Emergency and key services at risk due to property market boom

This was the finding of a wide-ranging study, Key Worker Housing Affordability in Sydney, commissioned by member-owned Teachers Mutual Bank, Firefighters Mutual Bank and Police Bank, and undertaken by the University of Sydney’s Urban Housing Lab led by Professor Nicole Gurran and Professor Peter Phibbs.

The report provides detailed analysis of declining levels of housing affordability across greater and metropolitan Sydney for key workers - the people we all depend on. These include teachers, firefighters, nurses, police, ambulance drivers and paramedics.

Based on current trends, the outlook for housing affordability in Sydney’s Greater Metropolitan Area is grim.

“Sydney’s over stretched housing market is locking teachers, firefighters, nurses, police, ambulance drivers, and paramedics out of home ownership. Our key workers are increasingly being forced to outer metropolitan areas in search of an affordable place to live,” said Professor Gurran.

The report found that in the ten years leading up to 2016, key areas in Sydney lost between 10 and 20 percent of teachers, nurses, police and emergency service workers to outer and regional areas. Sydney’s Inner South West (-14.6%), Inner West (-11.3%), Eastern suburbs (-15.2%), Ryde (-14.2%) and Parramatta (-21.4%) all experienced a net loss of key workers, while areas including the Illawarra (+10.5%), Southern Highlands (+17%) and Hunter Valley (+13.6%) all had net gains.

The nature of this group’s shift work combined with living a distance away in areas with unsuitable public transport meant 77.4 percent of key workers drove their private motor vehicle to work in 2016, compared with just over 43 percent for the general population.

Only five percent of key workers used public transport to get to work, compared with 12.7 percent for the general population.

Teachers Mutual Bank CEO Steve James says that the pressure this situation puts on people already working in high pressure jobs is unfair, whether they’re looking to rent or buy.

“Longer commute times, especially in private vehicles, lead to significantly higher financial costs and serious social consequences for key workers and their families, disrupting work life balance and impacting their lifestyle. Critically, lengthy commute times are also associated with lower rates of workforce participation.”

The report reveals that between 2003 and 2016, the median price of established homes in Sydney more than doubled from $400,000 to around $900,000 – well beyond the reach of many key workers, especially those who are single. Soaring rents have heightened the crisis, making a 20 percent home loan deposit unattainable for many key workers.

For instance, a single key worker eyeing a property in Sydney’s inner ring at the 2016 median price of just over $1 million would need 13 years to save for a deposit. This is a sharp increase from the 8.4 years needed to save a 20 percent deposit in 2006.

“For a key worker, finding somewhere affordable to live in reasonable proximity to their work is becoming impossible for those not already in the property market,” said Steve James, CEO of Teachers Mutual Bank Limited.

“The report has found that the closest local government area with an affordable median rental price for an entry level enrolled nurse is Cessnock in the Hunter Valley. That’s about 150km from any hospital in Sydney city, making it a 300km round trip per day,” explains Mr James.

The report also looks at urgent solutions that can be implemented to help key workers buy their own homes both close to their place of work and their established support networks such as family, friends, and the wider community including local groups, clubs, and schools.

It identifies five key priorities for policy makers and private sector stakeholders to consider. Professor Gurran emphasised that these approaches can be implemented largely within the current policy framework.

“There are a number of strategies that would improve housing affordability for key workers and their families, with government support. These include reducing the ‘deposit gap’ to home ownership that key workers now face despite their stable employment; boosting the supply of affordable ‘starter homes’ for first home buyers; reducing construction costs through design innovation; and looking at alternative forms of housing tenure,” said Professor Gurran.

Teacher’s Mutual Bank CEO Steve James continued: “This study shows that without urgent and genuine intervention on the part of policy makers and other institutions, a growing number of key workers in NSW and Sydney may never be able to afford to own their own home within reasonable distance of Sydney.”

Tony Taylor, Police Bank CEO, said that the five key measures identified in the report to improve housing affordability for key workers were worth serious consideration.

“Without urgent action by all levels of government, in conjunction with the finance and building industries, we could see more key workers pushed further out of the Sydney metropolitan area. The effects of that will be felt by each and every one of us,” he said.

Professor Phibbs added: “By addressing the key barriers to affordability, residential housing in metropolitan Sydney could be as much as 20 percent cheaper than today’s prices, with vastly more manageable deposits for key workers looking to buy a home.”