Housing Affordability Study

Transcription

1 Housing Affordability Study Gold Coast Region January 2014

2 MacroPlan Dimasi GOLD COAST Level 1/1 Le Boulevard 2 Elkhorn Avenue Surfers Paradise QLD 4217 (07) SYDNEY Level 4 39 Martin Place Sydney NSW 2000 (02) BRISBANE Level Eagle Street Brisbane QLD 4000 (07) PERTH Ground Floor 12 St Georges Terrace Perth WA 6000 (08) MELBOURNE Level Collins Street Melbourne VIC 3000 (03) Prepared for: Regional Development Australia Gold Coast MacroPlan Dimasi staff responsible for this report: Daniel Parker, Manager QLD Economics Jake McKinnon, Analyst

3 Table of contents Executive Summary...i Introduction... iii Section 1: Economic & Regional Overview...4 Section 2: Housing Affordability Assessment Local Areas Analysis...6 Section 3: Housing Affordability Assessment Contributing Factors Analysis.. 13 Section 4: Consultation Feedback & Findings Section 5: Study Findings & Recommendations Appendix: Consultation Questionnaire... 45

4 Executive Summary This report has been prepared to provide an assessment of housing affordability and housing stress on the Gold Coast. The assessment has comprised analysis of a range of socio-economic and housing market attributes to determine the extent of housing stress on the Gold Coast and the causes of current housing stress. Based on a comparison of housing costs and household incomes at 2011, there were approximately 45,946 households spending in excess of 30% of income on housing costs. Approximately 34,674 of these households were low income households, meaning they had an income in the bottom 40% of state wide household incomes. These 34,674 households indicate that 43% of the approximate 80,000 low income households on the Gold Coast are in housing stress. The 34,674 households indicated comprise 23,851 households in rental stress and 10,823 households in mortgage stress. While this data indicates that there is greater need for affordable rental product on the Gold Coast, there is also considered strong need to provide pathways to home ownership for low income households. The consultation feedback received for this assessment identified a number of issues as well as opportunities in regards to the local provision of affordable housing. Some of the issues noted included the lack of affordable land, outdated planning town planning policies/zonings and a poor public transport network. However, some of the opportunities identified by respondents included inclusive town planning policies, greater connectivity related to the light rail network, integration of affordable product within developing precincts such as Parklands, and greater incentivisation (from Council, State Government) to support affordable housing and attract not-for-profits as well as institutional investors. Some of the mechanisms and models identified as having the potential to support the delivery of additional affordable housing on the Gold Coast are outlined below. Economic Need Assessment 7 Waterford Court, Bundall 1

5 Funding, Cost Reduction and Incentive Options National Rental Affordability Scheme Increased participation of not-for-profit organisations Utilisation of Council or State owned land Inclusionary zoning for affordable housing product Planning and/or development concessions Rates relief Market Delivery Options Community land trusts Shared equity Rent-to-buy Economic Need Assessment 7 Waterford Court, Bundall 2

6 Introduction This report provides an assessment of housing affordability on the Gold Coast. The assessment has considered affordability in terms of rental and mortgage related housing costs and has analysed which areas are most negatively affected as well as what are the main issues affecting affordability on the Gold Coast. This assessment has relied on various socio-economic, demographic and housing market data as well as input from a number of selected stakeholders through a consultation program that has been conducted specifically for this study. The report has been prepared in accordance with instructions received from Regional Development Australia (Gold Coast) and is structured in four sections as follows: Section 1 provides an overview of the regional economic and industry trends affecting the housing sector and affordability locally on the Gold Coast. Section 2 analyses existing housing affordability conditions on the Gold Coast and highlights those areas most impacted by housing stress. Section 3 analyses a range of socio-economic, demographic and industry conditions to identify those factors that have the greatest influence on affordability conditions. Section 4 provides a review of the key issues, concerns and opportunities highlighted in the consultation feedback. Section 5 produces a summary of the key project findings and implications as well as recommendations related to potential future supply opportunities/delivery models. Economic Need Assessment 7 Waterford Court, Bundall 3

7 Section 1: Economic & Regional Overview This section of the report provides an overview of key socio-economic and demographic attributes that characterise the Gold Coast. This assessment highlights some of those broad city-wide attributes and trends that influence housing affordability. The Gold Coast (C) was reported as having a population of 526,173 people as of 30 June This resulted from growth of almost 11,000 people or a 2.13% increase from 2011 which recorded 515,202 people at the time of the ABS Census Household Survey 1. In 2011 there were a total of 181,619 occupied private dwellings on the Gold Coast. The following indicates the tenure of these dwellings: Owned outright 26.3% (QLD 29%) Owned with a mortgage 34.6% (QLD 34.5%) Rented 35.8% (QLD 33.2%) It is noted that the proportion of households owned with a mortgage has increased from 29.8% in 2006 indicating the community s general preference to own property. The median weekly household income for the Gold Coast was $1,174. This is only just above the low income threshold for households based on an assessment of state wide household income data which indicates low income households as those earning less than $1,125 per week. There were approximately 80,000 households, or 44% of all households, within this low income category in The median monthly mortgage repayment for residential dwellings on the Gold Coast was $2,075 in The median weekly rental cost for residential dwellings on the Gold Coast was $350 in Source: profile.id.com.au/goldcoast Economic Need Assessment 7 Waterford Court, Bundall 4

8 Household incomes as well as mortgage and rental costs all increased in value since 2006 however it is noted that there is a significant variance in the growth rates between income and cost categories. Growth for median weekly household income 15% (was $1,017) Growth for median monthly mortgage repayment 40% (was $1,480) Growth for median weekly rental payment 35% (was $260) As indicated, housing costs on the Gold Coast grew at a much higher rate than income on the Gold Coast between 2006 and This has a significant effect on housing affordability and stress for residents and has an increasing effect on demand for affordable product development. 5

9 Section 2: Housing Affordability Assessment Local Areas Analysis This part of the housing affordability study focuses on identifying those areas of key concern in terms of rental and mortgage stress. The assessment has considered rental stress and mortgage stress separately to understand the separate areas and issues affecting each sub market. For the purpose of this assessment affordability has been measured based on a threshold of up to 30% of household income. This has been used as an initial baseline for analytical purposes however this measure will be tested in Section 3 of this report. 2.1 Rental Affordability/Stress Assessment The following figure illustrates, at a Statistical Area 2 (SA2) level, the median proportion of household income spent on weekly rental payments for rented properties across the Gold Coast. Higher rates of rental stress are being experienced throughout many coastal suburbs from Main Beach to Coolangatta as well as a number of non-coastal suburbs including Southport, Varsity Lakes and Coomera. The local areas that have the highest proportion of households experiencing rental stress include: Surfers Paradise Broadbeach Kirra Coolangatta Southport CBD The majority of these areas provide some level of amenity such as proximity to beach, surf breaks, employment and education. While it is acknowledged that some residents throughout these areas are comfortable paying a high proportion of income on rent to access these amenity values, other households and Economic Need Assessment 7 Waterford Court, Bundall 6

10 particularly low income households will be negatively affected by the relatively high cost of rent. These areas will be assessed further using various socio-economic and housing market factors to determine any other conditions affecting housing affordability and stress locally. This will also consider whether an assessment of the proportion of income spent on rent is an accurate measure of housing stress or whether other conditions must be considered. 7

11 Figure 1 Households experiencing rental stress Gold Coast Economic Need Assessment 7 Waterford Court, Bundall 8

12 Figure 2 Households experiencing rental stress Local areas 9

13 2.2 Mortgage Affordability/Stress Assessment The following figure illustrates, at a SA2 level, the median proportion of household income spent on monthly mortgage repayments for owned with a mortgage properties across the Gold Coast. In general, there are relatively low proportions of households experiencing mortgage stress throughout the coastal suburbs of the Gold Coast. Those suburbs situated along the Pacific Motorway however have a higher proportion of households with mortgage stress. Those suburbs experiencing mortgage stress includes new and established residential areas such The Observatory (Reedy Creek) and Tallai, respectively. The areas identified as having a high proportion of households in mortgage stress include Upper Coomera/Oxenford, Pacific Pines, Maudsland, Highland Park, Worongary, Tallai and Reedy Creek. Figure 4 illustrates that within these areas there are some localities with up to 35% of households in mortgage stress. Some areas with high proportions of mortgage stress, such as Tallai and Worongary, are known to have higher household incomes as well as higher median monthly mortgage repayments. These factors are considered more closely in the following sections of this report to determine if the high proportion of income spent on mortgage repayment is a true indication of housing stress. 10

14 Figure 3 Households experiencing mortgage stress Gold Coast Economic Need Assessment 7 Waterford Court, Bundall 11

15 Figure 4 Households experiencing mortgage stress Local areas 12

16 Section 3: Housing Affordability Assessment Contributing Factors Analysis This section assesses a range of demographic, housing and socio-economic attributes to determine which conditions have the greatest influence on housing affordability. This analysis uses that locational assessment of rental and mortgage stress in Section 2 to determine correlation between these attributes and areas of high housing stress. The analysis conducted in this section will also determine whether the benchmark of <30% of household income holds true as the standard measure for housing affordability. The various attributes assessed in this section are analysed at a geographical level to produce a comparison with the analysis completed in Section 2. These attributes include: Household income (total) Household income change ( ) Proportion of compulsory expenditure per household Housing costs (total) Housing cost change ( ) Families with dependent children Retired aged persons (65+) Divorce rates Unemployment rates Housing affordability Median multiple method A summary of the relevant findings for each of the attributes assessed is presented later in this section. The last attribute assessed is housing affordability based on the median multiple method. The median multiple is a widely used method to provide a simple assessment of housing affordability within a region. The technique is Economic Need Assessment 7 Waterford Court, Bundall 13

17 recommended by the World Bank and the United Nations and is often used to provide comparisons between nations or regions. The median multiple is simply a comparison of median income and median cost of housing within a defined region or nation. A scale is then used to determine whether the region is affordable or unaffordable. The scale for the median multiple method is indicated below. Rating Median Multiple Severely Unaffordable 5.1 & over Seriously Unaffordable 4.1 to 5.0 Moderately Unaffordable 3.1 to 4.0 Affordable 3.0 & under As an example of the median multiple method, if the median household income for a region is $100,000 and the median sale price for a house within the same region was $300,000 the median multiple would be 3.0 and the region would be considered affordable. Alternatively, if the median sale price was $550,000 the median multiple would be 5.5 and the median multiple would be 5.5 and the region would be considered severely unaffordable. 14

18 Figure 5 Median weekly household incomes Economic Need Assessment 7 Waterford Court, Bundall 15

19 Figure 6 Household income change

20 Figure 7 Compulsory expenditure per household (as a % of household income) 17

21 Figure 8 Average weekly rental costs 18

22 Figure 9 Weekly rental cost increases

23 Figure 10 Average monthly mortgage costs 20

24 Figure 11 Monthly mortgage costs increases

25 Figure 12 Households with dependent children 22

26 Figure 13 Households with elderly residents (aged 65+) 23

27 Figure 14 Divorce rates 24

28 Figure 15 Unemployment rates 25

29 Figure 16 Housing affordability Units (Median multiple method) 26

30 Figure 17 Housing affordability Houses (Median multiple method) 27

31 Summary of Socio-Economic and Housing Attributes The following presents a summary of the key observations and findings of those various socio-economic and housing market attributes with comparison those areas most affected by housing stress, including rental and mortgage stress, on the Gold Coast. Household income (total) There is almost no correlation between household income and mortgage stress on the Gold Coast. There is no level of correlation that would suggest that an area with low household incomes has higher proportions of mortgage stress. There is strong correlation between low income areas and high proportions of rental stress, particularly throughout coastal suburbs and Southport. Coomera and Upper Coomera are an exception as they have relatively high household income but high proportions of rental stress households. Household income change ( ) There is a positive correlation between areas that experienced high household income growth and areas with a high proportion of mortgage repayments in excess of 30% of household income. This would suggest that some people throughout these areas are willing to accept the high mortgage repayments based on their relatively high household income. It is noted that there has been limited income growth in those areas with high rental stress such as Surfers Paradise and Broadbeach. It is likely that this is a reflection of the dominant hospitality and services sectors in these areas and the relatively low wages of these sectors. Proportion of compulsory expenditure per household This assessment provides a valuable comparison of the proportion of household income distributed to compulsory expenditure items (i.e. housing costs, food, utility services and other living expenses). This data set indicates that some areas indicating high proportions of mortgage stress have relatively low proportions of compulsory expenditure as a result of high incomes and few dependent children (i.e. Tallai and Worongary). 28

32 Those areas of more concern are the areas with a high proportion of compulsory expenditure as well as high proportions of mortgage and/or rental stress. For mortgage stress areas this includes Nerang, Pacific Pines, Oxenford, Upper Coomera and Maudsland. For rental stress areas this includes Southport, Labrador and Biggera Waters (southern end of suburb). Weekly rental cost It is noted that the suburbs of Surfers Paradise, Broadbeach, Southport and Labrador all have relatively low rental costs while having high proportions of households with rental stress. There are some suburbs such as Robina, Varsity Lakes and Coomera that have both high rental costs and high proportions of households in rental stress. These areas are considered less of a concern than those areas such as Surfers Paradise, Southport and Labrador. Rental cost change ( ) There is limited and no consistent correlation between rental cost change between 2006 and 2011 and areas experiencing rental stress. Monthly mortgage repayment There is high level of consistency between mortgage repayment costs and the proportion of households experiencing mortgage stress (i.e. areas with high mortgage repayment costs generally have higher proportions of households with mortgage stress). Mortgage repayment change ( ) Across the Gold Coast there is a reasonably strong correlation between increases in mortgage repayment costs and the proportion of households experiencing mortgage stress. Families with dependent children There is strong correlation between those areas with low proportions of households with dependent children and areas with low proportions of mortgage stress. 29

33 There is very little correlation between this data set and areas experiencing rental stress. Retired aged persons (65+) There is no consistent correlation between areas with high proportions of residents aged 65 and over and areas with high proportions of rental or mortgage stress. It is however noted that there are isolated examples such as Southport and Labrador that have high rental stress as well as higher proportions of elderly residents. This attribute is considered to add to the significance of rental stress in these areas. Divorce rates There is some correlation between areas with high divorce rates and areas with high rental stress. This is largely apparent along the coastal strip from Burleigh to Southport as well as Coombabah. Unemployment rates Correlation between unemployment and rental and mortgage stress is varied. In some areas, such as the stretch from Isle of Capri north to Coombabah including Southport and Labrador (and separately Varsity Lakes/Stephens), there is strong correlation between high unemployment and high proportions of rental stress. However in the same locations there is a low proportion of mortgage stress. Housing affordability Median multiple method The median multiple factor that is considered affordable is 3.0 or lower (i.e. the median cost of a dwelling is 3.0 times the median income within a defined area). The median multiple for the Gold Coast is 7.6 which is severely unaffordable. The most affordable suburb on the Gold Coast based on the median multiple method is Upper Coomera for houses and Pacific Pines for Units. The median multiple method of measuring affordability indicates that there is not a single suburb on the Gold Coast that offers affordable house or unit product. 30

34 However, this method demonstrates a significant contrast as the areas showing the lowest levels of affordability generally have the lowest proportion of households experiencing mortgage stress. For example, Surfers Paradise, Main Beach, Broadbeach and Coolangatta have some of the lowest levels of affordability on the Gold Coast however these areas all have relatively low proportions of households with mortgage stress. Implications The assessment of the various socio-economic and housing market attributes has identified a number of attributes that appear to have an influence or are relevant to rental and/or mortgage stress. In addition, the assessment has shown that while some areas appear to have high proportions of housing stress, other attributes such as household income and proportion of compulsory expenditure indicate that some of this stress may not be genuine. As such it is necessary to consider other factors when assessing housing stress (this is discussed further in Section 5). Rental Stress The consistent attributes affecting rental stress are largely income related. It is evident that those areas that have low household income or attributes related to reduced income, such as high divorce rates, high unemployment and high proportion of retirees, are more likely to be affected by high rates of rental stress. Much of the rental stress on the Gold Coast is throughout coastal suburbs as well as Southport and Labrador. This is likely because these locations have a much higher proportion of rented unit and apartment stock. While there is a higher amount of suitable stock in these locations, an issue with this is that permanent renters have to compete for this stock with tourists and high income households who choose to rent in these locations because of the amenity attributes. This competition inevitably results in increased rental rates. Mortgage Stress The attributes affecting mortgage stress on the Gold Coast are much more varied than rental stress. While some attributes have shown some amount of 31

35 consistency with higher or lower rates of mortgage stress, for the most part mortgage stress appears to be affected by a broad range of attributes that are often unique to each area (and likely each household). Some attributes such as cost of mortgage repayments and the change in mortgage repayments from 2006 to 2011 did show some level of consistency with higher proportions of mortgage stress. As previously indicated in this report, households incomes have increased at a much lower rate than mortgage repayments. As a result of the increase in mortgage repayments there are a number of areas indicating a high proportion of mortgage stress based on repayments exceeding 30% of household income. If the cost of mortgage repayments continues to increase at the high growth rate that occurred between 2006 and 2011, there is likely to be a significant increase in mortgage stress on the Gold Coast. 32

36 Section 4: Consultation Feedback & Findings This section presents the feedback and key findings from the consultation program completed for this study. The aim of consultation process has been to confirm the issues and barriers affecting affordable housing development and delivery as well as explore potential opportunities and solutions for future product delivery. The consultation was conducted as a questionnaire that was distributed to each stakeholder. A copy of this questionnaire can be found in Appendix A of this report. What is affordable housing? MacroPlan Dimasi enquired to what the respondents felt the term affordable housing meant. All respondents considered affordability to be a comparison of housing costs and income and that affordable housing did not generate costs that exceeding 30% of household income. Issues facing housing affordability When asked what the largest issues influencing housing affordability on the Gold Coast, two thirds of respondents felt that it was the availability of low cost land, whilst the remainder felt that it was the restrictions on housing diversity that presented the biggest challenges. Barriers restricting affordable housing In describing the barriers restricting affordable housing, the responses were varied, the most common barrier mentioned was the availability of low cost land, and the others listed were; Lack of appropriately zoned land; The removal of infrastructure charge rebates for not-for-profit providers; 33

37 A lack of distributed and usable public transport and services outside Southport, Robina and the coastal strip; Out dated and inflexible town planning; Highly conservative lending practices by banks. Is the supply of affordable housing improving or worsening? Two thirds of respondents felt that the supply of affordable housing on the Gold Coast was improving due to increased awareness of key issues, the work of notfor-profit groups and the National Rental Affordability Scheme (NRAS). The remainder of respondents felt that it was worsening, as the diversity of housing types is becoming narrower. Addressing supply in predominate investment areas When asked how the notion of affordable housing product be addressed in a location where there is a general focus on delivering investment product, the respondents felt that the NRAS has assisted in addressing this issue, but currently the limited pathways (renting and owner occupier) to housing occupation of the Gold Coast makes it hard to address this. It was suggested that with greater pathways to housing occupation (such as long term lease holds, rent to buy schemes, etc.) the barriers to institutional investment may be lessened. Are mixed income housing models appropriate? MacroPlan Dimasi enquired to whether the respondents believed that mixedincome housing models comprising social/community housing interspersed with general housing product would be appropriate in redevelopment areas such as the Parklands PDA and the Southport PDA. All respondents felt that this type of model, done correctly, has the potential to reduce concentrations of disadvantage, reduce social issues and provide access to well-located and accessible homes for people on low incomes. It was also noted that this should be incorporated with a mix of housing types as well as tenure types. It is also the general consensus that increases in tourism has the potential to encourage new housing supply, such as high rise apartments, that could produce 34

38 viable product for investors by supporting long term/permanent occupancy models. Are government incentives working? There were mixed responses to the whether government incentives such as the NRAS or Great Start Grant were effective in providing an affordable product. It was felt that the NRAS has attracted short term speculators rather than the intended institutional investors that would support the scheme. On the other hand it was said that the NRAS has been great (although slower than many would have liked) in improving affordability in the cities and suburban areas, as it has reduced the cost of provision of affordable housing whilst stimulating new development. How can planning improve the supply? There were a numbers of suggestions on how planning controls and regulations could be used to address or improve the supply of affordable housing. These suggestions included; Widen definitions to encourage diversity of housing and tenure types. Using planning controls and regulations to encourage more affordable design through the use of incentives. That planning could be used to encourage market driven infill development to allow communities to meet their own amenity requirements. Greater flexibility of development west of the coastal strip would assist in providing suitable development locations away from high-cost beach side properties. Encouragement of affordable housing along the Light Rail route, and potentially inclusionary zoning in high-need areas, would assist. Reintroducing rebates for infrastructure charges for not-for-profit providers. Reduction in car parking requirements in well-serviced areas. 35

39 Will the recent investment in infrastructure benefit the supply of affordable housing? All respondents feel that the investment in the light rail has the potential to connect the city in ways that were not possible before and that this connection will enable the propensity for higher density and affordable housing along the light rail route, which will also yield viable returns for investors. It was also felt that the investment in hospitals, TAFE, universities will benefit those who live close to infrastructure and provide greater opportunities for the Gold Coast residents. One respondent also felt that the Athlete s Village, once the Commonwealth Games finish will provide an excellent opportunity for offering affordable housing. 36

40 Section 5: Study Findings & Recommendations This final stage aims to answer a number of key questions and provide recommendations on how the affordable housing issue can be addressed on the Gold Coast. These findings and recommendations are based on the interpretation of analysis presented in this report, consultation feedback and examples of existing and/or conceptual housing models. What is the extent of the affordable housing issue on the Gold Coast? Based on the 2011 Australian Bureau of Statistics Census Survey, the Gold Coast had the highest proportion of households in both rental stress and mortgage stress of all major LGAs in South East Queensland. Approximately 17.1% or 31,057 households were in rental stress at the time of the 2011 Census Survey. It is noted however that the proportion of households in rental stress is calculated by the ABS as a proportion of all occupied private dwellings. MacroPlan Dimasi has calculated that approximately 47.7% of all rented households on the Gold Coast were in rental stress in The table below indicates the percentage of households in rental stress on the Gold Coast compared with other major regions throughout South East Queensland. 37

41 Table 1 Household Rental Stress SEQ Comparison Region Percentage of Households in Rental Stress* Median Weekly Rental Cost Gold Coast (C) 17.1% $350 Sunshine Coast (R) 13.8% $320 Ipswich (C) 12.8% $280 Logan (C) 12.1% $300 Brisbane (C) 11.8% $350 Moreton Bay (R) 11.5% $300 Redlands (C) 9.8% $350 Queensland 11.9% $300 Australia 10.4% $285 *Rental stress defined as spending more than 30% of household income on rental payments. Source: ABS (2013) Approximately 13.1% or 23,792 households were in mortgage stress at the time of the 2011 Census Survey. It is noted however that the proportion of households in mortgage stress is also calculated as a proportion of all occupied private dwellings. MacroPlan Dimasi has calculated that approximately 37.9% of all mortgaged households on the Gold Coast were in mortgage stress in The table below indicates the percentage of households in mortgage stress on the Gold Coast compared with other major regions throughout South East Queensland. Table 2 Household Rental Stress SEQ Comparison Region Percentage of Households in Mortgage Stress* Median Monthly Mortgage Cost Gold Coast (C) 13.1% $2,075 Logan (C) 12.9% $1,800 Redlands (C) 11.4% $2,000 Sunshine Coast (R) 11.4% $1,863 Moreton Bay (R) 11.1% $1,928 Ipswich (C) 9.6% $1,733 Brisbane (C) 8.7% $2,100 Queensland 9.7% $1,850 Australia 9.9% $1,800 *Mortgage stress defined as spending more than 30% of household income on mortgage payments. Source: ABS (2013) 38

42 The two tables on the following page provide a detailed assessment of rental and mortgage stress. These tables provide a comparison of the cost of weekly rental payments and monthly mortgage repayments by household income. This comparison provides the ability to assess how many households are spending more than 30% of income on rental or mortgage costs, as well as by income category. In terms of households in rental stress, Table 3 indicates that there were approximately 25,077 households spending more than 30% of income on rental payments. Table 4 indicates that there were approximately 23,851 households spending more than 30% of income on mortgage repayments. However, as previously stated, some high income households can afford to spend more than 30% of income on rent or mortgage payments without necessarily being stressed. As such it is more appropriate and often common to assess housing stress based on low income households only. Low income households are those with an income in the lowest 40% of the overall income range. Based on an assessment of household incomes in Queensland, the low income threshold is $1,125 or less per week. There were approximately 80,000 low income households (or 44% of all private households) on the Gold Coast in Based on low income households alone, Tables 3 and 4 indicate that there were 20,869 and 10,823 households in rental and mortgage stress respectively. This is a total of 34,674 low income households that are spending in excess of 30% of income on housing costs. In comparison to the 34,674 low income households in housing stress in 2011, there were 3,720 state housing authority dwellings and 718 housing cooperative/community/church group dwellings. It is uncertain as to the total number of dwellings offering reduced or subsidised rent (such as NRAS housing). 39

43 Table 3 Rental Stress Rental Payments vs Household Income Weekly Household Income Source: ABS, MacroPlan Dimasi Table 4 Weekly Household Income Mortgage Stress Mortgage Repayments vs Household Income Source: ABS, MacroPlan Dimasi Weekly Rental Payments Monthly Mortgage Repayments Rental Stress Households Total households experiencing rental stress 25,077 Total 'low income' households experiencing rental stress 23,851 Nil $100- $125- $150- $175- $200- $225- $250- $275- $300- $325- $350- $375- $400- $425- $450- $550- $650 and $1-$74 $75-$99 payments $124 $149 $174 $199 $224 $249 $274 $299 $324 $349 $374 $399 $424 $449 $549 $649 over $1-$ $200-$ ,649 $300-$ ,480 $400-$ ,639 $600-$ , ,936 $800-$ ,654 $1,000-$1, , ,605 $1,250-$1, $1,500-$1, , , , $2,000-$2, $2,500-$2, $3,000-$3, $3,500-$3, $4,000-$4, $5,000 or more Nil $150- $300- $450- $600- $800- $1,000- $1,200- $1,400- $1,600- $1,800- $2,000- $2,200- $2,400- $2,600- $3,000- $4,000- $5000 $1-$149 repayments $299 $449 $599 $799 $999 $1,199 $1,399 $1,599 $1,799 $1,999 $2,199 $2,399 $2,599 $2,999 $3,999 $4,999 and over $1-$ $200-$ $300-$ $400-$ ,657 $600-$ ,128 $800-$ ,702 $1,000-$1, ,936 $1,250-$1, ,063 $1,500-$1, , ,287 1, ,492 $2,000-$2, , ,327 1, ,905 $2,500-$2, , $3,000-$3, , $3,500-$3, $4,000-$4, $5,000 or more Mortgage Stress Households Total households experiencing mortgage stress 20,869 Total 'low income' households experiencing mortgage stress 10,823 Economic Need Assessment 7 Waterford Court, Bundall 40

44 What are the key issues affecting housing affordability? While income is one of the two primary variables in housing affordability, and there are a number of related attributes as determined earlier in this report, it is generally accepted that housing costs is the main issue affecting affordability. This includes the various factors that contribute to housing costs. There are a number of key cost inputs for housing, some of which have increased significantly in recent decades. These include: Land costs Holding costs Infrastructure costs Approval process costs Application fees Construction costs Sales and marketing costs Many research papers reviewed as part of this assessment stated or concluded that one of the most significant factors in the deterioration of housing affordability is the lack of efficient land supply. This is generally caused by the creation of urban footprints or green belts around established urban areas that contain or restrict urban development within these boundaries. This has resulted in a limitation of developable land supply and increased competition which naturally has an inflationary effect on housing costs. While there are a range of attributes and conditions that contribute to individual examples of housing stress and affordability, reducing or at least controlling the future growth in housing costs would have the most significant effect on improving affordability or limiting any further deterioration of affordability. Is 30% of household income a reasonable threshold to measure housing affordability? (I.e. if housing costs are less than 30% of household income they are affordable) There are a number of methods of assessing housing affordability. The 30% of household income method as well as the median multiple method are both widely accepted techniques for assessing affordability. However both techniques are Economic Need Assessment 7 Waterford Court, Bundall 41

45 very general in the variables that are assessed and while they can provide a reasonable indication of affordability at a broad regional or national level, they are not considered appropriate when considering affordability and housing stress in detail at a local level. So as to avoid inaccuracies related to high income households it is more appropriate to apply the 30% of household income method to low income households. As previously stated, low income households are those in the bottom 40% of the overall income range. This method has been applied earlier in this section for the Gold Coast. An added level of accuracy that could be applied to this assessment method is to adjust income to equivalised disposable income. Equivalised disposable income essentially adjusts total income based on the number of adults and dependents within a household to reflect the requirement of a larger household to have a higher level of income to achieve the same standard of living as a smaller household. For example, the equivalence scale applied to a single adult living alone is one. The equivalised disposable income is therefore equal to the household income. A family with two adults and two children under 15 however will have an equivalence scale of 2.1. If the household income was $100,000, the equivalised disposable income for the family would be $47,619. This indicates that the family has the equivalent economic capacity as a single person with a single person household earning $47,619 based on increased living costs associated with a larger family. Applying equivalised disposable income to Gold Coast households would provide further detail to determine the extent of housing stress throughout the region. This would also provide additional detail of the type of affordable housing that is required (i.e. units for single and couple households or larger houses for family households). 42

46 What options exist to improve housing affordability on the Gold Coast and what models can be used to deliver affordable housing? There are a number of mechanisms and models typically used to deliver affordable housing. On the Gold Coast the greatest need is for an increase in affordable rental product as well as pathways to home ownership for low income households. The following provides a summary of these mechanisms and models that provide potential to deliver affordable housing product on the Gold Coast. Funding, Cost Reduction and Incentive Options National Rental Affordability Scheme Continued roll out and delivery of NRAS approved product locally. Increased participation of not-for-profit organisations This may involve incentivisation on Council s behalf. Utilisation of Council or State owned land This could be through a partnership with a not-for-profit or other suitable organisation. The lack of land cost will allow product to be delivered at a reduced cost which would then support a range of delivery options to low income households. Inclusionary zoning for affordable housing product This would require appropriate planning provisions under Council s planning scheme. Planning and/or development concessions This could be similar to Council s Construction Kick Start Program. Rates relief Implemented by Council which allows the property owner (such as a not-for-profit) to apply the value of rates as a discount to the annual rental cost. Market Delivery Options Community land trusts A community land trust is a not-for-profit entity that holds title to land in perpetuity, to create and steward perpetually affordable housing and provide community benefit. This model provides the potential to deliver affordable product over a longer term where as some delivery models only deliver affordability to the first buyer. Shared equity Shared equity programs do already exist such as the Queensland Government s Pathways shared equity loan. This type of model provides the opportunity for low income households to transition from government housing (or normal rented housing) into home ownership. 43

47 Rent-to-buy This model also provides the opportunity for families to transition from a renting to home ownership. This model does not necessarily need to be delivered by a not-for-profit and may appeal to a broader market segment therefore making it a more commercially attractive delivery model. 44

48 Appendix: Consultation Questionnaire Gold Coast Residential Affordability Study MacroPlan Dimasi are currently working with RDA Gold Coast to develop an understanding of the key issues affecting housing affordability on the Gold Coast. The study is focused on identifying the issues affecting the market, current market gaps and needs for affordable housing product, and identifying opportunities for how affordable product may effectively be delivered on the Gold Coast. So as to gain insight of the specific issues affecting the local Gold Coast housing market and industry sector, consultation is being completed with key industry stakeholders. The consultation process aims to confirm the issues and barriers affecting affordable housing development and delivery as well as explore potential opportunities and solutions for future product delivery. The following presents a brief questionnaire to explore the various issues and opportunities relevant to affordable housing on the Gold Coast. This seeks to explore broad issues affecting housing affordability as well as the unique Gold Coast centric issues such as the influence of the tourism sector on demand and the influence of housing choice on supply. In terms of future opportunities, the intent is also to understand how the housing model on the Gold Coast can deal specifically with affordability (i.e. step away from the historically strong mix of investment/tourism oriented product). Economic Need Assessment 7 Waterford Court, Bundall 45

49 Please feel free to attach any additional documentation in response or contact Daniel Parker from MacroPlan Dimasi on if you have any questions or wish to discuss. 1. What is your understanding of the term affordable housing? 2. What do you believe is the largest single issue influencing housing affordability on the Gold Coast? 3. What are the current barriers restricting the delivery of affordable housing product? 4. Do you believe the supply of affordable housing on the Gold Coast is improving or getting worse, and why? 5. How can the notion of affordable housing product be addressed in a location where there is a general focus on delivering investment product? 6. Do you believe that mixed-income housing models comprising social/community housing interspersed with general housing product would be appropriate in redevelopment areas such as the Parklands PDA and the Southport PDA? (Please explain why/why not) 7. Do you believe the following issues are an impediment to the delivery of affordable housing product on the Gold Coast? Please provide comment: i. Infrastructure charges ii. Taxation iii. Negative gearing iv. Cessation of the First Home Owners Grant 8. Do you believe government incentives such as the NRAS and Great Start Grant are effective in providing affordability?

50 9. How might local planning controls and regulations be used to address or improve the supply of affordable housing? 10. The potential for future interest rate rise and increased tourist visitation poses a threat to housing stress and affordability. How might this be mitigated over the next several years? 11. Do you believe recent infrastructure investment on the Gold Coast has benefitted the supply of housing affordability, and how might this be improved in the future? If there are any questions regarding this document, please contact Daniel Parker on

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