small public investment can provide an enduring stream of affordable housing supply. They are an enduring legacy of the AHAP.”

AHURI went on to say: “The success of CHC reveals that a reasonably small degree of support provided the circumstances for a single-community housing provider to add 500 affordable rental units within a 10-year period. The key ingredients that enabled this were ready access to cheap debt finance and access to land.”

While ironic it is also unutterably sad that at the very time that AHURI was undertaking its review of housing-affordable initiatives across Australia and had identified CHC as perhaps the single most effective housing-affordability initiative of any government anywhere in Australia the ACT Greens/Labor government called in the $50 million revolving finance facility, thus denying CHC access to cheap finance, and cancelled the MOU guaranteeing CHC access to land.

In addition to abandoning its commitment to CHC the ACT Greens/Labor government has reduced the supply of land for detached housing to such a degree that there are now only very limited opportunities for anyone to access the land-rent scheme.

The decision to strangle the supply of land for detached housing has pushed prices through the roof and created a level of demand for land, whether for purchase or land rent, that effectively excludes anyone in the bottom two and a half income quintiles from the market.

I have struggled, and comprehensively failed, to understand why Labor and the Greens abandoned the ACT Affordable Housing Action Plan and I refuse to accept that flooding the market with cheap, high-rise, one and two-bedroom flats is a valid replacement plan.

When Greens leader Shane Rattenbury was asked why the Greens had supported the decision of Chief Minister Andrew Barr and Housing Minister Yvette Berry to terminate the revolving finance facility, which was central to the ability of CHC to deliver affordable housing, and to no longer guarantee CHC access to land for housing but to require it instead to go to market and to bid against commercial builders and developers, he responded to the effect that by removing all government support for CHC and requiring it to access finance and land on commercial terms would force it, in his view and that of the government, to “become more flexible”.

That is a bit like saying to someone who has just had their legs amputated after an accident that they will need to shape up and “become more flexible”.

My prediction is that if the ACT government does not reverse its hostility to CHC that within a few years CHC will cease building affordable houses for sale and that ultimately it will need to sell existing rental stock in order to be able to meet its operating expenses.

 

One Response to “Stanhope / Strangling land supply drives prices sky high”

  1. November 3, 2018 at 10:09 am #

    What else would you expect Jon from the rabble that calls itself the ACT Government today? But on another note, weren’t you the one who brought Andrew Barr into the Government?

Leave a Reply

Leave your opinion here. Please be nice. Your Email address will be kept private.
%d bloggers like this: