THE SUPPLY OF AFFORDABLE, SOCIAL AND PUBLIC HOUSING IS IN CRISIS. THE SOLUTION? REDEFINE THESE ASSETS AS ECONOMIC INFRASTRUCTURE; AND PREFABRICATION MUST BE PART OF THAT SOLUTION, ARGUES ROBERT PRADOLIN.
Despite the current softening in property prices, Australia is in the midst of a housing crisis; firstly, in terms of its general affordability and secondly in terms of availability of homes for key workers such as police, fire fighters, nurses, teachers (affordable or workforce housing) and for the socially disadvantaged (social or public housing).
Rather than continuing the discussion as a social issue, it is vital we reposition it as an economic one. By housing all Australians, rich or poor, we minimise the long term costs to society that result from the unintended consequences in areas of mental and physical health, family violence, justice, policing and long term welfare dependency. This provides both a challenge and an opportunity.
It is estimated that the current shortfall of affordable/social housing shortfall nationally is around 200,000 new dwellings. At an average total cost (including land) of $500,000 per dwelling, the potential size of the size of this market is in the order of $100 billion. The challenge is to elevate the discussion into the national consciousness so we all realise the long term cost (and social) implications if we don’t address this significant housing shortfall.
This requires a long-term investment approach and will require a pipeline of additional housing investment over several decades. The opportunity for industry is to create new financing, development and construction approaches that are able to achieve this new additional supply, at scale, without putting an upward pressure on labour costs. The only way this can be achieved is by prefabrication becoming mainstream.
“The opportunity for industry is to create new financing, development and construction approaches that are able to achieve this new additional supply, at scale, without putting an upward pressure on labour costs. The only way this can be achieved is by prefabrication becoming mainstream.”Robert Pradolin, Founder, Housing All Australians.
In many US cities including New York, Chicago and San Francisco, both sides of politics understand this dynamic and believe that investing in social and affordable housing makes good business sense.
It is seen as good for the economy, it brings workers close to their jobs and lowers the overall cost to government (and ultimately taxpayers) of providing services. It generates jobs and makes for a happier society, and a happier society leads to an increase in productivity.
It’s no different in Australia. Well placed, affordable housing for key workers, located in areas where society needs their services, and public housing, where tenants have ready access to existing infrastructure and services also makes good and rational business sense. In Australia today, crime, suicide, domestic violence and depression are huge problems. Analysis by SGS Economics indicates a cost benefit ratio of 7:1 in respect to the economic benefit to the community of providing public, social and affordable housing in the right locations.
The scale of the shortfall of affordable/social/public housing problem is significant and it needs a quantum shift in thinking. We need new and innovative funding mechanisms that minimise any short term impact to respective Federal and State Budgets. Governments on their own cannot fund this type of housing and therefore must encourage the use of private capital.
We have to start to see affordable, public and social housing as ‘economic infrastructure ‘, like privately funded roads, tunnels, hospitals and schools, all of which receive some form of government subsidy. Such recognition will mobilise private capital so that it will become economically viable to invest in this essential type of housing.
A tremendous dividend is also available to industry in participating in the delivery of this new housing supply, and the prefab industry can play a significant role. However, industry needs to show the benefits of prefabrication and how it has matured into providing cost effective and aesthetically attractive options. This won’t happen unless we pro-actively make it happen. We need industry to acknowledge the economic impact that housing stress is having on society, and demonstrate new solutions. The question is, how might the prefabrication sector effectively deliver that message?
Robert Pradolin is former General Manager for Frasers Property Australia and the Founding Director of Housing All Australians, a group of leaders from the private sector with a shared belief that it’s in Australia’s long term economic interest to house all Australians, including those on low incomes.■