Former developer says Vic Council's plan to create affordable housing not a good one
Victoria City Council wants 20 percent of units in larger new condominiums be affordable ... but a local expert doesn't think it's a great idea.
Bev Highton, owner of NAI Commercial, says 'affordable' is a relative term depending on each person. He also says housing is a cyclical market, and that the main issue that always comes up with real estate is supply and demand.
"If you bring supply into the market, it moderates the market, and you know what? I don't care where that supply comes in. Developers, builders, will target markets to put the supply where it's required, where the demand is. They don't want to build stuff that will sit there fallow, they want to build stuff that will be absorbed into the market"
He says builders do very serious investigations into the absorption factor, and creating any housing moves people around, and allows people to move into the market at the lower levels.
"One of the things that will happen is that the new buildings with all the bells and whistles, the rental buildings, let's talk about that, will absorb people that are in their older rental buildings, which are tired and worn out and run down, so they will then move into the higher end, and hopefully be very happy in those units. The neat thing about that is, it opens up the lower end for people starting out in the process to actually find rental accommodation."
He says developers spend a lot of time, money, and resources to first get the shovels in the ground, and forcing them to make affordable units isn't going to incentivize them to build in the city.
"We've got significant numbers of units coming on-stream in the city in the next 6 months to a year. What developer is looking at that number of units, thinking about the absorption of the units, is going to start a new project where he's hampered by having to provide, quote 'affordable housing' within it? It may just make it totally un-economic."
He also says the other 80% of residents may end up taking a hit, because the prices for them could be raised in order to make the affordable units a viable idea.
Victoria City Council is set to vote on the 1-in-5 affordable unit proposal on Thursday, June 27.