Inclusionary Zoning and Affordable Housing in Sydney

A few weeks back, Sadiq Khan was elected Mayor of London. He has committed to a target of 50% affordable housing in new housing developments in London. That's a stark contrast to what's going on here in Sydney, where the affordable housing target is ... well, there isn't one.

Out of some frustration with that situation, I banged out an opinion piece that got a run in the Sydney Morning Herald, making the case for mandatory targets for affordable housing in new developments in Sydney - a policy known as inclusionary zoning. The article's copied in below, with links to further information about some of the points made along the way.

(The SMH ran the article with the title "Sydney needs to catch up to other global cities with affordable housing" ... which will be a nice anecdote for next year's lecture about the 'global city' concept as a hegemonic concept through which all sensible claims have to be articulated! But I guess I was playing that game in the article, so fair cop. Anyways, I digress...)

Inclusionary zoning is no longer especially 'radical' in many parts of the world. And, as Peter Marcuse pointed out in a recent blog post, if inclusionary zoning is used in the re-development of existing social housing or low income housing areas, it can actually reduce the proportion of affordable housing and contribute to gentrification. That's certainly a risk were it to be applied in some parts of Sydney -- the proposed redevelopment of Redfern-Waterloo, currently an area with substantial public housing, is a case in point. But setting a mandatory minimum target in a situation where such redevelopments are going ahead without any legislated requirements for housing affordability would be better than nothing!

Since the article was published, I've spoken at a very interesting forum on affordable housing hosted by Vinnies, and made an appearance on Channel 9 news for a story about NSW Labor's proposal for an affordable housing target (I don't think they've quite embraced a numerical target at this point). Here's hoping that through the hard work of lots of different actors in the city, the tide might slowly be turning on this issue...

***

We might poke fun at Malcolm Turnbull’s recent remark that wealthy parents should shell out to assist their adult kidsfind their way into the housing market. But his quip reflects the reality that is taking hold in Sydney today.

Housing has become unaffordable to all but the highest paid. Help from our parents is certainly the only way that my partner and I could afford the house we’re living in now – and we’re on higher wages than most. As Tim Williams from the Committee for Sydney recently argued, inheritance is becoming the main road to home ownership in Sydney.

The statistics on this situation keep on coming. Last year, one study reported in the Sydney Morning Herald showed that a nurse could not afford to purchase a home in 95% of Sydney’s suburbs. Another showed that in financial year 2014-15, there were 64 suburbs where not a single dwelling sold for less than $1 million.

Things get even worse for those on lower incomes. An Anglicare report showed less than 1% of available rentals wereaffordable for people on government income support payments.

There are so many reasons not to tolerate this situation – not least the injustice of intergenerational inequity and widening inequality, and the economic unsustainability of pricing key workers like nurses and teachers out of the city.

The reasons for the high cost of housing have roots in the changing economic structure of our city. Politicians of all stripes like to brag about Sydney being a ‘global city’. That’s all well and good. But as our city has made the transition to becoming ‘global’, the cost of housing relative to wages has skyrocketed. This is not a coincidence. Indeed, it is a global phenomenon in cities similar to ours.In global cities where employment is increasingly polarized between those in high-paid professions working for globally-oriented corporate services sector, and those in the lower paid consumer services sector, there has been tremendous upward pressure on house prices, especially in parts of the city close to major employment centres.

Left to their own devices, housing markets in these cities do not deliver affordability. Housing is not like the fictitious markets in high school economics textbooks, where increasing supply can cause prices to fall.

So, what are other ‘global cities’ doing about this problem? In many, Governments are setting enforceable targets for affordable housing in new housing developments. This policy is called inclusionary zoning. In London over the weekend, Labour’s Sadiq Khan was elected Mayor. Part of his platform was to require that a full 50% of all dwellings in new developments are affordable. This would represent an increase from the percentage achieved by his Conservative predecessor Boris Johnson. His administration set a three year target of 55,000 affordable homes, with an average 34% of new dwellings being affordable in the 2012-2015 period.

What is the mandatory minimum for affordable housing in new housing developments in Sydney?

We don’t have one. We don’t even have an aspirational target.

Inclusionary zoning is by now a mainstream idea in many major cities, and is supported across the political spectrum. In cities like London, the debate has moved on from whether it is a good idea – the argument is now about the proportion of housing that should be made affordable.

This widespread embrace of inclusionary zoning is reflected here in Sydney, where a diverse cross-section of society supports inclusionary zoning in new developments as an effective means to provide affordable housing. Civil society peak groups like the NSW Council of Social Service and coalitions like the Sydney Alliance are calling for inclusionary zoning. Academics who have been funded by Governments from across Australia to look into solutions for housing affordability are calling for inclusionary zoning. The Committee for Sydney, whose membership is made up of dozens of major national and international corporations located in Sydney – including several prominent developers like Lend Lease, Meriton and Mirvac – is calling for inclusionary zoning.

But for some reason, the NSW State Government won’t get with the program.

Earlier this year, Premier Baird announced a $1 billion fund designed to ‘encourage’ investment in affordable and social housing. It was reported that this might generate an extra 3000 affordable homes – that’s a start, but it’s certainly not enough to transform our situation.

We need much more from Government than polite ‘encouragement’. We need enforcement.

As we stare down the barrel at several major redevelopments across Sydney – like the Central to Eveleigh corridor, the Bays Precinct, the train stations along the soon-to-be transformed Bankstown line, Parramatta Road, the areas around the proposed Parramatta light rail, and many more besides – we must set substantial mandatory requirements for affordable housing.

Aspirational targets have been set for some of these developments, but we know from past experience that this won’t do. Enforceable requirements that apply across the city are the only way to ensure that all developers involved in the planning and construction of new housing – including the State Government’s own Urban Growth – can’t trade away affordable housing aspirations once developments get underway.