Hunter Region – What’s Happening with Housing Supply and does it match Demand?

Dwelling supply in the Hunter is largely comprised of separate dwellings with three or four bedrooms. Generally the region has insufficient diversity in housing type or bedroom mix to meet housing need. While family households make up a significant proportion of Hunter region households, more than half of households are either lone person or couple only households and these are the household types which are forecast to be the fastest growing in the Hunter region to 2036.

Dwelling Type At the 2016 Census there were 298,527 dwellings in the Hunter Region, of which

263,399 (or 85.7%) were occupied. At the 2016 Census, the vast majority of occupied dwellings in the Hunter were

separate houses, comprising 81.7% of all occupied dwellings compared with 56.9% on average across Sydney and 82.2% in the Rest of NSW. The proportion of separate houses ranged between 96% of occupied dwellings in Cessnock to 71% in Newcastle.

The graph below shows the proportion of households in each of the key dwelling types in the Hunter LGAs and Rest of NSW at the 2016 Census – note that there is no information on the breakdown of dwelling type for unoccupied dwellings.

www.facs.nsw.gov.au

A further 10.6% of occupied dwellings are attached houses (compared with 14% in Sydney and 9% in the Rest of NSW) and 6% of occupied dwellings are flats (compared with 29% in Sydney and 6% in the Rest of NSW).

Newcastle (15%) and Port Stephens (13%) had higher proportions of attached housing than the average for the Hunter, while Dungog (0.6%) had the lowest proportion of attached housing in the Hunter.

Similarly Newcastle (13%) had the highest proportion of units in the Hunter, with Mid Coast being the only other LGA with a higher proportion (over 6%) than the Rest of NSW average.

Newcastle and Port Stephens had the greatest diversity of dwelling types in the Hunter.

According to 2016 Census data, there were 2,021 households living in caravan, cabin and houseboat accommodation or improvised dwellings in the Hunter. Caravan or residential parks are one of the few remaining affordable housing options for lower income earners. Mid Coast (606), Port Stephens (547) and Lake Macquarie (532) had the highest numbers of caravan, cabin and houseboat and improvised dwellings in the Hunter.

The Hunter had 11.8% unoccupied dwellings, well above the average of 7.7% for Sydney and below the average of 13.4% for the Rest of NSW. At the 2016 Census 35,134 dwellings in the Hunter were unoccupied. Mid Coast had the highest proportion with 18.8%, followed by Port Stephens (18.1%) and Muswellbrook (15.6%). Maitland had the lowest proportion with 7.1%. (Note that unoccupied dwellings are not differentiated by type in the Census).

Bedroom Mix The graph below shows the proportion of studio, one, two, three and four or more

bedroom occupied dwellings in the Hunter at the 2016 Census.

www.facs.nsw.gov.au

The graph clearly demonstrates the dominance of three and four bedroom homes, together comprising 85.5% of all dwellings in the Hunter, compared to 74.4% in Sydney and 85.5% in the Rest of NSW. Across the Hunter the proportion of three and four bedroom homes ranges from 91.9% in Maitland, 91.8% in Singleton and 91.4% in Muswellbrook to 78.3% in Newcastle.

Separately, four or more bedrooms comprise 40.8% and three bedroom dwellings 44.6% in the Hunter.

By contrast, studios make up just 0.1% of dwellings; one bedroom homes comprise 1.1% and two bedrooms 12.0% of stock on average across the Hunter. Dungog has the highest proportion of studio (0.3%) and one bedroom dwellings (1.9%) and Newcastle has the highest proportion of two bedroom homes (18.9%) in the region.

Given that lone person and couple only households comprised 51.7% of all households in the Hunter, the fact that studio and one bedroom homes combined comprise just 1.2% of the housing stock shows a significant mismatch between household type and dwelling size and an extraordinary lack of housing choice for smaller households.

The forecast increase in lone person and couple only households as well as older age groups in the Hunter is likely to increase the demand for smaller, more manageable and affordable homes.

Ideally there should be an increase in the number of studio, one and two bedroom dwellings to suit these household types and offer some housing choice. Two bedroom dwellings in particular offer the most flexibility, given they are also suitable for small families.

www.facs.nsw.gov.au

Tenure At the 2016 Census, 34.1% of Hunter region households owned their home

outright (compared to 27.7% in Sydney and 35.5% in the Rest of NSW); a further 31.4% owned their home with a mortgage in the Hunter (compared to 31.5% in Sydney and 28.6% in the Rest of NSW).

Private renters comprise 22.5% of households (marginally above the average of 22.3% in the Rest of NSW and compared to 28.0% in Sydney); while 4.0% of households rent through the state housing authority (4.0% in Sydney, 3.5% in the Rest of NSW) and 0.6% rent through a housing cooperative, church group or not for profit (0.6% in Sydney and 0.7% in the Rest of NSW).

Between 2011 and 2016, there was a 3.3% increase in the number of households who owned their home outright (compared to 2.8% in the Rest of NSW) and a 3.7% increase in the number of households who owned their home with a mortgage (compared to 2.0% in the Rest of NSW.)

In addition, over the same period there was a 6.0% increase in the number of households in private rental in the Hunter, compared with a 2.4% increase on average in the Rest of NSW.

The longer term trend in Sydney and NSW has been a decline in the proportion of households owning their home outright and increases in the proportion of households who are purchasing and who rent.

Across the Hunter LGA’s:o Mid Coast has the highest proportion of households owning their home

outright (43.9%), followed by Dungog (40.2%) with Muswellbrook having the lowest proportion at 24.6%. Note that between 2011 and 2016, Muswellbrook, (-1.5%), Singleton (-1.0%), Upper Hunter (-0.8%) and Newcastle (-0.7%) experienced a decline in the number of households owning their home outright, against the trend in the Hunter region and the Rest of NSW.

o Maitland has the highest proportion of households with a mortgage (36.9%), followed by Singleton (35.4%) with Mid Coast having the lowest proportion (22.7%). Note that Singleton (-4.5%) and Muswellbrook (-1.8%) experienced a decline in the number of households owning their home with a mortgage between 2011 and 2016, against the trend in the Hunter region and the Rest of NSW.

o Muswellbrook has the highest proportion of households in the private rental market with 31.8% and Dungog has the lowest proportion with 15.5%. Note that between 2011 and 2016 Upper Hunter (-8.0%), Mid Coast (-2.9%) and Dungog (-0.7%) all experienced a decline in the number of households in private rental, against the trend in the Hunter and the Rest of NSW.

The general trend is increasing numbers of households relying on the private rental market as a long term tenure rather than a transitional one between leaving home and buying a home, as housing costs have increased much faster than wages.

It is therefore important to encourage tenure diversity and a range of price points to meet local needs.

The graph below shows the proportion of households in each tenure type in each of the Hunter LGAs, the Hunter region and Rest of NSW at the 2016 Census. Note SHA refers to the state housing authority.

www.facs.nsw.gov.au

Public Housing The table below shows the number of public housing properties in the Hunter

region LGAs as at June 2017. Please note that Census data on public housing is not particularly accurate, as public housing tenure is under reported in the Census. The figures below do not include community housing properties.

AREA Public housing stock

Cessnock 673

Dungog 27

Lake Macquarie 3,246

Maitland 1,407

Mid Coast 732

Muswellbrook 19

Newcastle 3,906

Port Stephens 803

Singleton 390

Upper Hunter 0

Total Hunter 11,203

Rest of NSW 36,431

www.facs.nsw.gov.au

The table below shows the expected waiting times for general housing approved social housing applicants (not for priority housing applicants) by bedroom category in the Hunter Region as at 30 June 2019.

Expected Waiting Time

ALLOCATION ZONE 1 bed 2 bed 3 bed 4 bed

NN01 LAKE MACQUARIE 5-10 years 5-10 years 5-10 years 10+ years

NN02 LAKE MACQUARIE/ EAST 5-10 years 5-10years 5-10 years 5-10 years

NN03 MAITLAND 5-10 years 5-10 years 10+ years 5-10 years

NN04 MERRIWA 10+ years 10+ years

NN05 MURRURUNDI 5-10 years 2-5 years

NN06 MUSWELLBROOK 2-5 years 2-5 years 5-10 years 2-5 years

NN07 NEWCASTLE 5-10 years 5-10 years 5-10 years 5-10 years

NN08 PORT STEPHENS 5-10 years 10+ years 10+ years 5-10 years

NN09 RAYMOND TERRACE 5-10 years 5-10 years 5-10 years 2-5 years

NN10 TEA GARDENS 10+ years

NN11 SCONE 2-5 years 2-5 years Up to 2 years 5-10 years

NN12 SINGLETON 5-10 years 2-5 years 5-10 years 2-5 years

NN13 ABERDEEN 2-5 years Up to 2 years Up to 2 years

NN14 DENMAN 2-5 years Up to 2 years 2-5 years

NN15 KARUAH 5-10 years 10+ years

NN16 DUNGOG 5-10 years 10+ years 5-10 years 2-5 years

NN17 CESSNOCK 5-10 years 5-10 years 5-10 years 5-10 years

NN18 KURRI KURRI 5-10 years 2-5 years 10+ years 5-10 years

Information on Expected Waiting Times for Public Housing is available on the FACS website by region at:

https://www.facs.nsw.gov.au/housing/help/applying-assistance/expected-waiting-times

www.facs.nsw.gov.au

The Gap There are unusual and differing patterns of change in income and tenure evident

in different LGAs within the Hunter Region, against the trend in Sydney and NSW.

Overall the Hunter has lost low income households and low income rental households between 2011 and 2016. But this is by no means a uniform trend. In fact, only four Hunter region LGAs had fewer low income households in 2016 than in 2011 – Lake Macquarie, Newcastle, Port Stephens and to a much lesser extent, Cessnock. All the other LGAs in the Hunter experienced an increase in low income households.

Over the same period, Mid Coast lost a significant number of low income renter households while Port Stephens, Muswellbrook and Lake Macquarie lost small numbers. All the other Hunter LGAs experienced an increase in low income rental households. Note that overall the Hunter experienced a very strong increase in rental households between 2011 and 2016.

The Illawarra Shoalhaven region has similarly experienced a decline in low income households and low income renters between 2011 and 2016.

Both regions are close enough to be impacted by the Sydney market and are impacted by short term rental platforms, such as Airbnb. Evidence suggests that there is a new type of investor purchasing homes solely for the purpose of operating a holiday rental. Further, this is impacting lower income rental households through change of ownership and change in tenants from long term to short term. Given that most of the loss of low income rental households has occurred in Mid Coast LGA (and to a lesser extent in Port Stephens), it is a reasonable assumption that short term rentals such as Airbnb have had a negative impact on the housing market for long term renters there particularly but also in other parts of the Hunter.

Rental price growth in the Hunter has been strong, the vacancy rate remains tight and there has been a significant decline in the number of affordable rental properties for low income households. Across the Hunter region between 2006 and 2017 there was a loss of 4,453 affordable rental properties, representing a decline of 61%. The largest numerical losses occurred in Mid Coast and Newcastle.

Despite the loss of low income rental households, there is a large and growing gap between the number of low income rental households and the declining number of properties affordable for rental by low income households in the Hunter, as demonstrated in the graph below. The graph compares the number of renters on low incomes with the number of new bonds lodged that were affordable to rent for low income households in 2016.

Note that between 2011 and 2016 there was a loss of 1,042 low income renters across the Hunter while there was a loss of 1,357 low income rental properties between 2013 and 2017. This suggests that low income rental properties are disappearing faster than low income rental households.

Given the significant increase in the number of low and very low income households in rental stress in the Hunter between 2011 and 2016, this suggests that those low income rental households are remaining despite increasingly experiencing higher housing costs relative to income. It indicates that lower income households are being priced out. It also implies strong demand for affordable housing, despite the apparent loss of lower income rental households in some LGAs.

www.facs.nsw.gov.au

There is also limited opportunity for very low and low income households to affordably purchase in much of the Hunter.

Older age cohorts are forecast to increase the fastest to 2036 in the Hunter and DPIE also predict that lone person and couple only households will grow fastest.

There is already a significant mismatch between household type and bedroom number across all the Hunter LGA’s. With an increase in smaller households, this disparity will only worsen unless proactive measures are taken to increase the supply of studio, one and two bedroom homes. This will enable some measure of choice to smaller households and give older residents some options to downsize.

This is important given that annually the addition of new dwellings represents around 1% of the total dwelling stock – so change occurs very slowly. Given the current overwhelming trend to four bedrooms, strong incentives/requirements would need to be put in place to ensure a better balance and more diversity to meet housing need.

The graph below compares the number of smaller household types - lone person and couple only – with the amount of studio and one bedroom accommodation available. It is clear that if smaller households wished to live in smaller housing, they have very little opportunity to do so. While 51.7% of households in the Hunter are lone person or couple, only 1.2% of dwelling stock is studio or one bedroom.

This mismatch can impact on affordability, with smaller households required to consume more housing than they need because of lack of choice.

www.facs.nsw.gov.au

New generation boarding houses would also help fulfil some of this demand – particularly as they cannot be subdivided and must provide private rental accommodation. Where they are developed by community housing providers they will provide affordable rental for lower income earners. Note that the NSW Community Housing Industry Association has an Affordable Housing Tool Kit to help deal with community resistance to affordable housing available on their website. They also have a couple of excellent vimeos showcasing new generation boarding house developments and their tenants.

The next graph compares larger household types – couple family with children, one parent family and group households – with the amount of three and four or more bedroom accommodation available. It is clear that there is a significant oversupply of larger dwellings, by comparison with the household types which might need large homes.

www.facs.nsw.gov.au

This mismatch will be exacerbated by the forecast increase in smaller households and by the continued addition of bedrooms to existing dwellings. Existing dwellings comprise around 99% of all dwellings (by comparison with the 1% of new dwelling supply) and therefore additions of bedrooms to existing stock has a significant impact on bedroom mix across the LGA or region.

The high proportion of couple only households further suggests it is important to continue to encourage provision of one and two bedroom stock, to maintain a balance to meet local need, particularly where there are higher proportions of seniors and frail aged. This will give older residents opportunity to downsize into more manageable and appropriate homes.

Who needs affordable housing A wide range of people need affordable housing. Single income earners who fall

into the low income category include aged care and disability workers, retail sales assistants, production workers, receptionists and early career child care workers. People working in accommodation and food services comprise around 8% of the workforce nationally (7.9% in the Hunter) and are amongst the lowest paid workers. Similarly retail trade employs 10.3% of workers in the Hunter.

Single income households in particular are less able to compete in the housing market.

Increasing numbers of older single women are homeless or at risk of homelessness due to the lack of available affordable rental housing.

Health care and social assistance is a significant employment sector in the Hunter (employing 15.3%). A 2017 survey of NSW Nurses and Midwives Association (NSWMA) members showed that thirty six per cent of respondents

www.facs.nsw.gov.au

moved home or changed jobs in the previous 12 months because of housing affordability issues.

Partnering or collaborating with community housing providers is one effective way to meet some of the local need for appropriate affordable housing. Community housing providers are not for profit owners, managers and developers of affordable rental housing for lower income households and residents with specific housing needs. They work with partners, investors and government to provide housing and deliver support for tenants. For more information about community housing providers, see the NSW Community Housing Industry Association website.

Additional DataMore detailed housing data and tables used in this Snapshot are available from the Local Government Housing Kit Database on the Housing NSW website at:

http://www.housing.nsw.gov.au/Centre+For+Affordable+Housing/NSW+Local+Government+Housing+Kit/Local+Government+Housing+Kit+Database/

More information on Expected Waiting Times for Public Housing is available on the Housing NSW website by region at:

http://www.housingpathways.nsw.gov.au/How+to+Apply/Expected+Waiting+Times/

Additional data on social housing delivery is available on the FACS website at:

https://www.facs.nsw.gov.au/resources/statistics/social-housing-delivery

More information about community housing providers is available on the NSW CHIA (Community Housing Industry Association) website, including their affordable housing tool kit. The Tool Kit is based on extensive research about reasons for community resistance to affordable housing, and effective ways of building support for affordable housing:

https://nswfha.wpengine.com/lb/toolkits/ahtk/toolkit/

The NSW CHIA 2018 community housing state of the industry report is also available:

http://communityhousing.org.au/wp-content/uploads/2018/12/StateoftheIndustry-web.pdf

www.facs.nsw.gov.au