Affordable Housing Measures ‘Will Drive Away Investment’

Plans to increase affordable housing in Melbourne, including making it compulsory in new builds, will not work and potentially drive investors from the market.

This week the City of Melbourne’s planning committee endorsed a public panel’s 11 recommendations that also included penalties for not including afffordable housing in developments.

But Property Council of Australia Victorian executive director Cath Evans said the recommendations would not help address the housing crisis. 

“Penalties and disincentives will do nothing but push private capital out of Melbourne to other Australian and international cities, who use evidence-based approaches to drive down the cost of housing,” Evans said. 

“Rent controls have a long and well documented history of pushing investors out of the market, reducing the supply of rental accommodation and inflicting higher rents on the people who can least afford it.”

But, Evans said, local government does have  a role to play. 

“It is the responsibility of government at all levels to create the investment environment that encourages the private sector to bring new housing supply to market at an affordable price point,” Evans said.

“The property industry in Victoria is committed to playing our part in addressing the state’s housing affordability crisis and delivering on the Victorian Government’s Housing Statement target of 800,000 new homes by 2034.”

At a special meeting of the Future Melbourne Committee on March 23, a motion to endorse the recommendations and follow through on related actions was carried with all councillors bar one, City Activation Lead Cr Roshena Campbell, in favour.

Cr Campbell told The Urban Developer she had voted against the motion as she believed there should be other solutions for the problem of adequate, affordable housing. 

“The panel recommended penalties on developers that do not have 10 to 20 per cent affordable housing and a vacancy tax of up to 10 per cent of the value of a property because ‘rich investors will be able to afford it’,” Campbell said.

“I am grateful for the participation of our panel participants and we are in full agreement that Australia is facing a housing crisis.

“However, we disagree on the solution.”

The council sent 8500 invitations to select the 40-member panel made up of city residents.

The 11 recommendations

1. Penalties and disincentives for not participating in affordable housing supply

2. Innovative alternative funding

3. Simplifying the funding process

4. Public awareness campaign and education program

5. Consistent pipeline of funding between all levels of government for affordable housing

6. Compulsory affordable housing for new developments

7. Planning reform: new permit priorities

8. Lobby governments for sustained and consistent long-term funding

9. Creating sustainable communities

10. Incentives for stakeholders to provide affordable housing

11. Use a data-based approach to support and assess all recommendations

Some of the recommendations require advocacy on the part of council, others require changing council policies and processes and some involve community education on the issues and options around affordable housing.