New building and construction solutions needed to address rental crisis

Better design, improved construction practices and new rental models could alleviate the risk of rental stress according to urban research experts.

With 46 per cent of tenants already considered to be in rental stress according to Australian Institute of Health and Welfare data, RMIT University researchers said builders and developers could help ease the rental affordability crisis. 

Research fellow Dr Louise Dorignon said there were a lot of new options to help lower the running costs of homes and also make them cheaper to construct.

“Better design and more sustainable construction methods can produce more durable and energy-efficient homes that have the potential to reduce gas and electricity costs for households,” she said.

“This particularly holds true for apartments, which currently are of varying quality and overall need to be more sustainable, and more affordable to meet the needs of current and future residents.

“Alternative and innovative modes of housing production, including mid-rise mass timber, and incorporating shared amenity precincts, could help create more liveable apartment typologies, and in the long-term, more affordable ones for households. 

“One model is Passivhaus, which aims at producing net-zero new housing and at retrofitting existing ones for decarbonisation while providing maximum thermal comfort for residents.”

Tight vacancy rates have seen rents increase 9.8 per cent over the past 12 months according to CoreLogic – heaping pressure on tenants and leading many to fall into severe levels of rental stress.

Dr Dorignon said on top of rising interest rates, cost of living pressures were also hurting renters.

“Households in the private rental sector will likely be impacted by rent increases if interest rates continue to surge,” Dr Dorignon said.

“For households that are already concerned by significant expenses relative to their budget, this is likely to place them at risk of housing affordability stress.”

Dr Dorignon said low-income private renters had some of the least protected housing security and regularly faced potential rent increases and the threat of eviction.

She believes renters are also unable to reduce their day-to-day costs as they are unable to make changes or improvements to their rental properties.

“It is also often the same households who lack the funds to thermally improve their homes to reduce their electricity and gas bills,” she said.

Dr Dorignon said the use of more efficient materials such as timber and focusing on more compact designs introduce more options to meet future demand. 

“Despite the shortages that the construction industry is currently facing and some other issues (debates around its carbon accounting, appropriate fire regulations), apartments that have more lightweight structures have a key role to play in a shift towards the decarbonisation of Australian housing,” she said.

“They can offer multiple energy-efficiency and liveability benefits for residents.”

Dr Dorignon said improved materials and building techniques did not necessarily mean costs would be higher for builders and developers. 

“There is a lot of research showing that in the medium-term, using low-carbon materials and/or construction methodologies that maximise resources efficiency (such as design for manufacture and assembly, DfMA) reduce construction costs,” she said.

“In concert, digital technologies can improve communication and coordination along the supply chains, reduce waste and ultimately increase housing affordability.”

As a part of her research with the AHURI Inquiry into Housing in a Circular Economy, led by Professor Ralph Horne, Dr Dorignon said she’s focused on ensuring buildings become part of the solution rather than contributing to the problem.

Senior Research Fellow at RMIT, Dr Megan Nethercote said another solution to help ease the rental crisis was to continue to change the way new housing projects are developed by focusing on built to rent.

“Australia is witnessing a rise in build to rent investment, with Melbourne the epicentre of a boom in construction of large purpose-built rental accommodation earmarked for long-term operation by corporate landlords under unified ownership,” she said.

“Build to rent may provide some answers for renters by increasing the supply of market rate and affordable rentals and providing renters with improved security of tenure.”

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.