Public housing ‘renewal’ likely to drive shift to private renters, not owners, in Sydney


Dallas Rogers, University of Sydney and Michael Darcy, Western Sydney University

A target of 70% private and 30% public dwellings is an accepted standard for public housing renewal projects in several Australian states. This level of private ownership is said to be necessary to counter stigma and the supposed demotivating impacts of concentrated disadvantage. When we looked at the impact of applying this model to the planned Waterloo redevelopment in inner Sydney, the demographic projections were revealing.




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Our analysis shows the project would reduce the suburb’s proportion of social housing dwellings from 30% to about 17%. About 30% of households in the suburb would be owner-occupiers. Private renters might rise to more than 50% of households.

Why set social mix targets?

Social mix is often proposed as an antidote to a range of presumed problems associated with public housing estates. With the need for a social housing stimulus package receiving attention, and the Victorian government announcing a A$500 million program, it’s timely to revisit the mix of tenancies in estate redevelopments.




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State housing authorities favour a mix of public and private residential tenures when they redevelop large public housing estates. Authorities can then sell the majority of new dwellings to private owners and investors.

As Kate Shaw, Janet McCalman and Deborah Warr have explained in The Conversation, the strategy doesn’t always work as promised. Drawing on extensive empirical research into mixed-tenure renewal neighbourhoods, the evidence shows simple mathematical “one size fits all” targets do not work. Decisions on the residential mix need to be sensitive to local settings and needs.

Nonetheless, an orthodoxy has emerged among some housing authorities that social housing tenants should make up 30% of households while 70% should be sold to owner-occupiers and investors.




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The case of Waterloo

In Waterloo, limitations of the fixed-ratio approach relate to the likely composition of the post-renewal resident population.

The Waterloo estate site now contains about 1,900 public housing units. The renewal plan proposes retaining this number in the context of a three-fold increase in dwellings with a 70:30 private-public tenure mix. This will result in a total of about 6,500 dwellings.

At the suburb or neighbourhood level, Waterloo had 6,151 dwellings in 2016. As the table below shows, almost exactly 30% of these were let to social housing tenants.


Data: ABS Census 2016, Author provided

The table also shows the large variation in tenure mix across five Sydney suburbs and the Greater Sydney area. Some 44% of all dwelling stock in Waterloo was already rented privately. That’s almost 50% more than the Sydney-wide average of just under 30%.

Importantly, 63% of private dwellings in Waterloo are privately rented – double the Greater Sydney proportion.

Located close to three universities and the CBD, Waterloo is dominated by investor-owned rental housing. Future occupation is likely to follow this pattern.




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More like 17% social housing

State housing authorities measure tenure mix within public housing estates. But the Australian Housing and Urban Research Institute recommends measuring tenure mix at the neighbourhood scale.

Adding 4,500 new private households, while maintaining current social housing numbers, will reduce the proportion of social housing in the suburb of Waterloo to about 17%.

Projecting the current rate of renters in private dwellings onto the proposed 70:30 renewal mix might be expected to result in 63% of new private dwellings being privately rented.

The suburb would then comprise 52% private renters. Less than one-third of residents would be owner-occupiers.

The chart below shows how applying the 70:30 target to redeveloping the public housing estate could actually reduce tenure diversity for Waterloo.


Data: ABS Census 2016, Author provided



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Voices of residents missing in a time of crisis for public housing


Many private renters struggle too

The need for more social and affordable housing in well-serviced, inner-urban areas is well recognised. Getting the residential tenure mix right through renewal is key.

In the only full-length book on social mix in Australia, Kathy Arthurson notes social disadvantage occurs in both public and private rental housing. She writes:

The omission of private rental from the social mix literature is problematic, as in Australia and elsewhere most poor renters are in private rental and not in public housing.




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Private renters are doing it tough in outer suburbs of Sydney and Melbourne


A key element of the case for limiting social housing to 30% in redevelopment projects is the belief that any more would scare off potential private buyers and reduce developer returns.

However, an RMIT evaluation of the Victorian Public Housing Renewal Program showed the presence of social housing had little effect on sales of private apartments in renewed inner-city public housing estates.

Another evaluation of the Kensington renewal project in Carlton, Victoria, found strong investor sales but fewer owner-occupiers than anticipated.

Key takeaways

Recent research in Melbourne and Sydney suggests the supposed benefits of social mix are based on owner-occupiers, not more transient private renters.

It also shows social mix renewals that apply a simplistic 70:30 target within a narrowly defined boundary around an “estate” risk seriously undervaluing large public housing assets.The Conversation

Dallas Rogers, Associate Dean, School of Architecture, Design and Planning, University of Sydney and Michael Darcy, Adjunct Professor, School of Social Sciences, Western Sydney University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Overcrowding and affordability stress: Melbourne’s COVID-19 hotspots are also housing crisis hotspots



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Rebecca Bentley, University of Melbourne and Erika Martino, University of Melbourne

Melbourne is once again grappling with increasing COVID-19 rates. Ten suburbs in Melbourne have been designated COVID-19 outbreak hotspots: Broadmeadows, Keilor Downs, Maidstone, Albanvale, Sunshine West, Hallam, Brunswick West, Fawkner, Reservoir and Pakenham.

The outbreaks have sparked discussions about lockdowns and travel restrictions for people living in these parts of Melbourne and generated intensive suburb-specific testing.

The outbreaks have been attributed to family gatherings in homes and people failing to self-isolate, even after positive test results. This has occurred alongside possible breaches of infection control protocols in hotels accommodating people in quarantine – with security guards from major hotels having contracted the virus.




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Socio-spatial clues

While chance and circumstances converge to create outbreaks there are also some obvious factors related to where and how people live that impact their capacity to isolate.

As we potentially face a two year-long wait for vaccines (16 are in clinical evaluation internationally (with one being developed in Australia), we need to acknowledge the spatial concentration of these sites of vulnerability is not random. There are socio-spatial clues as to why we have had outbreaks in these locations.

Four measures: overcrowding, homelessness, housing affordability stress and financial hardship often occur in the same areas.
Shutterstock

First, the hotspots have some of the highest rates of housing precarity and financial hardship across Melbourne. People in overcrowded or unaffordable or insecure housing may have less control over their immediate environment and less capacity to isolate themselves than other community members.




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The recent Melbourne outbreaks have occurred largely in areas with:

  • high housing affordability stress: where those in the lowest 40% of income spend more than 30% of their household income on housing,

  • overcrowding: measured in terms of the number of people in a household, their age and gender in relation to the number of bedrooms in a dwelling, and/or

  • homelessness: where a person does not have suitable accommodation alternatives and their current living arrangement is in a dwelling that is inadequate, has no tenure, or if their initial tenure is short and not extendable or does not allow them to have control of, and access to space for social relations.

While housing security seems like an obvious problem to fix, it remains a long-standing, difficult issue for governments to tackle. Going into the COVID-19 pandemic, Australia exhibited high rates of homelessness and spiralling housing costs.

Many people in Melbourne and Sydney live in overcrowded or inadequate forms of housing as a result of what has become known as our “housing affordability crisis”. Alongside this, the numbers of people who require emergency accommodation far outstrip our cities’ capacity to house them on a medium- to long-term basis.

Second, people without savings may be compelled to go to work despite feeling unwell. They need to meet their weekly housing costs and don’t have savings enough to go two weeks (or longer) without income. This can occur even if people have negotiated reduced rent with their landlords.

Where housing and COVID-19 collide

When one considers these housing and financial factors from the perspective of COVID-19 suppression, their geographical clustering should not be disregarded. The areas in Melbourne with high rates of household overcrowding, homelessness, housing affordability stress and (related to this) financial hardship (often measured using people’s self-reported capacity to access funds in an emergency) map closely to areas where there are now high numbers of COVID-19 cases.




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Using publicly available data, we created a simple index describing capacity isolate based on the above four characteristics. We created maps of Greater Melbourne to examine the relationship between current COVID-19 cases and these housing and financial vulnerability factors. Our index shows Hallam, Sunshine West, Albanvale, Broadmeadows, Falkner, Reservoir and Maidstone are all in the top two quintiles.

Housing Vulnerability Index for Greater Melbourne.
NATSEM – Social and Economic Indicators – Synthetic Estimates SA2 2016; ABS – Data by Region – Family & Community (SA2) 2011-2016; and UNSW CFRC – Overcrowded Households Australia (SA2) 2016. Data were accessed on 26 June 2020 from AURIN Portal (https://portal.aurin.org.au/), Author provided

Over the last decade, Melbourne has seen itself become more spatially segregated. And household overcrowding and precarity are geographically clustered.

Acknowledging correlation is not causation, these findings suggest solving some of Melbourne’s housing problems might reduce the spread of COVID-19 now and in future outbreaks as we await a vaccine.

Taking this further, when assessing where in cities we are likely to see a spike in cases in the future, we should take housing-related vulnerabilities into account alongside other factors.

While steps have been taken by the Victorian government to address some of the issues we have flagged, such as the one-off payment of up to A$2,000 for eligible renters who are unable to afford rent, and the A$1,500 payment to people who test positive and have no leave cover, more could be done in the medium to long term to reduce the risk of overcrowding, housing related financial stress and precarious forms of housing (that lead to homelessness) across the city.




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Coronavirus shows housing costs leave many insecure. Tackling that can help solve an even bigger crisis


The past months of COVID-19 restrictions have highlighted how critical housing and financial security are to our health and well-being at both an individual and population level. The Victorian Council of Social Service has noted disasters can be “profoundly discriminatory” in where they occur, and in their impacts.

Successful COVID-19 suppression requires safe and equitable cities and addressing housing vulnerability is one of the many challenges we must take up.The Conversation

Rebecca Bentley, Professor of Social Epidemiology, Centre for Health Equity, Melbourne School of Population and Global Health, University of Melbourne and Erika Martino, Research Fellow, University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The housing boom propelled inequality, but a coronavirus housing bust will skyrocket it



iStock.
Author provided

Ilan Wiesel, University of Melbourne; Liss Ralston, Swinburne University of Technology, and Wendy Stone, Swinburne University of Technology

A housing boom that lasted from the mid-1980s with only minor interruptions has added to rising income inequality in Australia. Yet an impending housing market bust, triggered by the coronavirus pandemic and the resulting spike in unemployment, will not restore greater equality. On the contrary, recent history shows housing busts can worsen inequality.

Those who benefit most from a boom are not those who pay the price when it busts. And those harmed by the boom often become even more vulnerable during the bust.

Our analysis highlights the risks for people who bought their first home at the peak of the boom. We estimate 24,000 households are at very high risk because they took out large loans that might soon exceed their home value and also work in sectors with high job losses. Another 135,200 are at high risk and 121,000 are at moderate risk.




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Coronavirus has set up a housing bust

Experts have long cited an upsurge in unemployment as the main threat to house price growth. This risk became reality with the coronavirus pandemic. Over the seven weeks from mid-March to early May, jobs fell by 7.3%.

Unless employment rapidly recovers, the housing market is facing a major downturn. In one worst-case scenario released by the Commonwealth Bank, house prices could fall by up to 32% over the next two years.

Recent first-time buyers are most vulnerable

Households that can hold on to their homes and weather the storm until the market recovers are not substantially harmed. Established owners, who bought their homes before or early in the boom years, have enjoyed the largest increase in their home values, and the largest reductions in their debt. This puts them in a position of relative resilience to a housing market bust.




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In contrast, evidence from the 2008 housing crisis in the United States shows which households are most at risk. These were households that bought their first home with no deposit, or a very low one, in the period leading up to the 2008 crash. The crash left these households “underwater”, trapped with an asset worth less than their mortgage debt. Many defaulted on their mortgages, fuelling the housing market’s downward spiral.

The Australian housing market and financial institutions differ from those in the United States in 2008 in fundamental ways. Still, Australian households that bought their houses at the peak of the boom and have now lost their jobs in the coronavirus pandemic are facing the highest risk.

These include 24,000 recent (2014-5 to 2017-18) first home buyers who borrowed over 80% of the value of their home and were employed in industries where jobs have now collapsed. Another 135,200 recent first home buyers with high loan-to-valuation ratios are also at risk of going “underwater”, with homes worth less than their debt. Many of them are also in precarious employment, irrespective of the pandemic. (These figures do not include first home buyers in 2018-19, for which data are not yet available.)

Recent first home buyers at risk in a COVID-19 housing bust.
Source: Liss Ralston; data from ABS Survey of Income and Housing 2014-5 to 2017-8



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Build social and affordable housing to get us off the boom-and-bust roller coaster


Renters’ relief could be short-lived

Many private renters hope a housing downturn will translate into lower rents and perhaps give them a chance to buy their first home in a more affordable market. However, this is not always the case in a downturn. In the US from 2007 to 2009, despite declining house prices, rental affordability stress has only increased.

In Australia, the sudden decline in international students and short-term rentals has increased long-term rental vacancies in some areas. Reports suggest rents are going down, especially at the upper end of some rental markets.




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However, in the longer run, the slowdown in housing construction will create supply shortages, leaving rental vacancies low and rents high. Many landlords, mostly “mum and dad” investors, have taken large loans to finance their property investment. They will need to keep rents high to hold on to their investment properties.

Lower house prices will enable some households to become home owners for the first time, after being locked out of the market during the boom years. These households could benefit from a coronavirus housing bust if the market then recovers. Even so, their gains will do little to change the overall trend of rising inequality made worse by the housing downturn.

We need to flatten out booms and busts

Improved housing affordability is necessary to reduce social and economic inequality. A housing downturn will reduce house prices. But this downturn, when coupled with rising unemployment, will not deliver greater equality, especially if it’s followed by yet another boom.

Australia has flattened the curve of COVID-19 infections. To be successful in reducing inequality, we need to flatten the curve of both booms and busts in the housing market cycle. And only a thorough overhaul of national housing policy will achieve that.




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The Conversation


Ilan Wiesel, Senior Lecturer in Urban Geography, University of Melbourne; Liss Ralston, Urban Statistician, Centre for Urban Transitions, Swinburne University of Technology, and Wendy Stone, Associate Professor, Centre for Urban Transitions and Director, Australian Housing and Urban Research Institute Swinburne Research Centre, Swinburne University of Technology

This article is republished from The Conversation under a Creative Commons license. Read the original article.

HomeBuilder might be the most-complex least-equitable construction jobs program ever devised



Jason Pofahl/Unsplash

Geoff Hanmer, University of Adelaide

HomeBuilder is a good idea gone bad. It is possibly the most complex and least equitable program the government could have devised to deliver construction jobs.

It gives $25,000 to people who already own a home or already have enough money to buy one while delivering a minimal stimulus to extra construction. It isn’t a program to create jobs, it is a way of making people who are reasonably well off richer.

It does not address homelessness, precarious rental or any of the other pressing problems that are caused by our current housing mix.

It might build more nice decks for sipping Chardonnay (most already planned), it might deliver ritzy new bathrooms with imported taps or even new kitchens with the latest European appliances, but it won’t help those suffering housing stress.




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Construction is Australia’s third-biggest employer, after retail and health care and social assistance. It employs one in every 11 Australians, and it generates other jobs in the building supplies industry and in design and engineering.

The Master Builders Association says construction is facing a decline of 40%, with potentially horrendous implications for employment.

The industry has three main components:

  • residential – apartments and houses

  • commercial – including offices, airport terminals, retail, tourism, education and factories

  • engineering – including roads, railways and airport runways.

Engineering construction is doing reasonably well.

Across the country, governments are delivering a veritable infrastructure Utopia. Continuing projects include the Tullamarine Airport Rail Link, the second stage of the Sydney Metro, the North East Link motorway in Melbourne, the WestConnex motorway in Sydney, the Airport Metro in Perth and Cross River Rail in Brisbane.

All governments have to do is keep this pipeline going, which, by and large, they are doing.

On the other hand, commercial construction will be in deep trouble by the end of the year as current projects finish without new projects to replace them.

Outlook bleak, then COVID

The outlook for residential construction is desolate, although for some people with secure jobs working from home, COVID-19 appears to have ignited a mini home renovation boom.

Prior to COVID-19, commercial construction was forecast to shrink from A$48.77 billion in 2020-11 to $41.3 billion in 2023-24.

Residential construction was forecast to bottom out in 2021-22 with only 168,000 dwelling starts, down from a peak of 233,872 starts in 2016-17.

Now, both forecasts will be slashed.

The tourism sector is dead, the education sector is near death and the multi-unit residential market, already badly impacted by confidence issues around construction quality, is in terrible shape with many projects on hold.

Not big enough, not broad enough

The HomeBuilder scheme is not big enough or broad enough to do much to reignite residential construction. To be useful for jobs, it would need to deliver an extra 60,000 housing starts.

Given the only people who will benefit from the grant will be those some way down the track to either buying or building, it is hard to guess what the additional outcome will be, but it would be surprising if the scheme generated much additional activity.

Even if the full budget allocation of the scheme is taken up, it would fund only about 25,000 projects. Many would have gone ahead anyway.

Among the peculiarities of HomeBuilder are that it won’t work in much of Sydney where many houses are likely to be valued above the $1.5 million limit and it won’t work in regional towns where the required spend will overcapitalise existing houses.

Complexities aplenty

It will encourage people to build in fridges, microwaves, coffee makers and washing machines (many of them tastefully European) to bump the contract price up above the $150,000 minimum.

It is a potential administrative nightmare for state governments that are already stretched administering existing emergency relief programs.

Who will establish that the value of an existing house is less than the $1.5 million upper limit? Will it be the value now in the middle of the COVID downturn or the value last year, or the value used to set local government rates?

Contracts are meant to be arms-length, but who will ensure the builder is not the cousin or the in-law of the owner, something that might be impossible to avoid in a small country town? If a garage is built on the side of a house, rather than as a separate structure, will it comply with the rules? And on and on and on.

Few extra homes

While these are legitimate questions, they ignore the big, central problem with the scheme: the opportunity to deliver a substantial program of social housing that would address real problems, including homelessness, has been missed.

And the government has done it in a way that will minimise the jobs created and maximise the wealth transfer to Australians who are relatively well off.

For a government that has mostly managed to do the right thing ever since COVID-19 hit, this has been a terrible policy clanger.

It will encourage everyone who cannot afford to buy a home, or who is homeless, to believe the government has forgotten them.The Conversation

Geoff Hanmer, Adjunct Professor of Architecture, University of Adelaide

This article is republished from The Conversation under a Creative Commons license. Read the original article.

HomeBuilder misses a chance to make our homes perform better for us and the planet



Lochiel Park in South Australia has demonstrated the benefits of building homes to a higher standard – a minimum 7.5-star rating in this case.
Stephen Berry/UniSA

Trivess Moore, RMIT University and Tony Matthews, Griffith University

The federal government’s new A$688 million HomeBuilder package might protect residential construction jobs but it’s a missed opportunity to deliver sustainability benefits that would save owners money in the long run. The A$25,000 grant for new homes and renovations could have been better leveraged to provide broader and ongoing benefits. In particular, it could have been used to ensure homes are more energy-efficient and cheaper to run.

The grant is available for building an owner-occupied home with property values (house and land) under $750,000. Renovations costing between $150,000 and $750,000 for a property valued under $1.5 million are also eligible. Grants are means-tested against household incomes.




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Building new houses better

The scheme could have required new houses to exceed minimum building code requirements to be eligible. The development industry would then have had to deliver housing to this standard or risk losing potential buyers. Using the right design and materials would mean any extra costs are recouped over time.

Heating and cooling energy use could be reduced by almost 25% across capital city climate zones with minimal requirements. New houses could achieve these reductions with a solar PV system and 7-star performance rating (in line with proposed changes to raise the National Construction Code’s current 6-star minimum in 2022). This would reduce utility bills and carbon footprints for householders.




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The use of majority Australian-made materials could be stipulated. Local renewable energy, insulation and energy-efficiency businesses would benefit from increased demand. Job creation would follow in these and secondary industries.

The $25,000 grant cost to government would more than cover the costs of these requirements. Various Australian studies have found achieving a 7-star rating involves little if any extra cost for new houses in many locations. The cost of solar PV continues to fall.

Combining these sustainability measures through HomeBuilder would provide benefits across the lifetime of new houses.

The Cape is a Victorian development where all houses have a minimum 7.5-star performance rating. The first ones built have running costs of 15% of the state average for homes of the same size.
Trivess Moore, Author provided



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Renovation to benefit everyone

Restricting HomeBuilder grants to renovation projects over $150,000 excludes many modest renovations like upgrading a kitchen or bathroom. It has already been called a handout for the rich.

Much of the existing housing stock in Australia has poor energy and thermal performance. Many houses are too hot in summer or too cold in winter, or both.




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Installing a heat pump hot water system is one way to cut household costs and emissions.
Trivess Moore, Author provided

A better and more equitable strategy would be to provide renovation grants for energy-efficiency retrofits in owner-occupied and rental housing.

Retrofits could be undertaken for a fraction of the price of the renovation grant and still help a range of trades. There would be demand for heating and cooling systems, insulation and draught proofing to be supplied and installed. Households would save on bills and suffer less from extreme temperatures.

Energy-efficiency retrofits are a cost-effective way to improve environmental performance, thermal comfort, health and well-being. Much of Australia’s existing housing stock could be upgraded to 5 stars for much less than the budgets required by the announced stimulus.

Retrofits should be determined by an in-house sustainability assessment by qualified assessors – another potential growth area. Programs like the Victorian Residential Energy Scorecard already offer guidance on best practice. Identifying the best retrofitting opportunities for individual properties would ensure each household gets best value for money.




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Capturing wider benefits

A more strategic approach to HomeBuilder could help the economy and move us towards a lower-carbon future.

The need to upskill tradies and limitations of local manufacturing are often cited as barriers to improving the sustainability of Australian housing. HomeBuilder could offer incentives to overcome these obstacles. Setting higher building performance standards as a condition of the HomeBuilder grant would upskill workers and create jobs.

Tradies would have the opportunity to work on tens of thousands of houses with higher performance ratings. This would provide extensive professional experience of building more sustainable housing across the country. Local manufacturing and secondary industries could innovate and supply sustainable building materials and technologies for Australian conditions.

Improving housing sustainability would also help achieve broader federal and state government policy goals. For a start, it would help Australia achieve targets for reducing greenhouse gas emissions. It would also help with issues such as energy vulnerability and security.

As a final note, economists, housing researchers and social housing organisations argue that a program designed to deliver more social housing would provide greater benefits. Australia certainly needs to increase its social housing stock. HomeBuilder could have helped with this.

If future stimulus schemes target social housing, we suggest environmental and energy performance should be top priorities from the outset.




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Why the focus of stimulus plans has to be construction that puts social housing first


The Conversation


Trivess Moore, Senior Lecturer, School of Property, Construction and Project Management, RMIT University and Tony Matthews, Senior Lecturer in Urban and Environmental Planning, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Stimulus that retrofits housing can reduce energy bills and inequity too



Nicola Willand, Author provided

Nicola Willand, RMIT University; Bhavna Middha, RMIT University; Emma Baker, University of Adelaide; Ralph Horne, RMIT University, and Trivess Moore, RMIT University

Stay-at-home orders and the economic crisis have increased the burden of energy costs on lower-income Australians. Poor housing quality and unequal access to home energy efficiency are hurting our most vulnerable households. With the next stage of the national recovery program expected to include cash grants for home renovation, now is the time to turn to housing retrofits that support health and well-being as well as boost jobs.

Staying at home during the COVID-19 pandemic increases households’ energy consumption and costs. As one in ten Australians might lose their jobs, the pandemic is adding to the energy hardship of people who were already struggling to pay their bills.




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Access to energy is essential

Cold housing is a known health risk. Lancet research attributes about 7% of Australian deaths to cold weather. Warm housing reduces the risk of airborne infections, as well as providing comfort for working and studying.

Laundry temperatures of 60-90°C are needed to limit the spread of the coronavirus. But this conflicts with common energy-saving advice of washing clothes in cold water. Self-isolation also means heating more and not being able to close off unused rooms.

Low-income households, renters and older people are more likely to live in energy-inefficient dwellings. In fact, most Australian housing has poor energy efficiency.

When people on low incomes live in such housing, they are doubly disadvantaged by the challenges of needing more energy and not being able to afford it. Households with older people, people with chronic illness and children are particularly susceptible to energy stress and poor health outcomes.




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Stop-gap measures

The temporary stop to disconnections in some states recognises that access to electricity and gas is a basic need and essential for health and well-being. This guaranteed energy, and a commitment by Australian Energy Council retailers not to charge penalty fees for late payment, will give affected households some relief.

Even if power bill payments are deferred, households must still eventually repay their mounting debts.
Shutterstock

However, bill payment will only be postponed until the end of July. Much of the expensive heating period will still be ahead of us. And after that households will face the costs of cooling homes in summer.

Energy debts are going to accumulate as a burden to low-income households into the future. Energy retailers might find it ethically difficult to resume disconnections, but customers will have to repay their debts. This will only be possible if their overall financial position improves and/or the cost of their energy decreases.

Income support via energy concessions can ease bill stress. However, taxpayer money may be better spent on providing sustained relief by improving the energy performance of homes. Acknowledging housing as essential infrastructure would enable economic and social progress.




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A lasting solution to energy poverty

A long-term stimulus package for retrofits would be welcome. The focus should be on comprehensive retrofitting to reduce energy demand, thus helping households to repay debt. Comprehensive or “deep retrofits” combine simple activities such as draught proofing with insulating ceilings, floors and walls, upgrading heating and cooling appliances, and installing solar PV systems.

Many retrofits overlook the opportunity to install underfloor insulation when restumping a house.
CSR Bradford/YouTube screenshot

Initial findings of our HEET (Housing Energy Efficiency Transitions) research show simple retrofit measures are cheap and easy to do, and DIYing is popular. However, some opportunities are missed because householders are not aware of what can and should be done. A common example is failing to install underfloor insulation when restumping the house.




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Thinking about a sustainable retrofit? Here are three things to consider


Riding the current wave of home improvements, innovative retrofit initiatives may guide people in their DIY efforts. However, some training for proper DIY installation and the use of skilled tradespeople for technical installations is needed for safety and quality.

Spread retrofitting benefits more widely

Federal and state subsidy schemes already promote retrofitting. But recent research suggests low-income households and renters have benefited less. The one-in-three households that rent their homes should not be missing out.




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Putting people at the centre of retrofitting programs will provide healthier homes and help tackle unemployment. This means providing retrofit assistance to those who need it most and training people in retrofit skills.

Previously, the boom in new housing construction inhibited retrofitting. This might change following the COVID-19 crisis. A long-term retrofit program would be an opportunity to upskill builders and to retrain newly unemployed Australians, particularly the young people who have been most affected by job losses. An expanded retrofit workforce is needed to reach the large number of inefficient homes.

So-called “Green Deals” have already been proposed in Europe, the US and the UK. Green construction stimulus packages in Australia have successfully supported economic recovery before.
The aim should be to spawn a new industry of energy-efficient builders who will continue to contribute to the upgrade and upkeep of Australian housing. This could help cut greenhouse gas emissions, promote public health and improve our resilience to crises.

A nationwide stimulus package to provide healthier and more energy-efficient homes would help the most vulnerable and boost the economy.The Conversation

Nicola Willand, Lecturer, School of Property, Construction and Project Management, RMIT University; Bhavna Middha, Research Fellow, Centre for Urban Research, RMIT University; Emma Baker, Professor of Housing Research, School of Architecture and Built Environment, University of Adelaide; Ralph Horne, Deputy Pro Vice Chancellor, Research & Innovation; Director of UNGC Cities Programme; Professor, RMIT University, and Trivess Moore, Senior Lecturer, School of Property, Construction and Project Management, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Money for social housing, not home buyers grants, is the key to construction stimulus


Brendan Coates, Grattan Institute

There’s no doubt Australia’s construction industry is facing tough times. COVID-19 has caused migration to slow to a trickle. Some 2.6 million Australians have either lost their jobs or had their hours cut in the past two months. Many economists expect property prices to fall.

It all adds up to fewer homes being built in the coming months. That means fewer jobs in the construction industry, which employs nearly one in 10 Australians. The sector has already lost nearly 7% of its workforce since March.

The Morrison Government is set to anounce a stimulus package for the construction sector as soon as this week. But what should it include?




Read more:
Why the focus of stimulus plans has to be construction that puts social housing first


More home-buyer grants on the way

The federal government has signalled it will offer cash grants of at least A$20,000 to buyers of newly built homes. Unlike past schemes that have targeted first home buyers, it seems these new grants will be available to everyone including upsizers and investors. Grants may also be extended to renovations.

Large handouts would prompt some more residential construction by encouraging some people to bring forward their home purchases. It’s why in 2008 the Rudd government tripled the first home buyer grant to A$21,000 for new homes in response to the Global Financial Crisis.

But under such schemes, governments also end up giving grants to people who would have bought a home anyway. Even the more pessimistic industry forecasts expect 110,000 homes to be built in Australia next year. Giving A$20,000 to all of these home buyers would cost A$2.2 billion without adding a single construction job. Grants of A$40,000 would double the bill.

That’s a lot of spending for little economic gain.

Nor do grants to home buyers actually make housing more affordable. They are typically passed through into higher house prices, which benefits sellers more than buyers. In this case, that is likely to include developers eager to clear their existing stock of both newly and nearly built homes.




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The brutal truth on housing. Someone has to lose in order for first homebuyers to win


Cash grants for renovations would likely hit the economy quicker since they don’t necessarily require building approvals. But they bring their own problems. Grants will likely see in-demand tradies raise their prices, especially if the government is effectively paying for most of the work done. It will be also be harder for officials administering the scheme to determine if the work has been done before paying out the money.

Nor is it clear the renovation sector needs further stimulus: reports suggest COVID-19 is driving a renovation boom across many parts of Australia. Research by credit bureau Illion and economic consultancy AlphaBeta shows spending on home improvements is already 33% higher than pre-COVID levels.

There’s a better option

There’s a better way to support residential construction without providing such big windfalls to developers: fund the building of more social housing.

Social housing – where rents are typically capped at no more than 30% of household income – provides a safety net to vulnerable Australians.

In particular, the Morrison government should repeat another GFC-era policy, the Social Housing Initiative, under which 19,500 social housing units were built and another 80,000 refurbished over two years, at a cost of A$5.2 billion.

Under the initiative the federal government funded the states to build social housing units directly or contract community housing providers to act as housing developers

Public residential construction approvals spiked within months of the announcement.



Building 30,000 new social housing units today would cost between A$10 billion an A$15 billion. Because state governments and community housing providers won’t have to worry about finance, marketing and sales, they’ll be able to get to work building homes much quicker than the private sector.

The boost to the economy would be pretty immediate.

Just as important, building social housing would also help tackle the growing scourge of homelessness. At the most recent Census (2016), more than 116,000 people were homeless, up from 90,000 a decade earlier. COVID-19 has shown us that if we let people live in unhealthy conditions it can help spread disease – affecting everybody’s health.




Read more:
Coronavirus lays bare 5 big housing system flaws to be fixed


The drivers of homelessness are complex. Nonetheless the best Australian evidence and international experience shows social housing substantially reduces tenants’ risk of homelessness. But Australia’s stagnating social housing stock means there is little “flow” of social housing available for people whose lives take a big turn for the worse.

Funding social housing won’t boost house prices or provide windfalls for developers. It will do more to keep construction workers on the job, while also helping some of our most vulnerable Australians.The Conversation

Brendan Coates, Program Director, Household Finances, Grattan Institute

This article is republished from The Conversation under a Creative Commons license. Read the original article.

So coronavirus will change cities – will that include slums?



Aditya Kabir/Wikimedia Commons, CC BY-SA

David Sanderson, UNSW

Many commentators have speculated on how the coronavirus pandemic will alter cities and the ways they are planned and used. New York Governor Andrew Cuomo has tweeted: “There is a density level in NYC that is destructive […] NYC must develop an immediate plan to reduce density.”

Articles about disease and cities have reported on how past pandemics led to civic improvements, such as public health pioneer John Snow’s use of cholera maps, an early form of health-data gathering, to combat cholera in 19th-century London.

But these stories relate to cities in richer countries, which have enough funding and the political will to make changes. It’s hard to see how the COVID-19 pandemic will lead to any better outcomes for the close to a billion or so people who live in fast-growing, low-income, informal settlements, or slums, that cram cities throughout Africa, Asia, Latin America and the Pacific. These settlements are some of the densest and most poorly serviced places on Earth.




Read more:
Coronavirus an ‘existential threat’ to Africa and her crowded slums


Density, the good and the bad

Despite Cuomo’s statement, density for cities is good on the whole. The world’s population is rocketing, with most of this growth happening in cities. Where else would we put all these people?

Density is good for innovation, socialising, economies of scale, fuel efficiency and economic growth. Density, though, is good only when managed and planned. New York’s governor may have a point if he was talking about de-densifying slums in Dhaka, Cali or Freetown. Slum density can be grim.

In these dense settlements, heat stifles, ventilation is rare, light is sparse and families share one room and basic services (thereby worsening the spread of respiratory disease). Density that prevents fire trucks reaching fires, or that lacks adequate drainage, sanitation or piped water supply, is not good.

Health services in cities across the world have ramped up in anticipation of the inundation of coronavirus patients. This has been based on modelling of health data across respective populations, much as Snow did for London. Combined with lockdown and other social distancing measures, there is evidence this has so far mostly worked well (though not a cause for relaxing).

Health risks in slums, however, have been awful for decades. We have little data on the health of slum dwellers, and health care is often out of reach for those who are sick. The paltry numbers of ventilators in African countries attest to the shortage of equipment and support – what chance if you’re poor?




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Disasters come and go for slum dwellers

Will coronavirus have a lasting impact on urban planning and how we use cities? Perhaps.

Businesses might be asking why they spend so much on office space when employees have shown they can work from home. Many hitherto-polluted cities have enjoyed much cleaner air during lockdowns. Several European cities are considering lasting zoning regulations to reserve streets for cyclists.




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Physical distancing is here for a while – over 100 experts call for more safe walking and cycling space


But again, for people living in slums, it may well be business as usual. The coronavirus will be just one more tragedy for many who live in slums.

Take the Ebola outbreak of 2014-16, which killed over 11,000 people across Guinea, Liberia and Sierra Leone. Dense, poorly serviced slums with people living cheek by jowl were particular hotspots. Ebola had devastating impacts on economies, lives and health-care systems.

Yet evidence of post-Ebola improvements in urban planning are hard to find. When three-quarters of a country’s urban population, such as Sierra Leone’s, live in slums and confront other pressing matters of poverty and recent conflict, de-densifying and replanning slums equates to nirvana, at least in the short term.

Residents of Freetown in Sierra Leone have no reason to believe this pandemic will lead to any more improvements than previous disasters did.
Slum Dwellers International/Flickr, CC BY



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A novel idea: integrating urban and rural safety nets in Africa during the pandemic


Skin in the game

As the coronavirus pandemic has shown, self-preservation is a great incentive to action. Lockdown requires individuals to consent for it to work.

Post-disease urban improvements also correlate to self-interest. London’s infamous “Great Stink” of 1858 of untreated sewage floating in the Thames led to the world’s largest sewer system. But it only happened once the smell reached the House of Commons. Something had to be done!

Unlike the Great Stink, which didn’t waft further than the capital, the coronavirus is a global concern. The world has shown it can mobilise resources as never before to tackle a threat.

Now is the time to add slum improvements to our post-pandemic agenda. The need is great – the number of people living in slums may double to 2 billion by 2050. Given the world community’s demonstrated indifference to such places, even the confronting experience of COVID-19 might not be enough to lead to improvements.The Conversation

David Sanderson, Professor and Inaugural Judith Neilson Chair in Architecture, UNSW

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Coronavirus lays bare 5 big housing system flaws to be fixed



Shutterstock

Hal Pawson, UNSW and Peter Mares, Monash University

Australians had become used to walking past rough sleepers. Policymakers too, seemed unmoved by the people huddled in doorways or sheltering in parks under plastic sheets. That’s until the COVID-19 pandemic rendered rough sleepers visible, because we’ve all been told to stay home and anyone without a home presents a risk of passing on the virus.

State governments have suddenly found tens of millions of dollars to create pop-up accommodation or book rough sleepers into hotel rooms. But such short-term fixes also highlight the entrenched failings of Australia’s housing system. This crisis has laid bare five major vulnerabilities.

1. Thousands are sleeping rough

Before the pandemic, street homelessness affected about 8,000 people on any given night, as indicated by census data. But this is almost certainly an underestimate.

Recent UK research showed the number of people sleeping rough in any given year was five times as many as captured in census-type snapshots. There’s no reason to think it’s much different in Australia.

Many more people are on the fringe of rough sleeping — couch surfing, for example.

2. More than a million in rental stress

Our second housing system vulnerability is the body of people – far larger again – living in insecure and unaffordable rental housing. Even before this current crisis, housing costs had pushed around 1.3 million Australians into poverty. After paying rent they didn’t have enough money left for essentials like food and electricity.

Now many of these renters will have lost jobs or work hours. Government schemes like JobKeeper and JobSeeker will temporarily help only some — temporary migrants and many casual workers are excluded.

Measures like the moratorium on evictions are welcome (provided they prove robust). The same goes for mortgage pauses by the banks, which might help property owners avoid having to sell if tenants can’t afford the rent.

But these are only stopgap efforts.

3. A shrunken social housing sector

The third vulnerability is the shrivelled state of social housing, where rents are fixed at an affordable share of income. Relative to population, the number of properties let by public housing agencies and community housing providers has halved since 1991.

Across most of Australia, waiting lists for social housing are huge. In most jurisdictions the sector lacks the capacity to offer long-term housing to all the rough sleepers and others currently in hotels. Only through emergency unit acquisitions or head-leasing will this be possible.

4. A mountain of debt

Our fourth housing system vulnerability is housing-related debt. If the pandemic-induced downturn persists and unemployment stays high, this mountain of debt could make the recession much worse.

In the early 1990s household debt equated to about 70% of disposable household income. In March 2019, the RBA warned the debt-to-income ratio had risen to 190%. The increase was mostly due to increased borrowing to buy homes and investment properties.

Even before the pandemic, one in five mortgage holders were struggling to meet repayments. If large scale unemployment were to force mass property sales, this could compound the crash as homes flood the market.

We know from the GFC experience in the USA, Ireland, Spain and elsewhere that a sharp fall in property prices can have severe and long-lasting economic consequences that worsen inequality. In the USA, vulture landlords stepped in to buy up large numbers of distressed properties and create rental property empires. Renting from owners of this kind is not an attractive prospect.

Falling prices as the market was flooded by properties whose owners had defaulted on loans deepened the GFC impacts on the US.
Shutterstock

5. An unbalanced housing system

Our housing system is vulnerable to shocks because it is unbalanced, our fifth system frailty. Residential construction depends almost entirely on private developers building for sale to individual buyers.

These buyers are highly sensitive to the outlook for property values. The resulting herd mentality magnifies booms and slumps – a particular problem when they are totally dominant in the market. A magnified downturn can bring residential construction to a grinding halt. And while quick to shed labour, construction is slow to re-employ because of risk and long project lead times.

Construction normally employs more than 1 million Australians with a range of skill levels. It generates many more jobs through the building materials supply chain as well as in real estate, property management and financial services. This helps to explain why Master Builders Australia and the building union CFMEU have united in a call to government to invest in building 30,000 social housing units as part of Australia’s post-COVID recovery.

The need for a national strategy

The housing system needs more than a one-off crisis boost. The pandemic policy jolt is an opportunity to put Australia’s housing on more stable footings through a Commonwealth-led bipartisan, long-term, national housing strategy.

A key part of this should be routine social housing construction on a scale that at least keeps pace with population growth. That’s up to 15,000 homes a year – around five times the current number. This may sound ambitious, but it’s below the levels regularly achieved between the mid-1950s and the mid-1970s.

And this doesn’t have to mean a return to the post-war approach when state authorities provided public housing. Not-for-profit community housing organisations can now take on the major new supply role.

But we do need a post-war level of ambition. Government has two immediate roles to play in linking housing to a post-pandemic recovery.

The first is to help avoid a house price crash that will deepen an economic slump. Co-ordinating action with mortgage lenders could help minimise repossessions and avoid a glut of discounted properties on the market.

Governments may also need to take on distressed projects from private developers. The New South Wales government has already flagged such action.

The second immediate role for government is to support residential construction as the motor of economic revival by investing in social housing as the central plank of a stimulus package. Government-owned sites and developer-owned landbanks can be used to kick-start activity more quickly than other major infrastructure projects. Community housing providers – especially some larger faith-based players – also have shovel-ready sites.

These should be the first steps in the national strategy, which should aim to diversify both housing supply and demand.

Alongside a greater role for community housing, this could include a build-to-rent sector commissioned by institutional investors to build market rental blocks as long-term, income-generating assets. This would benefit tenants and the economy, by smoothing the boom-bust cycle of residential construction.

As we argue in our recent books, a national housing strategy must also thoroughly overhaul national, state and territory tax settings. Many of these have greater housing policy impacts than any spending program.

Tax reform could make our housing system fairer and more efficient. It could dampen the speculation that fuels rising prices and debt, while raising the revenue we need to provide decent, affordable housing for all Australians.


Peter Mares hosts a new series, Housing the Australian Nation, on Earshot on ABC Radio National from May 30, which features an interview with Hal Pawson.The Conversation

Hal Pawson, Professor of Housing Research and Policy, and Associate Director, City Futures Research Centre, UNSW and Peter Mares, Lead Moderator, Cranlana Centre for Ethical Leadership, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why the focus of stimulus plans has to be construction that puts social housing first


Geoff Hanmer, University of Adelaide

Australia has done better with COVID-19 than anyone dared hope. This opens up the prospect of a progressive relaxation of restrictions later this year. Organisations that could participate in an economic stimulus program will need to be in a position then to deliver “shovel-ready” projects to help revive the economy.

The construction sector is the obvious focus of a stimulus plan, and the construction of social housing should be the priority, for reasons that I’ll outline below.




Read more:
Is social housing essential infrastructure? How we think about it does matter


The Rudd government’s stimulus package during the Global Financial Crisis gives us a helpful guide to what does and doesn’t work. The initiatives that failed did so because of a lack of proper planning.

Fortunately, if we get going now, we have months to plan the recovery program. Getting it right will be crucial. By September, one month before JobKeeper payments end, many businesses are going to be on their knees.

Why construction?

Most of the successful elements of the Rudd package focused on construction. The reason is simple. Nearly one in ten Australians work in the construction industry. Many more are employed locally in the production of building products.

Both construction and building product manufacturing provide jobs for people with varying levels of skill, including people who are unskilled. The vast majority of concrete and steel reinforcement, bricks, wall framing, building boards, windows and doors, roof tiles and metal cladding are still made here. A substantial portion of domestic electrical and plumbing products, including stainless steel sinks, copper pipes and electrical cables are also made here.

It’s important to realise that the type of building being constructed will affect its local stimulatory impact. For buildings up to three storeys high, over 50% of their cost is labour on site. Of the remaining cost, the vast majority is Australian-made materials and components. (Although the Australian Bureau of Statistics stopped its series on Australian-made construction products in 2014, the employment impact can still be estimated from ABS manufacturing statistics.)

For typical single and double-storey housing, more than half the cost goes into labour and locally made materials account for most of the rest of it.
Shutterstock

However, the taller a building gets, the greater the percentage of imported components – lifts, mechanical components and facade systems are mostly imported.

Why social housing?

What sort of construction projects should the government consider for a stimulus package? While the response so far has been to focus on “fast-tracking” infrastructure, the current crisis has highlighted a number of pressing social needs. Various aspects of social housing top the list:

  1. Housing to reduce the number of people living in precarious private rentals. A substantial program to increase the stock of social housing would be a great legacy.

  2. Housing for people who are homeless. They will not be able to go on living in hotels once the lockdown ends.

  3. Affordable housing for workers in health, emergency services, education and retail who cannot afford to live close to the communities they provide vital support to. It turns out they are essential workers, some of the most important people in Australia, so we need to look after them.




Read more:
Key workers like nurses and teachers are being squeezed out of Sydney. This is what we can do about it


Housing construction is a very effective way to create jobs, both directly and downstream. About 6% of Australian jobs are related to housing.

What other construction work is needed?

There are other opportunities for well-targeted construction stimulus.

In many areas of Australia, public schools and kindergartens still rely on low-quality portable buildings or buildings that have exceeded their economic life. A program to replace them with new and efficient buildings would produce substantial social benefits, cut maintenance costs and improve sustainability.

Improving the deteriorated state of community buildings and parks, particularly in disadvantaged areas, would also deliver social benefits and potentially employ a lot of unskilled labour. Having decent parks and exercise facilities close to where people live will allow social distancing to continue as long as needed.

A Victorian government plan to remove combustible cladding from residential and community buildings could also be extended to all states. It’s essential work that would also create jobs.




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Flammable cladding costs could approach billions for building owners if authorities dither


The government could also consider a program to replace or refurbish university teaching and research buildings that are over 40 years old. Incredibly, as we have found at ARINA in our consultancy work, these older buildings still provide more than half of the 11.8 million square metres of gross floor space occupied by the higher education sector.

These ageing buildings are not well suited to supporting the research into solutions to SARS-CoV-2 and other pressing medical and economic problems. Replacing or refurbishing them would improve outputs, cut maintenance costs and improve sustainability, plus give a much-needed boost to the higher education sector.

Plan now to be shovel-ready

Anglicare SA is already thinking of what it can do to deliver more social housing. Its CEO, Peter Sandeman, told me he is making sure Anglicare has “shovel-ready projects that can be rolled out the moment a stimulus package is announced. There is no better way of stimulating the economy than by constructing social housing.”

This is stimulus that also meets critical social needs, Sandeman says.

There is a desperate shortage of social housing. Our waiting list and the number of people who are homeless demonstrates that.

Social housing provides a long-term benefit to everyone. It adds stability to the lives of the occupants and this is a particular benefit to their children and their education. Safe, affordable housing is the foundation stone that gives people a chance in life.

Other organisations that could be part of the stimulus package should be getting ready, too, and making sure the government knows what they are doing.




Read more:
Australia’s housing system needs a big shake-up: here’s how we can crack this


The Conversation


Geoff Hanmer, Adjunct Professor of Architecture, University of Adelaide

This article is republished from The Conversation under a Creative Commons license. Read the original article.