Thursday, May 19, 2016

Redevelopments in Northern Sydney

Over the past year the NSW Government has launched major projects to transform the State's Social and Affordable Housing portfolios - most notably Communities Plus and the Social and Affordable Housing Fund. But throughout this period, NSW Land and Housing Corporation ('LAHC') has also busied itself with smaller scale initiatives. As we outlined last week (here, with update here), on Sydney's well-heeled North Shore this has involved 'spot sales' of large houses to the private market. It appears likely that the resulting windfall gains have assisted an underfunded LAHC to meet its operating costs. 

Above: LAHC has been busy across the City of Ryde

But LAHC has also pursued a related though distinct strategy in neighbouring Northwest Sydney. The Public Housing provider demolished a number of large, freestanding houses in the Ryde Local Government Area in 2014 and 2015. It constructed units in their place. 

Public tender documents provide that houses across four sites in the suburb of Eastwood - two each on Alison StreetRaymond Street, and North Road, and three on the corner of Banksia Street and Lovell Road - were demolished, with small apartment complexes built in place of each. We understand that the same will likely happen to Public Housing cottages on Irene Crescent, also in Eastwood. 

Eight houses on Neville and Fawcett Streets, Ryde were also levelled for multi-unit developments. Finally, LAHC demolished a house on Adelaide Street, West Ryde, replacing it with a seven-unit building. 

Land and Housing Corporation has provided that all newly-constructed units will be provided exclusively as Public Housing. 

Our response

In our earlier discussion of North Shore spot sales, we highlighted the process LAHC undertakes in assessing its housing assets: "In managing the Public Housing portfolio, Land and Housing Corporation periodically estimates the cost or windfall or maintaining, redeveloping, or selling individual dwellings. In the case of valuable North Shore land in a heated market, it appears the opportunity cost of not selling is proving difficult to resist."

It is concerning that in Northwest Sydney, substantially similar properties to those sold on the North Shore have instead been redeveloped. It is impossible to escape the conclusion that land values were a key consideration; simply put, Ryde is markedly less valuable than its blue chip neighbour. According to Land and Sales Report data, the City of Ryde ranks 18th amongst Greater Sydney's 51 LGAs by average dwelling sale price. A far cry from the North Shore, which contains six of the top ten. The contrasting fortunes of the Ryde and North Shore properties suggests that the future Public Housing is tied to some extent to the fluctuations of a speculative and volatile property market. 

At the least, LAHC has provided that it did not impose any mandatory relocation process on tenants moved on from the now-demolished Ryde properties. This must continue to be the case for as long as LAHC is driven, by underfunding and/or market conditions, to the view that some Public Housing is too valuable not to sell. 

On the other hand, it should be repeated that the redevelopment of LAHC land within the Public Housing portfolio is strongly preferable to the loss a site to private interests. Moreover, LAHC has said that its redevelopment works in Northwest Sydney are addressing increased demand for smaller, more accessible dwellings, and for more Social Housing overall, in the Ryde area. The pursuit of such objectives is legitimate. However, we might also repeat our quibble with similar projects elsewhere in Sydney. That is, a true social mix - of the sort the Government claims to desire - requires a diverse portfolio. That means larger affordable properties as well as small units and bedsits. Most notably, large properties are necessary to accommodate low-income families. LAHC's redevelopment of Ryde may well serve immediate portfolio needs, but it must not result in the disappearance of larger Public Housing properties from the area completely. 

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