Housing affordability has been an increasingly pressing issue in Australia, and it’s a complex one to understand and resolve. While everyone agrees on the need for more affordable housing, the jury is still out as to who should be responsible. In this discussion paper, I’ll take a look at Victoria’s current initiative, the Big Housing Build, and explore how well it’s working.
First, a recap of the issue at hand…
The Australian housing affordability crisis is a topic that understandably receives significant airtime. Since the 1980s, housing prices have risen exponentially: in 1980, the median Melbourne house price was $40,800, compared to a staggering $901,000 in 2022.1,2 Unsurprisingly, this has outstripped wage increases in the same period, making it harder for Aussies to buy (or even rent) a home.
While expensive housing affects everyone to some degree, the people experiencing the most acute hardship are low-income households, who struggle to find suitable housing in the competitive private rental market. Many renters find their housing to be insecure, unaffordable and of poor quality – with a 2017 study finding that 43% of renters were finding it hard to get by on their current income.3 During the recent pandemic, 17% reported that their rent became unaffordable and 5% received an eviction notice.4
The bottom line is that, even in our privileged country, more Australians are precariously close to being homeless. And thanks to decades of underinvestment, there is nowhere near enough social housing to accommodate those who qualify: in Victoria, the waiting list increased by 49% from 2017-2021.5
It’s also important to note that this crisis isn’t just detrimental to lower income families. When lower income households are shut out from our neighbourhoods, we lose contributions that are valuable for everyone. We lose key workers in places they’re needed; we lose social and cultural diversity, and we lose cohesion across communities.
When we don’t look after the most vulnerable members of society, it’s society as a whole that suffers.
So, what’s the Victorian Government doing about it?
During the pandemic, the Victorian Government devised and launched the ‘Big Housing Build’. Essentially, this established a pot of around $5 billion to invest in the creation of increased social and affordable housing for vulnerable Victorians, including those on the Victorian Housing Register. As well as helping address the obvious housing issue, the other driver was to provide much needed stimulus for the development and construction industry amidst the uncertainty of the global pandemic.
The funding is being released in a series of rounds, which Community Housing Associations (CHAs) together with their development partners can apply for. Things kicked off in 2021 with an initial Rapid Grants Round which was open to applicants with ‘shovel ready’ projects – that is, projects that already had planning permission (or were close to obtaining one), and could commit to commencing construction within a designated time frame. Targeting advanced projects was a considered means of realising a quick and tangible return on investment – both in terms of providing much-needed accommodation quickly, as well as ensuring that Victorians could see things actually start to happen ‘on the ground’.
Typically, the design of projects funded under the Rapid Grants Round have had to be amended to be fit for purpose – but it seemed to strike a chord with the development community, particularly with those whom had projects that had stalled on account of challenging viability issues.
This initial round encouraged developers to partner with CHAs, who will, upon completion of the project, operate it for at least thirty years as social housing. In many instances the CHA will also acquire the asset. The inherent involvement of CHAs supports the long-term delivery of genuinely functional social housing that optimises the prospect of funded developments making a positive impact on communities. Registered CHAs are uniquely qualified to place the right people in the right homes, liaising with both the Government and the Victorian Housing Register – but they also commonly run outreach programs and help residents access services, and engage with local businesses and community groups. All of this supports residents to effectively integrate into their communities.
Since launching, the Big Housing Build has steadily gained momentum – but it’s not without its challenges.
UPco became involved in the initiative at the very beginning, when we were engaged by the Department of Treasury and Finance to assess the ‘shovel readiness’ of projects under the initial Rapid Grants Round of 150+ applications. From there, we have worked with CHA and developer clients in applying for grants and planning approvals across several rounds – including projects in metropolitan locations such as Wantirna South and Croydon and others in regional Victoria. Some were planned as residential developments, so needed very few changes to work as purpose-built social housing.
What has become evident is the high design standard to which the Government is holding applicants accountable (which is no surprise given it’s their money being spent). Homes proposed under the Big Housing Build are subject to the same design rigour as ‘free market’ accommodation, with familiar Planning Scheme expectations such as minimum room sizes, cross-ventilation and open space provision. The other area where there’s an increasingly high bar is the environmental performance of these homes – where exceeding best practice outcomes is a baseline requirement.
Meeting these various design expectations presents an inevitable challenge for CHAs and developers, who are already working on a not-for-profit basis or with small margins (even taking the government funding into account). The process established under the Big Housing Build to obtain funding and planning approvals is quite labour intensive – and the UPco team is finding that we’re often a lot more involved with things like stakeholder engagement, and particularly direct engagement with the community, which would be managed by Councils under more conventional and familiar planning processes . This all costs proponents money, and has the obvious potential to erode the feasibility of a project over time.
Speaking of process, the Government is certainly trying to make approvals more streamlined (which was part of the Big Housing Build promise).
The Big Housing Build planning process has been designed, in theory at least, to deliver approvals more quickly, and there are a few factors that contribute to this. Firstly, an approval pathway has been established which installs the State Government as the authority responsible for making decisions, with Homes Victoria there to help guide the management of stakeholder engagement and inputs.
Secondly, while the results of community engagement are factored in and can help improve the development or bring clarity to elements of the design, objectors have no capacity to challenge the umpire’s call – which, importantly, eliminates the time, expense and uncertainty of drawn-out VCAT scenarios.
Thirdly, the process is somewhat unique in that applications are not formally lodged until all stakeholder inputs are received and resultant issues have been resolved. We start with a concept design, carry out stakeholder consultation (which involves the community and local Council) and present larger projects to the Office of the Victorian Government Architect. From there, we take on board all these various inputs, produce a consultation report and make amendments to the design that are reasonably necessary to ensure the project provides an appropriate response to the planning framework. This means more work upfront, but less issues cropping up unexpectedly down the track – and our counterparts at Homes Victoria have been very supportive in helping us and our clients navigate the process to deliver successful outcomes.
While it’s still early days, I believe the Big Housing Build is a step in the right direction.
For so long, there’s been a lack of clarity around who is ‘doing’ social housing. Who is funding it? Who is leading it? Who is responsible for deciding where it would go? When the Big Housing Build was launched, it provided a sense that those questions were beginning to be addressed in a meaningful way, with a mechanism to make it happen.
Of course, any kind of social housing initiative tends to face opposition of the NIMBY kind. In our experience with community consultations, we often encounter concerns around safety and property values – but the CHAs are well placed to coherently explain how the benefits of these projects to local communities outweigh the perceived problems often attached to social housing. Personally, I sense that society is becoming more aware of the benefits of diverse and inclusive communities, which will hopefully continue to help counteract any lingering stigma.
And while it’s true that the long-term success of the Big Housing Build won’t become evident for some time, the high standards we’re striving for are promising. I look forward to seeing the delivery of great quality, fit-for-purpose homes that change people’s lives and enhance the communities in which they reside. From the industry’s enthusiastic uptake across multiple rounds of grants, it seems I’m not alone.
Politics are unavoidable when you’re dealing with government money, and these projects involve many stakeholders (and attract a fair amount of scrutiny). And when it comes to the process, there is undoubtedly room for improvement. Fortunately, we’re finding that Homes Victoria is openly committed to facilitating the process as efficiently as possible – they acknowledge and understand the frustrations that can arise and it is evident they are continually considering ways to improve the applicant experience. The alignment with Government Planners has certainly been refreshing. Even when matters arise where there is a difference of view with the authorities, we’re ultimately on the same page about wanting to deliver a great outcome for vulnerable Victorians and the broader community – and I hope we will. Watch this space…
These are my thoughts, but I would love to hear yours – this is an evolving conversation and one I believe is worth engaging with. Feel free to comment below, or get in touch with me at mellenbroek@upco.com.au
1. R Fox and R Finlay: Dwelling prices and household income. RBA Bulletin, December Quarter 2012.
2. Valuer-General Victoria, Victorian Property Sales Report, December 2022.
3. CHOICE, National Shelter and NATO (National Association of Tenant Organisations): Unsettled: life in Australia’s private rental market, October 2017.
4. E Baker, R Bentley, A Beer & D Lyrian: Renting in the time of COVID-19: understanding the impacts. Australian Housing and Research Institute, October 2020.
5. Hal Pawson and David Lilley: Managing Access to Social Housing in Australia: Unpacking policy frameworks and service provision outcomes. UNSW City Futures Research Centre, May 2022.