With housing affordability squarely on the minds of the voting public, governments are looking at selling off excess Crown land no longer needed for government purposes.
In the Federal Budget, Treasurer Scott Morrison put forward the former Defence force land at Maribyrnong as a future suburb and the Andrews government is examining the sale of the former Peter MacCallum Cancer Centre site and the Parkville Youth Detention Centre.
But for all the talk increasing housing supply to increase affordability, developing these sites into residential precincts is unlikely to have any noticeable impact on prices.
The standard approach of selling to the highest bidder, then incentivised to onsell at the highest possible prices, is just not conducive to achieving the good quality, low-cost housing that our cities desperately need.
If government land is to be sold off for housing, we need to get the best possible outcome. With this in mind, there is a bold opportunity open to governments if they truly wish to increase supply of specifically affordable housing. What's better, they need only look as far as Brunswick to find inspiration.
The innovative not-for-profit organisation Nightingale Housing has created a housing development process which enables high quality, sustainable and "developer-free" apartments. Instead of relying upon developers to finance projects ??? who then take a minimum of 30 per cent as profit ??? Nightingale uses a system of small ethical investors who take a maximum of 15 per cent. This financing model frees up the architects to focus on sustainable and good quality design, rather than what might make the highest short term financial return.
This model is also considered deliberative ??? the future occupants of the apartments are confirmed before the design of the apartments is finalised. Where speculative development builds and then sells to the highest bidder at the end of the process, deliberative development enables the future occupant to be involved in design decisions along the way. This also eliminates the investment risk of apartments not selling upon project completion. The longer-term affordability of the apartments is maintained beyond the first owner through a covenant system that prevents apartments being sold at a significant profit.
Though Nightingale apartments have proved incredibly popular, it is still going to be many years and possibly decades before we see deliberative development provide a volume of housing anywhere near that provided by speculative developers. This is where a partnership with the government could help turbocharge Melbourne's affordable housing.
Imagine substantial sites in Parkville, Maribyrnong or East Melbourne being transformed into Nightingale Precincts. The government could borrow the investment funds using their triple-A credit rating in an already low interest rate environment, just as they might for other city infrastructure. The return on this investment would be 15 per cent, making it a very good deal for taxpayers.
Aside from the financial benefit, there are some interesting design possibilities which could be opened up if architects and planners were empowered to deliver an entire precinct within a Nightingale type framework. Perhaps we may see the emergence of community power tool libraries, so that each home owner doesn't feel the need to own their own power drill. Another possibility might be streets completed with community pavilions, such as those imagined by architecture practise Mihaly Slocombe in its Streets Without Cars proposal for Drummond Street, Carlton.
No doubt there will be big developers wanting to argue against the deliberative approach. But time and time again, these developers have either been unable or unwilling to deliver affordable, liveable homes in any meaningful volume. That is why it is time for governments to step up.
Developers might try to suggest that if governments work with Nightingale Housing on these precincts, it will lock out competition. This is a false argument. These sites could easily be open to any organisation willing to undertake a deliberative housing model that also limits investment profits to 15 per cent. If the traditional big players can't make that work, Nightingale has proven it they can.