Primer for the incoming
Housing Affordability Tsar

This is a paper submitted as coursework for Strategic Spatial Planning at UNSW. The premise was for students to create a new, senior public service role for the NSW Government and then prepare a briefing paper for them.


This Primer has been prepared for the incoming Housing Affordability Tsar for NSW. We welcome this appointment to address much needed reform.

Housing is a critical component of a healthy and equal society (Emsley, et al., 2008). Yet, the affordability of housing in Sydney has declined sharply in the past forty to fifty years, hitting lower income households in middle to outer-suburbs most acutely (Gleeson, Low, 2000; Yates and Milligan et al., 2007).

We recognise the complexity of the situation, due in part to the involvement of multiple stakeholders across levels of government, the private sector, and not-for-profit entities. This primer seeks to address some of this complexity and offer suggestions for ways forward. In particular we focus on three levers:

  1. Reducing the upfront cost of land
  2. Alternative funding & ownership models
  3. Innovative approaches to building.

The three sections of this primer address these levers, and also give an overview of associated key issues, best practices, and opportunities. Whilst we have provided examples from different Australian and international cities, it is important to recognise the importance of local context in the development of affordable housing, primarily because of the highly variable nature of policy and housing market characteristics (Randolph, et al., 2018).

Background & context

Sydney’s population is estimated to grow by 1.74 million by 2036, resulting in a need for an additional 725,000 homes across Sydney (NSW Department of Planning, 2019).

Without a comprehensive affordable housing strategy, the pressures of increasing housing costs currently experienced by lower income households across Sydney are unlikely to ease.

There have been multiple and high-profile claims that housing supply is failing to keep up with demand, and that this affects affordability (Daley, et al., 2018; RBA, 2014). In response, the NSW Premier has identified housing affordability as one of 12 Premier’s Priorities, primarily looking at increasing supply through fast tracking of housing approvals and rezoning,
with aims to complete 61,000 houses by 2021 (NSW Government, 2019).

Research demonstrates, however, that blanket increases in supply will have only modest results, suggesting that there are more complex and nuanced factors at play in the supply of affordable housing (Ong et al., 2017; Pinnegar, Randolph, 2012).

With lack of access to affordable housing comes housing stress, which is particularly high in Sydney, with an estimated 57.7 per cent of lower income renter households in metropolitan Sydney paying more than 30 per cent of total household income on housing costs in the period 2017 to 2018 (ABS, 2019).

Health implications related to housing stress include a lack of nutrition as low income earners cut back on essentials such as food, along with more long-term mental health implications from continued stress caused by instability in housing (Singh et al., 2019; Yates, Milligan, 2007).

The location of housing can further embed disadvantage because of reduced access to transport and employment (Commonwealth of Australia, 2014; Dodson, Sipe, 2008; Winter, 2013).

Levers for change

This primer introduces three levers aimed at reducing the gap between what people can pay and what the market or government can build. The coordinated application of measures in three related areas should see some improvements in affordability.

LEVER 1: Reduce the upfront cost of land so that affordable housing providers do not have to compete with private developers.

LEVER 2: Provide a spectrum of funding mechanisms to expand the capacity of a greater range of low-income households to secure affordable housing.

LEVER 3:Explore innovative models of building that reduce upfront costs and help low-income households enter the housing market.


Reducing the upfront cost of land

Access to cheap land is a major barrier to the development of affordable housing (Randolph et al., 2018). In Sydney, the trend has been for new affordable housing to be built at a distance from the city centre and areas of highest employment as land toward the centre has become more expensive (Dodson, Sipe, 2008).

Since 2011, approximately $10 billion of government-owned property assets have been sold (Robertson, 2017). This privatisation of previously public space is a trend which appears likely to continue.

Whilst we do not begrudge a desire to finance government services through these sales, we believe there might be an opportunity to think more creatively around the provision, use and valuation of public land in order to attract the building of affordable homes where they are most needed.


  1. Land costs significantly add to long term project costs for affordable housing developers. The cost of land is approximately 15% of total housing costs for infill developments and up to 23 per cent for greenfield developments (URBIS, 2011). Whilst this does not represent the most significant cost for new buildings — construction can be up to 60 per cent — in markets such as Sydney this can be a significant cost that affordable housing developers must carry over the term of the investment.
  2. Attractiveness of short-term commercial returns. The Coalition Government’s privatisation agenda means that there is little exploration of more long-term finance arrangements that could be as, if not more, financially beneficial than the cost of land (Randolph, et al, 2018).


Community land Trusts (CLTs): CLTs have been credited as providing similar benefits to outright ownership such as security of tenure (Crabtree et al., 2012; Pinnegar, et al., 2008). Dedication of public land to affordable housing has been used by the cities of Port Phillip and Brisbane to deliver significant results (Emsley et al., 2008).

Land rent schemes for individuals. As part of the ACT Affordable Housing Action Plan, households earning less than $85,000 per annum were offered a residential block of land to rent from the government at two per cent of the land value. This scheme enabled low income households to reduce the deposit gap and the overall cost of building a new home The program aimed at providing for 1,000 households, and has subsequently been opened up to the community housing sector (Rowley et al., 2017).


Reduce long-term project costs through land contributions. Lessening the upfront cost of land will reduce the overall cost of developing affordable housing. This is because, unlike for-profit developers who get immediate return on or before completion, community housing and affordable housing developers are often required to spread their debt over a longer period, meaning they often pay more interest (Randolph, et al, 2018).

Government retains equity. Rather than outright sales of public land, the government should consider retaining equity in some developments in exchange for the contribution of land. This is a more long-term approach that could see governments receive greater financial rewards than one-off, short-term sales.

Treat land as a platform for social good. This change of framing helps to place greater importance on the long-term value of land retention for public good (Parvin, Reeve, 2019). With this in mind, it is recommended that in locations where affordable housing will have the most impact, the government should reconsider the need to achieve the ‘highest and best use’ price for that land.


Alternative funding & ownership models

The great Australian dream of home ownership may not benefit all households equally, because too often, low income households are forced to buy properties of poor quality in substandard locations (Dodson, Sipe, 2008).

Rather than assuming that people on low incomes can or will want to own a property outright, it is worth exploring spectrums of ownership and equity across the ‘housing continuum’ that might provide similar benefits.


Home ownership has become out of reach for many. The borrowing capacity of households has not grown at the same rate as the cost of housing (Pinnegar et al., 2008; Yates and Milligan et al., 2007). Structural factors, in particular, have been linked to the lack of pathways for lower-income households to home ownership (Yates and Milligan et al., 2007).

Demand-side incentives affect affordability. Mechanisms which increase the purchasing power of first home buyers can drive up the price of houses unless there is a corresponding increase in supply (Karp, 2019; Pascoe, 2013; Pinnegar et al., 2008; Yates, 2017). Moreover, international research has shown that there has been little increase in the supply of affordable housing in countries where individual household subsidies were the only mechanism applied (Rowley et al., 2016).

The discontinuation of the National Rental Affordability Scheme (NRAS) has raised fears of negative outcomes for low-income renters (Aliento, 2018; Burke, 2018), especially when compared to recent ABS figures which show that housing costs as a proportion of income are rising for renters (ABS, 2019).

Inclusionary planning and planning bonuses provide insufficient affordable housing. In the UK, inclusionary planning requirements delivered 43 per cent of total affordable housing output compared to just 1 per cent in Sydney (Emsley et al., 2008; Gurran et al., 2018; Rowley, 2015).

Shared equity arrangements are highly dependent on market stability. When markets slowed in the late 1980s, NSW households with HomeFund loans found that they owed more money than their home was worth (Public Interest Advocacy Centre, 2017). Greater caution in this state toward shared equity schemes has been attributed to this (Pinnegar, et al., 2008).


Government retained equity. In Western Australia, the state government has taken an equity share from a private developer in return for the contribution of the land (Randolph, et al, 2018). As the government is able to draw on the value of the housing along with onsite asset sales, the return on this arrangement has far exceed what they would have received from the outright sale of the land.

Cooperative housing. This is a popular model in countries which value collectivisation (Crabtree et al., 2019). Co-ops account for 10 to 15 per cent of housing in Sweden, Norway and Germany, but just 0.05 per cent of the total housing sector in Australia (SBS, 2013).

Nightingale Housing model. The ‘Nightingale Covenant’ caps profits at 15 per cent and is based around the offer of perpetual affordability. Development costs are reduced where possible, and ongoing costs for residents are reduced through sustainable building design. Nightingale chooses owners by ballot and gives preference to key workers and Indigenous people (Cumming, 2018; Nightingale Housing, 2018).


Encourage the Federal Government to resume the National Rental Affordability Scheme. Community Housing advocates have called for its reinstatement as part of a cohesive affordable housing strategy (Aliento, 2018; Burke, 2018). If reinstated, it is suggested that the flat-rate of the subsidy should be altered to take into account spatial aspects to affordability, as the funding gap in high cost locations cannot always be met through the subsidy (Randolph et al., 2018).

Combine shared equity with reductions in land costs. To reduce the impact of market changes to the value of homes within shared equity schemes (such as with HomeFund), the overall cost of the property should be lessened, potentially through land rent schemes as proposed in the previous section.

Increase levels of cooperative housing. There is scope for NSW to further promote the use of cooperative models to provide affordable housing (Emsley, et al., 2008). The sector in NSW could be assisted through scaling back recent changes to the income and asset tests for residents. Previously there was an allocation of 35 per cent of residents who did not have to meet any eligibility requirements, meaning a greater diversity of residents and higher revenues for the co-ops (Crabtree et al., 2019).


Innovative approaches to building

There are multiple barriers to people with low incomes entering the formal housing market (Gurran et al., 2019). Although the high cost of purchasing a home is a major factor, it is also worth noting that there have been few changes to the models of affordable housing supply — including how the homes themselves are built — especially in light of dramatic demographic shifts in Australia’s population (Milligan et al., 2014). This means that even if there are sufficient affordable homes, they are not necessarily meeting the needs of our current population.


Informal dwelling construction is on the increase but doesn’t always comply. According to Gurran et al., higher levels of informal housing are being built across Sydney to match the undersupply of cheaper housing — and lack of flexibility in building types — yet many of these do not comply with the planning system and building codes (Gurran et al., 2019). This raises issues of safety, health, privacy and general liveability for occupants.

Ongoing costs of maintenance of low-cost buildings. Residents of housing built at low cost are often beset with significant costs for heating, cooling, and maintenance because of the poor quality of the build (Gibbs, 2017).

Lack of variety in housing types in areas of most need. The provision of a diverse range of housing creates affordability for a diverse range of people (Rowley, Phibbs, 2012). Yet in Sydney, detached dwellings dominate suburbs of disadvantage, with apartments tending toward areas of greater advantage such as the CBD or along transport nodes (Hulse, et al., 2014).


Direct relationships between council and home owner. People on low incomes in Almere in the Netherlands can buy land from the local council and then choose from a range of ready-made homes to place on their plot, or design their own based on some official design principles. Over 3,000 homes are planned for this region (Feary, 2015; NACSBA, 2019).

Greater levels of self-build. The UK Government’s National Planning Policy Framework stipulates that councils must provide for the self-build market, noting that it could be a key in the provision of affordable housing (Ministry of Housing, Communities and Local Government, 2019).

‘Half a House’ concept. This is a model where homeowners are provided with the bare basics of a home for an affordable price, allowing them the space to expand through self-build as and when they have the resources to do so (Turner, 1972). This model was put into play when affordable ‘half houses’ were sold to earthquake survivors in Conception, Chile (Zilliacus, 2016).

Building community capacity. The Lockhart River Aboriginal Shire Council has used funding from the federal government’s National Partnership Agreement on Remote Indigenous Housing (NPARIH) to upskill local people to build their own houses (Mounter, 2019).


Allow for the building of more flexible housing. Traditional models of family houses do not allow the flexibility required of today’s families. Principles of flexibility could be engaged to allow for expansion and contraction over time. We suggest that the Tsar could assist councils to take a more proactive stance on the revision of building codes to allow for greater flexibility.

Consider ongoing costs when measuring affordability. Gibbs suggests that affordability as a concept needs reframing to include the ongoing costs paid by households through their tenure (Gibbs, 2017). This includes payment for electricity, insurance and maintenance, a significant cost for some when buildings are of poor quality. This would need to work in concert with measures to alleviate the extra costs associated with the use of quality materials and building techniques.

Ensure affordable housing does not further embed disadvantage. Climate resilience means building homes which will protect occupants from rising heat and other effects of climate change. Sustainable buildings will reduce ongoing costs to residents (Emsley, et al., 2008).

Reinvigorate self-build traditions. Australia has a long tradition of self-build, and as late as 2003, NSW offered a self-build subsidy (Crabtree, 2018). There may be capacity for the government to partner with an organisation such as Habitat for Humanity Australia who offer reduced rate home loans in return for ‘sweat equity’ during construction (Habitat for Humanity, 2018).


A range of challenges and opportunities have been introduced here while by no means comprehensive, should offer a source of inspiration to the incoming Tsar as they tackle this crisis in housing affordability. A lack of appetite of successive governments to consider and provide affordable housing has contributed to this crisis, as has the complexity involved in coordinating responses across levels of government and with the non-profit and private sectors on which the responsibility of provision of most affordable housing has been placed.

It is worth stressing that societal goals of greater housing affordability will not be reached by simple solutions. Different households experience housing affordability problems in different ways, so what is suitable for one household may not be so for another. Policy responses will therefore need to be varied, integrated, and cross-governmental (Yates, Milligan, 2007).

This effort will be worth it, however, as housing is such a critical component of a healthy and equal society (Emsley, et al., 2008). In addition, the government should benefit from the financial savings from less spend on other services — such as mental health — which are related to the housing stress experienced by many people on low incomes.

If there were to be one overarching recommendation it would be for the creation of a governance framework for housing affordability — consisting of the the levers mentioned in this paper — which can encompass and guide the navigation of this complex system. As, without sufficient policy and responsibilities it will be difficult to achieve the aims of providing affordable housing to all.


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Kimberley Crofts

Strategic designer and researcher on a quest for sustainable futures through a PhD in participatory methods.