Is ‘informal’ housing an affordability solution for expensive cities? Evidence from Sydney, Australia

Abstract

Does 'informal' housing offer more affordable choices for low-income renters in expensive cities? This paper investigates this question with reference to Sydney, Australia, where planning reforms have sought to deregulate housing development including 'informal' and low cost market accommodation, in response to chronic housing affordability pressures. Examining rental advertisements, housing supply and affordability data, and through interviews with local government personnel, we find that informal secondary units and room rentals dominate Sydney's lower cost market, but rents remain high relative to incomes. Further, and despite reforms to encourage new secondary dwellings and low cost rental supply, substandard and non-compliant housing persists, exposing tenants to serious risks. The findings suggest that in high cost cities such as Sydney, the informal sector occupies an important and unrecognised role in housing low-income renters, but that more systemic reforms beyond the planning system are needed to improve housing outcomes for disadvantaged groups.

No More Illegal Subdivided Units? A Game-Theoretical Explanation of the Failure of Building Control in Hong Kong

“…Synthesising the regulatory aims and practical understanding, the magnitude of monetary sanction is central in deterring violations against building regulations (including the production of substandard housing). In the same vein, several studies on housing regulation in Australia [12,13], Czechia [75,76] and the United Kingdom [77] suggest that illegal housing production results when the risks of penalty are outweighed by the expected profitability. Considering the failure of building control, we particularly draw on Vols and Belloir's [56] qualitative findings in investigating the rogue landlords who frequently infringe on building control regulations in the Netherlands.…”

“…This view challenges the usefulness of social-cultural deterrent theories that are built upon morality and ethics. Numerous grounded studies have suggested that the growth of informal and illegal dwellings is attributed to profitability and speculation [13,64,75,76]. Conceivably, classic criminologi-cal theories based on the rational choice model seem to offer a better explanation of the game between enforcers and property owners who produce ISUs.…”

“…The game-theoretic model aforementioned can be applied to analyse the strategy for the illegal subdivision of units by the government using real-life secondary data. Prior to the model application, the value of the economic-gain-to-survey-cost ratio, m, should be first determined, followed by the degree of punishment, r. The equilibrium of the game can be solved using Equation (13). To determine the value of m, we assume that each illegal subdivision brings the property developer who subdivides his or her units a direct economic gain of HK$12,000 and the inspection cost of each dwelling unit is HK$4000.…”

“…The illegal conversion or subdivision of a flat is not new around the world. For example, illegally converted dwellings are very common in big Australian cities such as Sydney and Melbourne [12,13]. Such illegal practices are also found in the United States [14].…”

Spatial Variability of the ‘Airbnb Effect’: A Spatially Explicit Analysis of Airbnb’s Impact on Housing Prices in Sydney

“…Finally, in Sydney, Gurran et al (2020) found that short term rental (STR) platforms such as Airbnb typically rented to the more affluent sector of the rental market and provided limited affordable alternatives to formal rental stock. Hence, there is increasingly criticism over the ramifications of Airbnb's presence in the housing market, given housing affordability is already a critical concern in many urban areas where tourism thrives (Lee, 2016).…”