Launch Pad 1: Affordable Housing

Thursday, May 21st, 2015

 

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It is more that obvious that housing affordability is now a perennial topic.  The relatively new distinguishing of “affordable” from “social” housing is also becoming common place.  Houses have long been important projects for architects.  In Wellington, the WCC’s rejuvenation of its social housing stock has meant that locally we have an increasing awareness within our architectural community of contemporary issues pertaining to housing.

JOIN US on Friday 22 May 4.30pm for our online discussion on Affordable Housing as part of our virtual launch of our givealittle site to fundraise for our involvement in the Basin Bridge High Court Appeal opposing NZTA.

Featuring: Nigel Case, Dennis Chippindale, Sam Donald, Sam Kebbell, and Mark Southcombe

Welcome to our panel and the first of our discussion topics in our fundraising site launch.

First up is MARK:

Affordable housing faces a critical crisis in New Zealand that is part of an increasing social divide resulting from the wealth accumulation that occurs because of housings primary role changing from the provision of homes and shelter to a concentrated form of capital investment. The labour required to accumulate the capital required to afford housing has increased to the point housing is no longer remotely affordable for a young couple without inherited capital. They are caught in a poverty trap where a disproportionate amount of the income from their labour is required to access housing, to pay the rents dictated by the returns required by the banks and the investors that own housing as lumps of capital. They have no possible access to home ownership and get only the hangover from increased housing values in increased housing rental costs and decreasing disposable income.

This crisis is exacerbated by the housing provision mechanisms that deliver housing. Governments have taken several steps back and sideways over time and we are at the point that housing supply is pretty much left to the market with the idea that demand will drive supply and oblivious to the inherent contradiction between affordability and supply by the market which seeks not to make more affordable –but to make as much profit as possible within the parameters of so called affordability. Amenity, quality and the floor areas of housing are reducing in the name of affordability, but at the same time profits on social housing are retained and maximised with no comprehension of the ethical backflip required as this occurs. Architects are complicit in this process, which is the reverse of affordability, and immediately results in massive capital gains as housing increases in value –great for those on the bandwagon, the new capital elite. Lack of supply clearly results in rampant price increases that are not close to affordable despite the label.

The capital and social divide this process creates is growing fast and with it will come increasing social need, stratification and potentially future unrest. The market will not and cannot solve this. It’s actually working against it by milking the situation for profit. The only effective solution is to acknowledge the problem and return to a range of social housing provision by government, what can now be seen as a heyday of egalitarian housing and access. This new generation mixed use vibrant social housing needs to occur at an ambitious scale based on the actual cost of supply and to be retained and maintained by government as affordable at below market costs. Housing can once again be primarily and firstly a home, and as such be an excellent social investment for the future.

SAM D, what would you say in response?

The true cost of housing is not what it costs now, but what is the cost of continuing to get it wrong. Social housing policy should be a governmental priority and a core part of the nations drive for economic, social, environmental and cultural sustainability. New Zealand is rapidly becoming a more unequal society – we seem to be heading down the path of the USA where the gap between rich and poor is simply horrifying. An unequal society is bad for everyone. The pitchforks are coming.

NIGEL – your thoughts?

Yes, agree, vast disparity between the very wealthy and the very poor is not ideal. Flooding the market with social housing would seem an answer to unaffordable housing. I am uncertain what form this would take but high density housing would seem sensible. For this type of housing to be successful I suggest it should be on good land. I.e desirable land. Close to schools, public transport, parks, shops etc. This solution would I assume target the most disadvantaged. Which would be a measure towards supporting the poor of the poor/wealthy divide. How will this be funded? Is this an obligation for the NZ tax payer? One wonders whether the wealthy could fund this, thereby attempting to address the other side of the equation.

This is of course an exercise in social engineering and an issue pertaining to the principle of motivation. What will motivate the poor to better themselves when homes are provided? What will motivate the wealthy when their wealth is taken from them? And what will motivate the government to this when increasing property prices is good for the economy? The government could equally have a hand in setting mortgage interest rates. A factor that has been seen to affect property values.

Is the social housing suggested government owned and tenanted at below market rents? Recent research indicates that while house prices are increasing, the current cost to rent is not. It is useful to consider the housing market as 3 distinct markets: the house buyer market, the rental market and the new home construction market. While these are related they tend to behave independently. That rents are not unduly increasing would suggest this market does not have a supply shortfall.

SAM K – any thoughts?

I agree with you Mark, that the market appears to be very unlikely to fix this problem and may simply make it worse. I don’t completely have my head around the economist Thomas Piketty’s work, but I gather the gist of it is that, left unchecked, the rate of return on capital (as you describe above) is generally greater than economic growth and the result is an increasing concentration of wealth… and by extension, I presume, a bigger problem of house affordability. So like you, it seems to me the government needs to take significant corrective steps. Precisely what those steps are, I don’t know, but the option you call for above of a major government construction programme makes sense to me: a difficult proposition to make to market evangelists, however.

 

NIGEL, do you have a statement on affordable housing you’d like to make?

I do not proclaim to be an expert on this subject but have been involved in the last couple of years in the development of a low cost, alternative solution, residential construction system and so through my involvement in this process have considered the notion of affordable housing frequently.

Affordable housing is a broad notion and does mean different things to different folks. In essence however it seems to be about the concern for the accessibility of New Zealanders to put a roof over their heads. The crux of the issue being the publicized relatively high cost to purchase/rent a place to call home.

There are a variety of assists designed to facilitate affordable housing, many of which target lower socio-economic groups, (the young, the single and those on lower incomes): government accommodation subsidies, kiwi-saver first home buyers policy, funding and grants to various charitable organisations to assist with their social housing initiatives, etc.

These measures are however reactive and designed to assist the disadvantaged and don’t address the root of the problem, which seems to be an issue of supply and demand: an enduring shortfall in the supply of housing relative to the demand for it. A demand driven by, I presume, factors including: population growth, (immigration for the year concluding March 2015 at 56,000), loss of homes as a result of the Christchurch earthquakes, (in the order of 17,000), and speculative investors.

Managing demand via considering population growth is a difficult and contentious task. New Zealand’s published growth rate is quite low and while recent immigration figures do seem alarmingly high they are not the norm, (average immigration per annum is closer to 10,000). Saying this however, and in the context of the massive depletion of many finite global resources, population management is a topic warranted of discussion. As is pondering the moment at which an increasing population causes a lowered quality of living.

Managing the demand via facilitating the increase in the rate of supply of housing is on the other hand an aspect being actively pursued: this includes the governments housing accord policy and has the objectives of making available more land for developments, speeding up and reducing the cost of Council consenting and reducing development contribution costs. These initiatives are evident in Wellington City Council’s Housing Accord policy, which designates Special Housing Areas within the Wellington City region. These are measures intended to incentivise large-scale developers with the objective that this may increase the rate in supply of houses.

Affordable construction is oftentimes misconstrued as affordable housing. Generally speaking, it is the market which will determine the cost/value of a home and is largely irrespective of what it actually costs to construct the home. Lowering the cost of construction is a constant pressure and perpetual consideration within my industry and only really contributes to affordable housing when the client is to be the home occupier.

Given this scenario I offer the following considerations when minimising cost is the primary agenda:

  • Seek cheap land, (do consider commuting costs in this).
  • Seek easy land – i.e. minimal earthworks, minimal risk of requiring Resource Consent.
  • Pursue simple designs – i.e. single materials, traditional materials, simple forms, standard acceptable solution detailing.
  • Seek to use building materials that are not supplied by industry monopolies.
  • Work with material modular sizes.
  • Research the plethora of house building companies.
  • Build small – also reduces ongoing running/maintenance costs.
  • Reconsider expectations – i.e. ensuites, garaging, entertainment rooms etc.
  • Consider owner-built options.
  • Consider various procurement methods for engaging a contractor.
  • Consider prefabrication.

For the last couple of years I have been involved with the development of a low cost housing system using prefabricated laminated timber panels and insulated panels with the objective of being able to provide quality new housing at sub $2000.00/sq.m rates. To achieve this many of the above notions have been incorporated though sourcing ‘easy land’ is an ongoing persistent frustration.

SAM D – any response?

Attempting to manage New Zealand’s housing affordability by limiting demand caused by immigration would in effect just be pushing the problem back onto other countries. The world’s population is expected to grow from the current 7.3 billion to almost 9 billion by 2050 with many of these additional people expected to be living in slums. Housing affordability is a worldwide issue and many immigrants seek out New Zealand due to the comparative affordability of housing here compared to large parts of the developed world. As housing continues to become less affordable elsewhere and with it starting from a higher base, New Zealanders currently living offshore are also likely to continue to return to get on the property ladder. They need to be offered sustainable models to buy into.

Increasing the supply of flat and easy land needs to be done very carefully. Suburban sprawl into greenfield areas tends to cancel out the CO2 emissions benefits of denser urban centres. Developments on the outskirts where flat and easy land often exists need to include dense clusters of housing to enable efficient public transport to be sustainable and should also contain community amenities to avoid suburban isolation. Brownfield sites are often flat but not always easy. Wellington and Auckland have large port areas very close to the centre where logs and cars sit while cars sit log-jammed on urban motorways bringing commuters into work.

The idea of building small needs aggressive advertising to readjust the expectations of a TV watching nation who are bombarded with images of completely unaffordable suburban dream homes complete with the latest and greatest and biggest of everything.

How about you MARK?

Nigel your affordability tactics are great. John Gray’s Living Ark project is an example of real affordability through redesigning material supply chains and avoiding monopoly supply. The Dogbox project in Whanganui is another example using low cost land, smart design, recycled and economic materials, and sweat equity. In NZ its tough to do this because globally we are a miniscule market a long way away from many manufacturers and our market is too small to sustain manufacture of a great many elements and materials necessary for building if we want choice. Economies of scale are a tricky beast to manage in a market as small as New Zealand. We noted a history of what we called ‘Noble Failure’ of Prefab systems and companies in our Kiwi Prefab book. Company’s gear up and have a measure of success only to eventually get kneecapped by the changing demand for product, and the changing economic environment in New Zealand. Is it inevitable that more group-housing product will be manufactured overseas and we will piggy-back onto the runs for bigger markets? Maybe we will develop a second-hand housing import business from Japan? That might be affordable? More hopefully we may yet develop more New Zealand produced and timber based housing for export that can then also addresses our own demand? And of course it will need to be highly refined, design rich, smart and just simply way better than the alternatives.

And SAM K?

I think there are some useful points made by Nigel here about expectations and a modest outlook. Like Sam D though, I get nervous about talk of finding flat land. Finding somebody’s roof to build on seems like a better long term hunt. Obviously higher densities reduce the proportion of land cost to single a housing unit, along with the many other benefits that go with higher densities, some of which Sam D mentions above. Yep, bring on the Mad Men, good thought.

 

SAM D – do you have a comment on housing to make?

Housing is affordable, its land thats unaffordable.  If people weren’t allowed to own land just think how much more capacity everyone would have for high quality design and construction. The late Sir Ian Athfield said that to me several years ago and I’ve often thought about the need to somehow decouple spiraling land cost from construction cost, which has it’s own ever increasing cost pressures.  Between 1988 and 2008 NZ’s average section price as a percentage of total house and land price has increased from 23% to 46%.  How can this be sustainable? Without a ban on land ownership/investment, or releasing ever more land for greenfield development and urban sprawl, one very real answer is to stop building individual houses on individual sections.

What is the true cost of that cheaper house (ie. cheaper section) out on the periphery of town?

To the individual there is the tangible additional travel costs to work, retail locations, schooling and socialising (as these rise further, lenders may start factoring these costs in to a home owners borrowing capacity).  There are higher maintenance costs compared to quality multi-unit housing spurred on by the marketing forces telling everyone to tool up at their local hardware mega store! There is also the less tangible but increasingly understood social cost of suburban isolation due to reduced access to, or complete lack of, community amenities and the inability to walk and cycle for most journeys.  For society there are increased energy use, additional infrastructure costs (which eventually fall on individuals via development or rates increases), and a less connected and active population. Research shows that urban form has a very real influence on health costs as peoples options around transport become more limited due to lack of density. The growing research in Social Sustainability also identifies isolation as a significant contributor to our mental health with all its flow on effects.

So it’s density, density and more density.  But who wants to live more densely?  Some do, but not the majority.  At least not with the types of density that they are being offered by the market.  A market driven by short term profits and very little interest in quality or affordability, either in the short term or over the life of a building.  Development levies are currently per household unit – maybe they should be waived when a certain level of density is proposed?  Rather than a District Plan that limits a section to two household units as of right, how about a rates surcharge on every section that only contains one household unit?  The additional revenue could be put back directly into say 15% subsidised affordable housing in every new multi-unit development as is done widely in Europe.  Sorry Ath, we can’t make everyone give up their land ownership, but maybe we can encourage them to share their quarter acre and even create some AHPONS (Affordable Housing Projects of National Significance) in the process.

There are good examples of medium and high density housing in New Zealand and more so internationally. It is time they were fully analysed and communicated to the wider public so they can see that what’s on offer in the market now falls well short of what’s possible, desirable and affordable for the individual, society and the planet.

NIGEL – any response?

I have also fleetingly pondered the notion of removing the concept of land ownership but stall when reflecting on the mechanisms required to provide house owners the right to occupy land. What would this look like? Some form of agreement would be required to give house owners the courage to build on a piece of land. Would this be a lease? If so I expect that this would end up attracting the same types of market pressure that currently exists with land ownership. Access to good buildable/occupyable land is a part of the issue. No arguments here. The housing accord is an attempt to address this. Giving Councils the authority to establish Special Housing Areas, SHA’s, areas of increased density or new green/brown field sites. Town Planning policies attempt to control urban sprawl by restricting land development. This concern being driven by the well-researched consequence that low density fringe suburbs have on cities. Issues to do with amenity isolation and traffic congestion. Access to place of employment is an important part of the issue.

Access to schools, shops, health and other facilities also important but not as much as the need for the daily access to the ability to earn. Based on this notion Land closest to centralized places of employment should be densely occupied. Ready access to these areas could be facilitated by introducing expedient transport options. The idea of some form of fast rail service could provide this. Nodes along the line also zoned for denser housing within walking distance of the stations. This rail may be a better place for government investment if you accept the notion that it is not distance but time from employment that contributes to land cost.

MARK – your thoughts?

I for one enjoy living in the city and the high medium density mixed use environment and all that comes with that. The suburb is not everyone’s dream of paradise… Prioritising good design is key and for Kiwis that includes amenity that is sadly too often absent in Medium density housing. Gerald Parsonson has a great example happening in Mt Vic and I have long been an advocate of Peter Beaven’s Thorndon Mews and Pitarua Court as another but they are too few and far between. Changing the ways we deliver housing is equally important. Ath’s urban village is a great model of balancing work living, the collective and individual needs. Co-ownership of land in whole or more often in part through urban cohousing is definitely a way of the future with groups of individuals coalescing through the net and directly delivering collective group housing projects models that cut the developer out of the picture completely… create better more tailored architecture, and pocket the savings…

And SAM K – any response?

Absolutely Sam D, bringing examples of good medium and high density housing to the public discussion is a really important thing to do. The university can contribute to this objective quite well, and to some extent it already is. There are certainly theses continuing to build up on this topic from several Masters streams which could be used as examples for discussion. Ideally the university would partner up with other institutions, or even individuals and companies, which would broaden the range of perspectives and open up wider audiences, and therefore have greater impact. Mark has done some useful work on this topic, and Martin, Penny and I are certainly keen to include a discussion about density (amongst other things) in our work on regional landscapes – so George Soros, if you’re reading this, do ya wanna dance?

 

SAM K – do you have a statement to make on affordable housing?

Developing a better understanding between architects and trades is one way to improve our chances of addressing the demand for housing with any architectural dignity. If we got the system working optimally, architects would have a looser grip on individual projects but many more projects to do. Like the watercolourist architects of the pre-digital age, we could give careful attention to siting, planning, and key details and involve tradesmen much more in developing the rest. Of course for that to work out well, tradespeople would have to understand more than most of them currently do about the qualities we’re trying to bring to a building. This would require architects to explain their work in very accessible, yet very accurate ways.

Unfortunately, we architects are not well known for either accessible or accurate explanations and often fall back on justifications of the work in faux-pragmatic terms when explaining the work to anybody except another architect, “that wall must have a lean on it because it lets light into the adjacent courtyard”, for example. The danger with these Trojan horse explanations is that the builder finds another way to get light into the adjacent courtyard at half the price and the main reason the wall was leaning, say, because it connected two pieces of geometry, is now lost. Personal aesthetic judgements are just as vulnerable.

Architects could practice explaining the real reasons for our decisions with tradespeople, both in practice and in their training. It could start with architecture students and trade apprentices having exchanges which would give them both some perspective on the other and integrate the two bodies of knowledge. Trade apprentices would be exposed to the design challenge of reconciling demands from umpteen directions, including the conceptual and aesthetic demands established by our history, and architecture students would be exposed to the construction challenges of actually making gravity defying details.

The result might be more articulate architects and more understanding tradespeople and we would surely all live happily ever after in carbon negative beautiful medium density affordable housing with shining infrastructure and no crime. Not sure why somebody didn’t think of this ages ago.

SAM D – any response?

So, what we need is another version of the Simple House Acceptable Solution but prepared by soon-to-be award winning architects with watercolored key details and applicable only to multi-unit housing with a density where Affordability = Location + Materials + (Tradesman + Robot)2 / Quality design, where location = Land/Density + Transport (purchase of ongoing license of NZ Standard for Density in Housing required to perform calculation).

And NIGEL?

Nice. There are often circumstances in which documenting the ‘what’ and the ‘why’ is conducive to a good project outcome. Whether this be to avoid aesthetic disasters or avoid additional costs is a merited objective. The appeal of relinquishing the minutiae of documentation also has appeal with the objective I assume to reduce the cost per project of the architectural service. However a good proportion of documentation is done for compliance purposes which our current system is unlikely to relinquish. That part of documentation that is to do with the aesthetic craft is I would argue is what a designers reputation relies upon, it is also given much time and consideration. Dual aspects which are necessary for a good outcome and unlikely to be invested in by the trades. Relinquishing this role to the trades does fill me with concern, though in fairness, they couldn’t do much worse than a lot of the designs that grace our fair city.

Yup. We might also consider the formula Architect = Idea x (Tradesman + Robot)2 or, A = (t+r)2, where the value of r increases over time on some sort of logarithmic scale, especially when artificial intelligence gets a grip (not in this housing cycle, but inevitably). Of course I’ve got my tongue in my cheek, but if 8,000 – 12,000 houses are required in Auckland alone each year (somebody correct me if I’m wrong) and there about registered 1,800 architects in all New Zealand, some sort of multiplier on our productivity is required in order to make a significant impact.

Yep, we’re also going to get some robots working on prefab and in situ which will will increase architect’s gearing… artificial intelligence might be interesting for robots too… as they learn details.

MARK, any last words on the topic?

Most architects already work closely with tradies in some form or at some level. Many work very closely with some trusted collaborators who happen to be tradies and the exchange is two-way. We depend on and value their expertise which lets face it – when it comes to their trade if they are any good – is at level most of us cant begin to approach. There are also lost of alternative forms of practices out there that have diversified and are reinventing the tiring pale shadow stereotype architectural practice that no longer works as well as it once did. The architect-builder model is one and multifaceted multidisciplinary practices in the widest interpretation of the term and that include architecture are others. PrefabNZ is a good example of a hybrid organization that mixes up groups of people that historically have not played together that well. What happens in these forums is that understanding develops both ways as Sam advocates. Within the interchange comes an underlying robust respect for the value architectural DNA embodies in a project.

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Posted under: AC EVENTS, Givealittle | 1 Comment »

One Response to “Launch Pad 1: Affordable Housing”

  1. Sam D Says:

    Housing affordability in a sad state in the USA too: http://www.vox.com/2015/5/28/8679889/minimum-wage-housing-map

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