Can the market provide affordable housing?

There is an ongoing debate about the best role for the planning system in addressing the shortage of affordable housing in Australia’s cities. At one end of the spectrum is the argument that its role in setting land value can be parlayed into mandating the inclusion of targeted affordable housing. At the other end is the argument that there is a need to simply remove planning constraints on supply, particularly on lower-cost housing options.

A good example of the latter has been the NSW State Environmental Planning Policy for affordable rental housing, or “the AHSEPP”. Introduced in 2009, the AHSEPP sought to remove barriers to, and even provide incentives to stimulate, the market delivery of housing options affordable for low-income households. The policy’s purpose as described in explanatory material highlights its role in addressing long waiting lists for social housing, among other worthy goals. Although broad in scope, the policy essentially relies on market delivery of secondary dwellings (granny flats) and boarding houses (called rooming houses in other jurisdictions).

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Source: The Fifth Estate