Researchers tackle affordable housing barriers in regional communities

An Australian-first study will identify the barriers to affordable and sustainable housing in regional areas and develop a model that could attract more cost-effective developments.

The Future Regions Research Centre (FRRC) project is led by Professor George Earl and Professor Jennifer Martin and will bring regional communities, housing suppliers and managers, industry representatives, and government stakeholders into the nationwide project that aims to bridge the gap in housing supply initiatives between urban and regional areas.

Professor Earl, who has extensive experience as a construction economist and industry researcher, says one of the key motivations behind the project is most current supply initiatives have largely focused on addressing housing demand in capital cities, neglecting the unique challenges faced in regional areas.

"What's clear from some of my work in the community housing sector is that most of the initiatives around housing supply, particularly affordable housing supply, although they're not exclusive for our capital cities, are capital city-centric," Professor Earl said.

"So what tends to happen is the regional housing sector gets missed out. There has been plenty of work done quantifying what housing needs are and what gaps there are in housing supply, but very little work has been done in trying to see how we can clearly identify what the barriers are for the major players, like developers and investors, to use capital city initiatives in the regions.

"Little work has gone into looking at changing policies or construction techniques. These need to be radically changed because one of the biggest problems of regional housing is it's very expensive – the land may be cheaper but the actual construction cost is horrendously expensive."

Professor Earl says the project aims to investigate current and future housing demand in regional Australia by cohort, as well as the barriers to the provision of appropriate affordable supply for both home ownership and rental tenure.

He says the project is significant because demographic data outlines the need for more than 900,000 new dwellings in regional Australia over the next 20 years, based on Australian Bureau of Statistics estimations, while the Community Housing Industry Association (CHIA) estimates shortfalls in regional housing to be around 230,000 units of accommodation in 2024.

Professor Earl says recent housing supply-focused initiatives at the government and industry levels have an Australia-wide application in theory, but the take-up of the initiatives by the various stakeholders has tended to focus on capital city demand.

The three-year project is looking to include a local-government area sponsor for a case study in each state and the research will lean on the work of innovative PhD projects that can help dispel some of the concerns held by developers and investors about backing regional construction projects.

"The reason developers focus on the capital cities is because they believe it's lower risk, but some of the work that we already have shows that the risks are not what they think they are," Professor Earl said.

"We know that the risks of investing in affordable housing are measured against other forms of built assets, and affordable housing has the lowest risk beta of the lot. There is no difference whether that's in the cities or the regions." Professor George Earl

"Another study we have looked at affordable housing as infrastructure, not a built asset. If we were to change how we analysed affordable housing, particularly social housing, as infrastructure like a tunnel or a bridge over 50 or 100 years, that would significantly change the dynamics of the investment.

The study will also employ machine learning techniques to better identify supply and demand for housing. The technique tested on 30-year-old data, while ignoring current conditions, calculated current market valuations to within a few per cent. This modelling to predict what regional housing supply and demand will be in 30 years.

"So what we've got some really innovative tools that we'll embed in the study, and by using these techniques, we hope to go to the big developers, the superannuation funds and other investors and show them that the regions can give them the same level of return at the same low risks."

Professor Earl says while the project is beginning with a three-year study, he is hopeful it can extend beyond that and draw in multi-disciplinary research from across Federation.

"For Federation and the team we have, and with our large regional footprint, this opens the opportunities for a whole array of other research to come in because, really, it's not just about the physical housing supply," Professor Earl said.

"I refer to housing as sustainable living because housing is not just about housing, it's about how you live, it's about the economy, the social impacts, health, wellbeing, employment – there are so many elements where we have the expertise and can contribute to this work."