With news that the last of Byron Shire’s pod villages will be closed by the end of the year, both residents and the wider community are asking: where will they go in a region where vacancy rates are less than 0.5 per cent?
There’s no denying governments have been trying to address the housing crisis. But housing’s a Gordian knot for governments, balancing affordability while avoiding the kind of property crash that caused the Global Financial Crisis (GFC) and tanked the Japanese and Chinese economies.
Another key problem is they’re now saddled by increasingly expensive debt from spending during the GFC and pandemic, reducing borrowing and spending.
So they’re relying on developers to provide social and affordable housing, or as the previous Coalition government did, selling off social housing, losing around 15,000 dwellings even as waiting lists, especially in regions like Byron, have ballooned 20 per cent since 2023.
The NSW government has introduced a slew of reforms to increase supply, including its Transport Oriented Development Program, and establishing the Housing Development Authority (HAD), which has approved massive designated ‘State Significant Developments’ (SSD) over council regulations and community concerns.
But developers, already hit by high build costs, labour shortages, and falling auction clearance rates, are abandoning outer suburbs and regions where affordable and social housing is most needed for luxury inner city developments. The collapse last week of the Bethla group, which specialised in low-cost outer suburban and regional developments, is a case in point.
If anything, it’s a case of plus ça change. Remember the 2019 apartment glut, when high rise completions skyrocketed? While rents somewhat fell, prices didn’t, and the housing industry contracted with over 40,000 jobs lost, leading to chronic supply shortages today.
Because developers can only get lending approval once they reach 80 per cent of sales, the government’s underwriting them with a $1 billion finance guarantee fund. This includes the Rozelle Village development which starts at $2.28 million for a two-bedroom apartment.
To sweeten the deal, the government has reduced affordable housing mandates in new developments from the 30 per cent to less than ten, which reverts back to developers – and market rates – after ten years. Of the 402 projects fast-tracked by the HDA, only 22 have permanent affordable housing, with 100 approved without any. Even then, they’re only 25 per cent cheaper than already astronomic market rents, now more than 50 per cent of average wages.
While developer lobby groups argue that expensive luxury developments free up cheaper stock, that’s not the case. Density doesn’t reduce prices but increases them: not only because it tends to happen in already well-serviced and located areas, but because build costs skyrocket for high rise. According to the latest ABS data, the average cost to build an apartment is around $358,000, compared to $320,000 for a single storey house or $280,000 for a townhouse.
The big problem is most NSW premiers act as though they’re the Lord Mayor of Sydney, focusing most policy and infrastructure in the city. The government’s Sydney Plan concentrates most development in Sydney’s already pricey Eastern Suburbs. In many respects, it makes sense, given how much infrastructure they and other inner city areas already have – much less the higher stamp duty they bring an under-pressure state budget.
But while the Premier argues that essential workers like nurses, paramedics, and cops should live close to the communities they serve, and young workers and families should live close to the CBD, that also means further raising demand – and prices.
It assumes in an age where most of us work from home that only the Sydney or Parramatta CBDs can support jobs, even as the recent order to public servants to return to the office has resulted in office space shortages and logistics issues. And it means concentrating that economic development away from all the other NSW regions crying out for jobs, infrastructure, and housing. What about all those essential workers in Byron Shire now forced into long commutes or even tents?
Affordable housing isn’t as desperately needed in already dense, already expensive, inner city areas as it is in outer suburbs and up and down the coast, especially in ‘sea change’ regions like Byron Bay, overrun by short stay holiday accommodation denying locals homes.
As Urban Development Institute of Australia NSW CEO Stuart Ayres says, ‘the solution to our housing supply crisis is not to simply build more apartments in Sydney’s highest-cost locations that most people cannot afford.’
There is hope. Former NSW Building Commissioner, David Chandler has proposed building cheap apartments on Crown land, removing land costs, and scaling roll out by purchasing materials in bulk for multiple developments. He argues it could reduce costs by up to 20 per cent.
The Victorian government’s introduction of a 7.5 per cent short stay levy and Vacant Residential Land Tax have freed up dwellings and brought down prices. While many developers have no qualms demolishing existing affordable housing for luxury developments, some socially-conscious builders are offering accommodation in empty buildings still awaiting DAs under what’s known as ‘Meanwhile Use’.
But while it’s introduced some rental reforms, including rent increase caps, and increased social housing with the $6.6 billion Building Homes for NSW Program to build 8,400 homes, the government has shied away from similar reforms to Victoria’s and rejected the HDA’s recommendation to increase permanent affordable and social housing in new developments. The government is already falling 40 per cent behind its commitments, with only around 67,000 houses completed of the 113,000 required.
Because the market hasn’t addressed these problems, the government needs to: prioritising housing where it’s needed most, not where it’s easiest or most profitable.
As the soon-to-be-evicted pod villages residents – and many struggling with housing stress and homelessness in Byron Shire and across NSW – could tell them.
♦ Sunil Badami is a writer, academic and broadcaster. He’s appeared in nearly every major Australian media outlet, and is a regular on ABC Radio and TV.
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