Pitching in to tackle housing affordability

Perth developer Rod Hamersley reflects industry sentiment when he talks about the difficulties around making apartments stack up in the current market outside of the premium segment.

Mr Hamersley heads up Australian Development Capital, whose $500 million, 742-dwelling, Perth Girls School project in East Perth is an example.

He said the company, also known as ADC_, was keen to deliver the project but the recent acceleration of construction costs meant now was not the right time to do so.

Given the school development’s considerable affordable component, with 15 per cent of dwellings to be affordable build-to-rent products, ADC_ is looking for other ways to service that market as future delivery of affordable apartments becomes more economically viable.

The Cottesloe-based developer has become the latest Western Australian company to partner with Homes for Homes, a national not-for-profit organisation that uses property sale proceeds to fund social housing projects.

“It is such a critical issue in the industry at the moment, the delivery of social and affordable homes,” Mr Hamersley told Business News.

“With the escalation of construction costs, it’s been difficult for us to deliver [those] … so this is a simple way for us to contribute to that market.”

ADC_ is close to starting to build 150 dwellings in Mosman Park, Subiaco and Maylands.

The company is also part way through building a 46-apartment project in North Fremantle.

Apartment developers contribute to the pool of social and affordable housing, mostly in DevelopmentWA, Department of Communities or government identified redevelopment areas, where the government requires these components to be delivered.

As with a lot of developers, ADC_’s current projects fall outside of those areas.

ADC_ executive director Adam Zorzi said high land costs in the premium infill areas in which the company was working made it unrealistic to deliver social housing components on these projects.

“We cannot feasibly deliver social housing product [in these areas] within the price thresholds that the community housing providers can afford to acquire them,” he said.

Mr Zorzi said ADC_ would rather see its capital deployed to experts in the field “rather than taking an ad hoc approach to it from one project to the next”.

Homes for Homes, launched in 2015, provides a mechanism for developers and apartment owners to donate 0.1 per cent of the proceeds of an apartment sale.

In ADC_’s case, the developer has paired with the organisation on its upcoming projects, and it will give 0.1 per cent of the proceeds each time it sells an apartment.

Additionally, ADC_’s apartments will be registered with Homes for Homes, giving buyers the opportunity to donate when they sell their homes in future.

Homes for Homes partnerships manager WA Adrian Talbot pointed out the growing need for social and affordable homes, as homelessness intensified.

“In Western Australia today, it is harder than ever to find affordable and secure accommodation,” he said.

“There is pressure across all facets of life, it is not just people on the margins anymore.”

In WA, 34,201 people are on the social housing waitlist and 9,261 are on the priority list, and close to 10,000 people are experiencing homelessness, Shelter WA and Australian Bureau of Statistics figures show.

Recent ABS data show rough sleeping has doubled in WA in the past five years, with 2,315 people sleeping rough – the worst in the nation.

Homes for Homes is on track to raise more than $1 billion by 2030, with a pipeline of 20,000 properties nationally.

LWP Group, Eastcourt and DevelopmentWA also partner with the organisation in WA.

Speaking on the partnership model late last year, LWP Group managing director Brendan Acott said Homes for Homes’ business model led to a multiplier effect, where $1 in funding can unlock up to $8 in further funding for the community housing sector.

He said this meant Homes for Homes often provided the crucial 10 to 20 per cent additional equity needed for a housing project to get off the ground.

Homes for Homes chief operating officer Tracy Longo said the funding the not-for-profit group delivered to the community housing sector often enabled these providers to unlock traditional capital.