New Carpet and Affordability

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We recently had new carpet laid throughout our offices which meant there was a reasonable level of packing and unpacking.  Anyone who has gone through the routine of moving house or office, often finds things that they had either forgotten about or filed away for later use.  I came across one such gem.

In April 2002, the Queensland State Government released a discussion paper on “Affordable housing, residential development and community well being.”  I thought it would be interesting to see what has been achieved in the 8 years since this paper was released to the public.  Readers should also bare in mind that the SEQ Regional Plan was introduced in 2005 which changed the development landscape over night.

One of the initial recommendations for consideration was the admission that for State Planning Policy to be effective, a head of power in legislation may be necessary.  In many respects this has been achieved with the creation of the ULDA, however it is only recently that this well intended organisation has partnered up on a large scale with developers for the Ripley Valley, Yarrabilba and Flagstone.  The opportunities for the ULDA and private developers to achieve successful built form outcomes in a short period of time should not be underestimated.  The greatest challenge will be the resourcing of the ULDA to cope with this enormous workload.

One of the key definitions for affordable housing relates to rents.  It was, “rent levels for affordable housing should not exceed 30% of gross household income, after any applicable Commonwealth Rent Assistance is deducted from the rent”.  At this point in time, the department’s view was housing was only genuinely affordable if it was well serviced, well located, safe, secure and accessible to people in need.  Whilst the points raised are typical motherhood statements, the intent was clear that public transport, shops and personal mobility were important criteria.  So if we apply this broad interpretation to Brisbane’s suburbs, what does this mean?

A single person wanting to rent a 1 bedroom apartment in Brisbane’s CBD needs to earn a minimum of $65,000 to fall outside of the rental affordability category.  This is an entirely plausible outcome, though one that probably doesn’t apply particularly well to most who are in administration or retail roles or just starting their careers in a professional capacity.  And let’s face it, these are the people that need the most help and generally represent the greatest number of employed people.

If we look further out to West End as an example.  It meets the criteria of being close to work, arguably within walking distance but certainly within riding distance.  There are plenty of shops and it is an area that is growing in popularity.  A neat and tidy one bedroom apartment will mean that our admin/retail person or young professional is going to need to earn $52,000 per annum or above to find themselves outside of the affordable rent crisis.  This should be achievable for the young professional however the administration or retail person is likely to be suffering still.

The reality of looking further out to suburbs such as Mount Gravatt and Sunnybank as examples is that the rents don’t go down, you simply get another room or two as part of your accommodation options.  This is not to say that there is a critical shortage of one bedroom accommodation in our middle and inner ring suburbs, it is simply to point out that the options for a person wanting affordable rent and to not have to share a house are limited.  Over the past five years, there have been minimal additions in stock for one bedroom apartments or units in the aforementioned near city locations, despite the continuous increase in single person household formations.

To put this in perspective, the highest minimum wage for retail employees is $38,480 per annum or $740 per week.  This equates to a 30% threshold of just $220 per week in rent.  The worst case scenario is for someone employed at a retail level 1 position is just $600 per week which would make the 30% threshold of just $180 per week.

The point that I perhaps have laboured to get to is that someone who is employed and trying to make headway is struggling trying to pay their rent, let alone a mortgage.  Now many will say that the capacity to own a house is not a right but an aspiration, but since when did trying to rent a single bedroom apartment become an aspiration?  And whilst some will also suggest that highlighting retail employees is part of adding credence to the above argument, the reality is that retailing is the second largest employer in Australia, only slightly behind healthcare.

So what does this have to do with new carpet and old documents?  Quite simply that in eight years, as a society we have not been particularly good at looking after those who are trying to make an honest living.  And whilst it is easy to point the finger at any number of different organisations, financiers and government agencies, the problems of eight years ago when the document was released remain despite our awareness and generally very good economic times.

There is only one solution that I can see.  Government and the private sector needs to work together to provide suitable outcomes that will see the relaxation of various fees and charges.  Whilst NRAS (National Rental Affordability Scheme) is a good start, many of the developers we work with have struggled to make projects stack up, struggled with the number of hoops to jump through and the complexity of the system.  

It’s time to make things simple, find mutually compatible solutions and help create suitable accommodation that looks after our Aussie Battlers.  After all, the country was built on the notion of a fair go for all.