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If you don’t already live in Melbourne, you probably can’t afford to Analysis

If you don’t already live in Melbourne, you probably can’t afford to

Affordable housing in Melbourne in 2019 is an urban legend, like petrol for under a dollar a litre or the secret underground tunnel network.

Despite recent cooling, our housing market is still somewhat cooked. Median house prices are still over five times more than just 20 years ago, and apartment prices are over three and a half times more.

Despite attempts by local planners to negotiate the inclusion of affordable housing in new property developments springing up across the city, for most people finding a property they can afford to rent (let alone buy) remains a distant dream.

But, as Victor Hugo said, there’s nothing like a dream to create the future.

Inclusionary zoning is a solution ensuring that a proportion of new building developments is delivered as affordable housing. Generally, housing is considered affordable if it costs less than 30 per cent of household income to cover the mortgage or rent. Any household that spends above 30 per cent of their income on housing is living in ‘housing stress’.

The Victorian Government and local councils have so far relied on voluntary approaches and negotiation with developers to include affordable homes as part of new developments. While this has yielded some small positive results – like the Queen Victoria Market Munro Precinct agreement providing for 15 per cent affordable housing – making inclusionary zoning voluntary doesn’t work.

It doesn’t guarantee the affordable housing that Victorians need.

Victoria needs to move away from the ambiguity of voluntary negotiations and explore options for a mandatory inclusionary zoning scheme. This would deliver clarity for developers and the construction industry, as well as a flood of affordable homes,

Inclusionary zoning isn’t new, at least not in other parts of the world. More than 500 inclusionary planning schemes operate in different areas of the US, and England and Scotland both require a proportion of affordable housing to be included in any new housing development.

Inclusionary zoning isn’t even new in Australia, where South Australia, New South Wales and the Australian Capital Territory all have inclusionary zoning policies in place. Victoria can catch up and become a national leader in this space by taking a bold approach to inclusionary zoning.

There are lots of variables that need to be considered when thinking about what a mandatory scheme should entail. These include:

  • What proportion of units should be inclusionary housing?
  • How big should a development be before the inclusionary zoning provisions kick in?
  • Can a developer ‘pay their way’ out of this requirement, with that money to be spent on affordable housing elsewhere?
  • What should be the standard of the affordable dwellings?
  • How do we even define ‘affordable’, and ensure things remain affordable over the long term?

These are all good questions and will determine the shape of any prospective inclusionary zoning regime in Victoria. But we need to start the conversation.

In the second term of the Andrews Government there is urgency to get the ball rolling on delivering a mandatory inclusionary zoning scheme for all new housing developments in the state.

While it isn’t the only housing policy response we need, inclusionary zoning is one important tool that will help to deliver affordable housing for Victorians well into the future.