Industrialised, Integrated, Intelligent sustainable Construction - I3con

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SUSTAINABLE CONSTRUCTION HANDBOOK 2 Thus, to summarise, while <strong>sustainable</strong> development is a contested concept at a conceptual level, it is better understood and applied to housing when delineated into economic, social and environmental sustainability. In terms of environmental sustainability, there is an ongoing trend in Australia to address certain issues through mandatory standards in the building code. Affordable Housing Affordability could be simply defined as ability to pay. However, this definition is limited and does not take into consideration whether the consumption of the good or service would seriously compromise the consumer's ability to consume other goods and services. Affordability, therefore, needs to relate to the price and consumption of a particular good or service, such as housing relative to disposable income. Incorporating disposable income ensures there is a mechanism, such as the percentage of income spent on the product, to determine if there will be enough income left to buy other essential goods and services (Davidson 2005b). The variables associated with housing affordability and their related contributing factors include: • Price: market competition; access to public housing. • Usage: demographics; household needs; supply of suitable housing; and opportunity cost of consumption. • Disposable income: Commonwealth support payments; government grants and/or concessions; support from welfare agencies. Affordability like sustainability is a complex concept involving the consideration of a number of variables. For example, household needs in relation to style of housing and location differ between a couple with children who might require more rooms, or a retired couple wishing to live near family and support networks. Satisfying household needs varies depending on the price of housing stock, which is in turn influenced by the availability and price of private rental accommodation or public housing, and variables in the housing market. Usage and price of housing is also dependent on disposable income. Australians have historically enjoyed high rates of home ownership and relatively low housing costs, facilitated by cheap and plentiful land for urban development but Australia today is in the midst of a housing affordability crisis (Beer et al. 2007). House price growth has continued to outstrip income growth to the point that more than one million low and middle income households are now experiencing housing stress (Australian Government, 2008), defined as occurring when more than 30% of household incomes are spent on housing costs for the bottom 40% of income groups (Australian Government 2008; Yates et al. 2007). Housing stress is affecting large numbers of home purchasers, but is also felt in the rental sector. A recent study by Yates et al. (2007) found that 65% of low-income private rental households were experiencing housing stress in Australia. Another recent international study (Cox and Pavletich in AMP.NATSEM, 2008) comparing housing affordability in the developed world ranked no Australian urban area as ‘affordable’ and 25 of Australia’s 28 urban areas as ‘severely unaffordable’. Although this level of affordability was also found in New Zealand and the United Kingdom, most developed countries had a much smaller proportion of ‘severely unaffordable’ urban areas. The United States, for example, had only 30 ‘severely unaffordable’ areas out of 129 studied (Cox and Pavletich in AMP.NATSEM, 2008). Beginning in the early 1990s, State Governments in Australia have implemented policies that favour urban consolidation over growth on the periphery (Forster 2006). Strategic planning in cities like Melbourne, Adelaide and Perth now incorporates urban growth boundaries that restrict land sales and set limits to further development on the periphery (Forster 2006). Such policies are coupled with plans to develop high density housing around transit oriented developments on train and tram lines, which it is hoped will discourage car use through the development of self contained urban centres combining 50
HANDBOOK 2 SUSTAINABLE CONSTRUCTION shops with transport nodes. State Governments in Victoria and South Australia have also mandated affordable housing targets in new urban estate developments that demand that a certain proportion of all new developments are deemed to be affordable. In South Australia, for example, 15% of all new housing in estates under development must be affordable. Likewise Housing SA, the state housing authority responsible for social housing builds homes that can only be sold to low income earners. However such measures have only a minor impact on the supply of affordable housing and have little effect on the supply of rental properties. As Yates and Wulff (2005) note, the private rental market cannot be relied upon to provide affordable housing opportunities when the supply is inadequate and the limited stock is poorly distributed. Moreover, such policies do not negate the pressure on land prices presented by urban growth boundaries, as observed by Forster (2006). Day (2005) argues that urban consolidation policies have driven up the price of land in Australian cities while the cost of constructing a home has largely remained the same since the 1970s. Housing affordability has also been affected by asset price inflation triggered in part by the introduction of a First Home Owners Grant to new home buyers by the Howard Government in 2000, and rising incomes associated with the economic boom in Australia that began in the late 1990s and continued until the global financial crisis in 2008. The First Home Owners Grant has been supplemented by grants to first home owners by State Governments and in some states, tax concessions on stamp duty and associated costs of home purchase. Merit goods An Australian cultural milieu that places a social premium on home ownership but in an environment where affordability is in decline has been encouraged by significant support from the Australian and State Governments for new home owners, which has feared that markets will not supply housing that is sufficiently affordable to the majority of the population. In this sense home ownership in Australia might be considered to be a merit good that should be provided or at least strongly encouraged by governments. Merit goods differ from socially desirable public goods such as law and order, parks, street-lighting, defence etc., which are generally provided from the general revenue because the market cannot efficiently provide and distribute non-excludable goods through the price mechanism. Merit goods while similar to public goods are those that are deemed socially necessary but can be provided by the market but not necessarily in the right quantity or at an affordable price. Education is generally considered to be a merit good and in some countries, health care. Such goods if left to the market might be unevenly distributed in the community. For example, people who cannot afford to educate their children privately will not do so, or choose not to do so if there are other matters that they wish to prioritise. Home ownership in Australia is considered to be highly desirable by governments and the community alike as it is held to provide social equity and is bound up in Australia’s cultural identity (Gleeson 2008). Australia’s identity as a suburban home owning nation is referred to by Gleeson (2008 p 2655) as ‘The Great Australian Dream’, which is under challenge from a poorly grounded critique of ‘sprawl’ perpetuated by urban planners. This critique warns that unless higher urban densities are achieved Australians will be condemned to obesity, poverty, loneliness and many other maladies. Concerns over ‘sprawl’ have influenced the imposition of urban growth boundaries and other measures that place upward pressure on the cost of land and hence undermine the cultural aspirations of Australians to ownership of a detached house on a quarter acre block. As Forster (2006 p.180) suggests, such policies ‘reduce the affordability of conventional housing, while forcing increasing numbers of households into higher density dwellings that they show little sign of actually desiring’. The Dream remains but it is becoming increasingly unattainable, placing political pressure on governments struggling to find new ways to provide a merit good that is culturally tied to Australian’s concept of themselves as a home owning nation. The critique of the Great Australian Dream is allied to more grounded concerns over the sustainability of our cities in relation to pressing debates over climate change. The Stern (2006) and Garnaut (2008) reports have drawn attention to the unsustainability of doing nothing about climate change and other environmental issues. Australian Commonwealth and State Governments have begun to mandate 51
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Industrialised, Integrated, Intelligent sustainable Construction - I3con

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