Social and affordable housing: Whacking a wicked problem

Economy, Government, Housing, Politics

Social and affordable housing: Whacking a wicked problem

Jan 6, 2025

Australia’s housing crisis is caused by three factors: Supply, Supply and Supply. Supply of Land. Supply of Materials. Supply of Labour.

A ‘Catch 22’ makes the crisis ‘wicked’: if migrants are brought to Australia to supply labour for building houses, housing must be provided for them to live, exacerbating the crisis.

Can a ‘wicked’ problem be resolved by the process of ‘reframing the problem’.

Firstly, we can match house sizes with the number of occupants and resize houses to provide dwellings that cost less to build and less to heat and cool. There are many ‘McMansions’ in Australia; buildings that require a large supply of materials, a large supply of labour and a large and costly supply of energy to keep the occupants to be comfortable.

The Australian Bureau of Statistics measures the size of new houses and reports:

Over the period from 2002-03 to 2021-22, the average floor area of a new house in the Australian Capital Territory has increased to be the largest of all states and territories, increasing by 28.5m² to 258.9m². New houses in New South Wales had the largest floor area in 2002-03 but have since decreased by 5.7m² to 239.4m² in 2021-22. The average floor area of new houses in South Australia and Victoria have also increased considerably during the 20-year period, increasing by 14.4m² and 15.8m² respectively.

Downsizing reduces the magnitude of the Supply crisis, especially for social and affordable houses.

Secondly, Australia’s building practice is ’build to a design’. A reframe is ‘designed-to-be-built’. Labor’s Home Building Plan is 1.2 million homes by the end of the decade. To achieve that, 1,200,000 homes divided by 2,010 days is about 600 houses PER DAY, every day to 1 January 2030. Australia needs to think about producing houses like cars: factory building ‘designed-to-be-built’ dwellings on a production line.

Where could Australia find the production capacity? China has ‘overbuilt’ dwellings, and now has its own wicked housing problem: a glut of housing, excess building capacity and a shrinking population. This housing crisis is the converse of Australia’s crisis and linking the two crises would go a long way to resolving both.

Designed-to-be-Built kit homes could be manufactured in China with Chinese materials and labour, shipped to Australia and assembled on prepared sites with a fraction of the ‘build to design’ dwelling labour, and most of the materials supplied by the kit.

There is a diplomatic opportunity in this program. China is Australia’s biggest trading partner. In 2023, China had a trade deficit of approximately 81.8 billion U.S. dollars in merchandise trade with Australia. By providing Australia with a substantial portion of the required 1.2 million homes, the balance of trade would be a little more balanced. A rough estimate is that in a year, 365 days * 600 homes * $100,000 per kit = $21.9 Billion per annum.

The ALP’s funding commitment to the 1.2 million houses is $32 Billion over period to 2030, so other sources of funding must be found. No doubt, many Australian new home buyers would appreciate access to a $100,000 home kit to erect on newly released land and with much reduced labour costs.

The housing crisis in Australia is real and a substantial burden on our society. A path to resolving Australia’s wicked housing issue is reframing the problem and working cooperatively with our largest trading partner.