Understanding the debate over affordable and sustainable housing Laura O’Neill School of Natural and Built Environments, University of South Australia Lou Wilson School of Natural and Built Environments, University of South Australia

Abstract This paper explores the meanings of the concepts of affordable and sustainable housing. These terms are widely used in Australia to describe two difficult to resolve issues in the Australian housing market but are rarely defined in measurable terms. The meaning of these terms is unpacked in relation to the debate over how to provide affordable and sustainable housing. A residual income approach is described as a way of making sense of this debate and providing a measure of affordable housing. It is argued that measures of housing affordability tend to gravitate around numerical measures, whilst giving little consideration to measuring social and environmental components. A discussion surrounding the concept of affordable living and residual income suggests that affordability might be determined not only by what income households spend on housing but more importantly what income households spend on non-housing related needs. It is argued that research into the experiences of persons who reside in what has been branded as affordable and or sustainable housing is minimal and more research is required in this area.

Introduction The term affordable housing is a slippery concept that has many different meanings to a myriad of different people, groups and levels of governments. When discussing the concept of affordable housing, quite often the question that is raised is who is the housing affordable for? The following paper will discuss the history of housing policy in Australia with a special emphasis on housing policy and the evolution of housing provision in South Australia. It will attempt to define and differentiate affordable housing from housing affordability by reviewing the literature in this field and seeking to address how these two concepts are discussed. The concept of affordable living will be introduced as too will be the residual income approach to understanding housing affordability. The paper will seek to relate these concepts to sustainable housing and the so called Triple Bottom Line (TBL) approach to

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sustainable development. This review will investigate the economic, social and ecological spheres of sustainability of newly constructed and pre-existing homes and will also discuss the important role of undertaking home improvements as a way of delivering economic and environmental benefits to households.

Background Australians have generally always enjoyed relatively high levels of home ownership due to its abundance of prime cheap urban land coupled with relatively low housing costs (Wilson et al. 2010; Beer et al. 2007). However, the provision of housing in Australia has not always enjoyed the same positive outlook. Kathy Arthurson has pointed out that since the 'post World War 2 period, demand for housing has out-stripped supply in all Australian states, and much of the existing housing was of poor quality' (Arthurson 2008: 484). Since this time the treatment of housing policy in Australia has been erratic and the Commonwealth government’s role in this area has been influenced more by the electoral needs of the government of the day rather than the needs of the Australian people (Milligan & Tiernan 2011). Predating this time the visionaries of those who established the South Australian Housing Trust (SAHT) in 1936 did so as part of the South Australian industrialisation policy, with its primary role to build sound inexpensive homes for workers (Hutchings 2007). It was set up in such a way that the cheap rents would result in lower living costs and wages compared to that of the eastern states (Hutchings 2007). Due to its effectiveness and the increased demand for housing in South Australia post Second World War, its operations expanded. By 1950 the SAHT was responsible for 30 per cent of all dwellings built within Metropolitan Adelaide (Hutchings 2007). Nationwide a change in policy direction associated with the signing of the 1956 Commonwealth State Housing Agreement (CSHA) encouraged home ownership through the

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sale of publicly funded and constructed housing (Milligan & Tiernan 2011). This was an early manifestation of the emergence of the new political agenda of neo-liberalism, which became more apparent from the1970's onward. Neo-liberalism has been associated with the long term decline of the provision of state owned housing in favour of a market mechanism for allocating housing (Milligan & Tiernan 2011). More broadly neo-liberalism has influenced 'government services either being reduced or restructured to meet the needs of a market-orientated economy' (Beer et al. 2007: 12). Between 1956 and 1972 the CSHA contained no mechanism to direct housing assistance to those on low incomes (Monro 2000). This change in policy direction contributed to the decline in housing affordability nationwide and was seen as a precursor to new policies that caused low-income people to be confined to housing related poverty as there was little choice of housing type and location in newer public housing (Milligan & Tiernan 2011). The 1973 CSHA moved towards targeting housing assistance to low income earners and new eligibility requirements were introduced for both rental and home ownership (The Parliament of Australia 2001). This coincided with the establishment of the Department of Urban and Regional Development (DURD) under the Whitlam Government and the states were required to establish corresponding Land Commissions (Troy 1978). The South Australian Land Commission (SALC) was established in South Australia at this time, and some of their objectives were similar to that of DURD. This included stabilising the price of urban land and to divert the flow of land value from rural to urban development (Hutchings 2007; Troy 1978). Unlike the SAHT, the SALC had compulsory objectives to purchase land which was funded by the federal government. Despite efforts made by the Whitlam Government to actively engage with urban issues (Milligan & Tiernan 2011), the DURD was abolished under the Fraser Government in 1975. By the 1980's the term affordable housing started to appear on the political agenda as affordability challenges moved up the income distribution chain and government agencies

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retreated from public responsibility towards social housing and low income housing (Stone 2006). More recently the debate surrounding the provision of housing comes on the back of the housing affordability crisis which has featured widely in media headlines across Australia (Yates 2008). In its ranking of housing affordability in 2009, Demographia (cited in Burke & Hulse 2010) ranked Australia as the least affordable English-speaking country compared to that of Canada, USA, Ireland, UK and New Zealand. This has resulted mostly from house price growth rising faster than household income and is influenced by the cost of finance, demographic factors and the supply and demand for housing (Abelson 2009; Wilson et al. 2010; Yates 2008, Hall & Berry 2006).

Affordable and Sustainable Housing For the purpose of this paper it is important to differentiate housing affordability from affordable housing. In Australia, housing affordability relates more broadly to a households ability to pay for their housing and is seen as a general goal across the housing market (AHURI 2011; Ruming, Gurran & Randolph 2011). Stone suggests that housing affordability directly expresses the ‘challenges each household faces in balancing the cost of its actual or potential housing…and its non-housing expenditures…within the constraints of its income’ (2006: 151). Stone also acknowledges that 'affordability is not a characteristic of housing - it is a relationship between housing and people' (2006: 153). There is still debate surrounding the issues of when housing is considered to be unaffordable, however a common measure of housing affordability is that households should spend no more than 30 per cent of their gross household income on housing costs (ABS 2011). It is when households spend more than 30 per cent on housing costs that they may start to experience housing stress (AHURI 2011). However, even this seemingly simply measure of housing stress attracts much debate

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amongst not only academic researchers but also within the circles of policy makers across the nation as it excludes extremely low income earners and may underestimate the number of people actually experiencing housing stress (Nepal et al. 2010). Affordable housing on the other hand refers to housing that is affordable to those on low or moderate incomes to rent or purchase and is priced so that households can meet other living costs (Abelson 2009). Milligan et al. (2004: ii) suggests that 'affordable housing is intended generally to [provide households]...access [to] appropriate housing in the market without assistance'. This concept is explored in more detail by Disney (2007) and highlights that affordable housing should reflect general public usage while also being compatible with appropriate policy goals. The most widely used measure of affordable housing is the "30/40 split" and calculates that low or moderate income households (bottom 40 per cent of incomes groups) should spend no more than 30 per cent of their gross household income in meeting their housing costs (Radford & Sarris 2002; PIA 2007; Disney 2007; Pullen et al. 2010; Ruming, Gurran & Randolph 2011). Disney (2007: 1) continues to give meaning to the concept of affordable housing as ‘housing that is reasonably adequate in standard and location for lower or middle-income household’s [and] does not cost so much that…[households are unable] to meet basic living costs on a sustainable basis’. This implies that there are much deeper social, economic and environmental factors that need to be explored when developing affordable housing. Burke and Hulse (2010) suggest that separate from the affordable housing and housing affordability debate is the concept of affordable living. Affordable living is closely aligned to the theory of Residual Income Approach proposed by Michael Stone in his 2006 article What is Housing Affordability? The Case for the Residual Income Approach. Stone proposes that housing affordability is an 'expression of the social and material experiences of people, constituted as households, in relation to their individual housing situations' (2006: 151).

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Residual income is explained simply by Stone as 'nonhousing expenditures are limited by how much [income] is left after paying for housing' (2006: 163). Or more specifically a household will experience a 'housing affordability problem if they cannot meet its nonhousing needs at some basic level of adequacy after paying for housing' and taxes (2006: 163). This measure differs from the well known 30/40 split as the residual income is expressed as income that is left over after paying for housing rather than a ratio (Stone 2006). On this matter, Burke and Hulse (2010) believe that affordable living has been pushed onto the policy agenda more recently due to the problems associated with increasing living costs such as the price of energy and fuel. Similar to that of Disney (2007), their argument focuses on the issues associated with poor location of housing and that the long term affordability of households are jeopardised due to poor access to public transport and high dependency on cars (Burke & Hulse 2010). Second to this, in the Australian context increasing affordability often results in housing being located on cheap land and constructed to minimises costs, this in turn has resulted in low environmental performance housing coupled with potentially contentious social acceptability (Arman et al. 2009a, cited in Pullen et al. 2010). Closely aligned to the concept of affordable living is ‘sustainable housing’, which adopts the TBL framework to seek better options for housing (Maliene, Howe & Malys 2008). More broadly the concept of sustainability is a 'framework for understanding economic development, community development and natural resource management' (Schlossberg & Zimmerman 2003: 643) The economic side of sustainable housing includes the financial costs associated with new and existing housing stock, the original purchase price of housing and on-going costs associated with housing. It also explores the notion that future generations should enjoy and afford the same housing standards as past and current generations (Yates et al. 2007). It is suggested that socially sustainable housing is achieved when social relations, customs, structures and values are maintained (Zillante et al. 2010). More specifically, it

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includes ease of 'access to hospitals, schools, shops, good public transport and a clean and safe environment' (Maliene, Howe & Malys 2008: 268). This too can improve the quality of life for households and have positive impacts on households physical and mental health (Winston & Eastaway 2008). It is also widely recognised that the housing sector is largely responsible for greenhouse gas emissions, energy material use and changes in land-use dynamics (U.E. UN Habitat, 2008, cited in Wallbaum et al. 2012). Addressing the ecological sphere of sustainable housing it is suggested by Chance (2009) that you not only have to deal with carbon emissions by improving energy efficiencies but also take into consideration the impact of construction (including its embodied energy and carbon emissions), personal transport, food and waste. It is suggested that by addressing the above it will improve energy efficiency and will maintain on-going economic benefits to the household (Pullen et al. 2010). Another area that also needs to be considered in the sustainable housing debate, separate from newly built homes, is the popular home improvements movement. More often than not, home improvements are generally undertaken by home owners rather than tenants. This is because tenants or renters have less freedom to engage in physical alterations or undertake energy improving measures to the homes that they reside in (Maller & Horne 2011), notably because they may lose these investments when their lease ends. In Westernised cultures increasing expectations, aspirations and opportunities to modify homes on a more frequent basis has changed the practice of home making and has become deeply entrenched within household culture (Maller & Horne 2011). However, under the TBL framework undertaking home improvements or retrofitting homes is generally only able to address the ecological & economic sphere as the social sphere is already pre-determined. Home owners who actively engage in home improvements are the target of vigorous government policies and nongovernment organisations (NGO's) environmental reform agendas that actively encourage

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environmental responsibility by reducing household ecological footprints (Connolly & Prothero 2008). This is achieved through 'campaigns, educational programs and regulation...[that] are aimed at reducing household energy and water consumption' (Maller & Horne 2011: 60). Incentives and rebates encourage the uptake of sustainable technology and are promoted to home owners as a way of saving money and improving efficiencies (Maller & Horne 2011). Typically the types of retrofitting that occurs to improve the environmental performance of dwellings include installing insulation, solar hot water and electricity, rainwater tanks and water reticulation systems (Maller & Horne 2011). This review of affordability and sustainability in housing suggests that previous research treats these two concepts independently of each other. On this matter, Pullen et al. (2010) aim to draw these two concepts together and give greater meaning to the concept of affordable and sustainable housing and define it as: Housing that meets the needs and demands of the present generations without compromising the ability of future generations to meet their housing needs and demands. Affordable and sustainable housing has strong and inter-related economic, social and environmental components (Arman et al. 2009a, cited in Pullen et al. 2010: 53). The benefits associated with sustainable housing are aligned with the needs of households that are placed in the affordable housing sector of the market as it is generally understood that low income households spend more income on utilities and transport and are less likely to undertake energy efficient improvements to their homes without financial support (Arman et al. 2009; Winston & Eastaway 2008). It is also acknowledged that low and medium income households also have less 'choice of environment and may be concentrated in areas of dereliction, with considerable air and noise pollution, and limited access to quality green space' (Winston & Eastaway 2008: 214). This can result in a reduction in the quality of life

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and reduce the mobility of residents as they try to reduce energy and fuel consumption (Burke & Hulse 2010). Whilst the above definition of affordable and sustainable housing provides an outline of what is meant by this term, it lacks clarity in relation to how it might be operationalised, specifically in relation to observable and hence measurable quantities. It is suggested that to address this lack of observable and measurable quantities that an integrated framework of sustainable and affordable housing might need to be developed (Zillante et al. 2010). There are four main ways that sustainability can be modelled and related to affordable and sustainable housing. This includes a cost-benefit analysis, material and energy accounting, building assessment tools and the use of indicators (Blair et al. 2004). It is suggested that indicators are best suited at an urban scale as they are more holistic in evaluating entire communities and are said to be very 'useful for identifying, synthesizing, and communicating conditions and trends' (Blair et al. 2004: 6). Studies that utilise indicators based on the TBL model have been conducted by Blair et al. (2004) who focused on traditional development and master planned communities in New South Wales, South Australia and Queensland, and more recently by Pullen et al. (2010) who conducted assessments on already established affordable or sustainable housing projects both locally, nationally and internationally. However, where Blair et al.’s (2004) case study focus was on mainstream housing located in the outer suburbs, Pullen et al. (2010) aligned their indicators with metropolitan urban infill projects and endeavoured to reflect best practices in one or more components of affordable and sustainable housing projects (Pullen et al. 2010). Such indicators include energy efficiency, water efficiency, construction materials, construction methods, affordability, desirability, transportation, density and urban form, waste management, dwelling size, adaptability, social acceptability, safety, quality of life, quality of place and health as the key indicators (Pullen et al. 2010; Blair et al. 2004).

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However, moving forward from developing assessment indicators that help determine the sustainability and affordability of housing is an area that has largely remained in the shadows of related policies. This mainly includes the experiences and perceptions of households who live in affordable sustainable housing and how they engage with new technology and systems to determine their own affordable living component (Maller & Horne 2011). Understanding the behaviour of households can provide policy makers with a useful insight into the attitudes and motivations that influence human action in using new technology and systems (Maller & Horne 2011) to reduce energy and water consumption once households are in situ. Holloway and Bunker (2006) suggest that using new technologies such as Smart Meters can reduce household energy and water consumption. The benefit of such meters allows households to measure their usage at different times of day and to determine when peak billing periods occur, therefore, encouraging household members to change their behaviours and reduce consumption (Holloway & Bunker 2006). It is suggested that such behaviour changes include household members performing domestic duties during off-peak periods when power is cheaper (Sydney Morning Herald 2005b, cited in Holloway & Bunker 2006). However, assessing and reporting on household behaviour can be challenging as: 'occupancy behaviour related to buildings, especially dwellings, are beset with problems...[as] neither buildings nor occupancy patterns are ever identical...[,] occupants may be reluctant to engage with intimate questions...and occupants being studied may change their behaviour as a direct result of a study, and therefore provide atypical data' (Pilkington et al. 2011). It is therefore suggested that the differences between study areas are identified and that researchers indicate that their presence itself may cause residents to change their behaviour during the study period (Pilkington et al. 2011).

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Conclusion This paper has attempted to bring greater clarity to the meaning of affordable and sustainable housing and its subsequent aspirations. In Australia, there is no single accepted definition of what constitutes as affordable housing (Milligan et al. 2004). Differentiating affordable housing from housing affordability might provide a degree of transparency to the debate. That is, measures of affordability tend to gravitate around numerical measures, whilst giving little consideration to measuring social and environmental components. The discussion surrounding the concept of affordable living and residual income approach highlighted that affordability might be determined not only by what income households spend on housing but more importantly what income households spend on nonhousing related needs. This concept adds more complexity to developing a singular definition of what constitutes as an affordable housing measure. Relating affordable living to sustainable housing via the TBL unpacked the economic, social and ecological variables as a way of delivering on-going sustainable benefits to households. This paper has demonstrated that the current literature relating to affordable housing and sustainable housing treats these two concepts independently of each other. However, by identifying a workable definition of affordable, sustainable housing the ambiguity surrounding the concept might be removed. Giving greater clarity to the definition of affordable, sustainable housing might be achieved by developing this concept through key indicators of affordable and sustainable housing. The review has found that whilst research in the discourse of affordable and sustainable housing is comprehensive, research that relates to the experience of persons who reside in what has been branded as affordable and or sustainable housing is minimal. Finally, this literature review has highlighted that it is important to gain greater insight into the behaviour patterns of these households so that all levels of government might develop economic, social and environmental policies that facilitate housing that is both affordable and sustainable.

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