A conceptual model for improving housing affordability in Sydney

Housing at an affordable price is a dream for many low to moderate income families as the standard variable mortgage rates on mortgage loans have been pushed to above 9 percent (February 2008) - the highest since late 1996 - and the Reserve Bank of Australia is expected to increase the cash rate again in the near future. The higher the mortgage rates the more difficult it is for low to moderate income families to gain access to home ownership, or even to keep their current homes. There are many suggested solutions to improve housing affordability for low to moderate income families, such as land planning and government assistance. This paper, however, introduces an alternative model improving housing affordability, i.e., the government, private firms (developers/investors) and the low to moderate income families working together in a model that will help these families to improve their ability to rent or access home ownership. The study is organised in the following sequence: Firstly, a review of the literature on housing affordability to compare benefits and disadvantages of policies; secondly, a proposal for a conceptual model describing the roles of each party and demonstrating how, working together, they can achieve a solution. Finally benefits and risks of the participants are analysed leading to a conclusion