Disrupting the Affordable Housing Model in Smart and Intelligent Communities

Every Smart City and Intelligent Community aims to create a high quality of life for its citizens. Healthy and happy citizens create a more vibrant and productive economy. According to a recent Economist Magazine article on housing in Britain, the correlation between housing availability and affordability are directly related to productivity. The choice was to either live in increasingly more crowded and more expensive housing accommodation in order to participate in a more productive community or to move out to work and live in a less productive area. But this is not unique to Britain. Many people who cannot find or afford housing in San Francisco and Silicon Valley eventually are forced to move elsewhere, even though they might have a job prospect in the Valley and wind up being less content in the new community they have been forced to move into.

Tallinn-Downtown-HistoricSt_sml_(1).gifIn a U.S. study by the Knight Foundation called the “Soul of the City”, the authors concluded that the best way to attract and retain talent, a key element to Intelligent Communities, was to provide three things: affordable housing, accessible and affordable transit and “things to do”. These are also important elements to a high quality of life for all citizens. Shelter is a basic human need and should be deemed a human right. Movement is essential for trade and communications and a key to productivity and prosperity. Entertainment, heritage and culture, celebration, nature, the richness of urban and rural experiences and places, family, choice and variety - are all aspects of the “things we like to do” and be a part of. Why is it so difficult to provide these in every community, especially safe, clean and affordable housing for all our citizens?

Many Intelligent Communities try to address this issue from a holistic perspective. The challenge of securing and maintaining a healthy supply of affordable housing clearly impacts more than just the person and their family – it impacts the entire social and economic ecosystem of the community and region at large. Accordingly, if productivity and the economy of our cities are linked to affordable housing, it must be at the center of government policy. For instance, Germany, Austria and Singapore consider affordable housing as a “right” whereas American and British public housing programs tend to treat affordability as a commodity and privilege. Three main factors account for Germany’s stable housing: responsive housing supply; secure rental tenancy; and regulated mortgage credit availability. The German constitution enables housing supply in response to demand through ‘right-to-build’ legislation, providing confidence in the market. As German communities receive grants based on the number of its inhabitants, local governments encourage development. In comparison, UK cities are much less liberal and accommodating, surrounded by strict greenbelts, significantly restricting the availability of land for development which usually also push up housing prices. The dominant housing choice among Germans is regulated rental accommodations which prevent steep increases in accommodation prices. The political system is also highly sensitive to tenants’ rights, ensuring that renters enjoy security of tenure. Accordingly, Germans have little incentive to rush into owner occupation, avoiding ‘panic buying’ and speculation. Similarly, public housing programs in Austria, such as in Vienna, have also succeeded in meeting critical housing shortages. Their approach is to create public housing policies that avoid temporary stopgap measures for the most vulnerable in times of crisis, leading instead to managing affordable housing prices, attracting talent and encouraging greater social cohesion. This disruptive approach provides housing for all by subsidizing all elements of society, not just the lower spectrum of the economic spectrum. By contrast, New York City’s public housing tends to be limited to lower income tenant household incomes that wind up competing for an inadequate supply of housing options, most of which are also aging and need of rehabilitation, and the waiting list continues to grow. Some authors have termed these public housing developments as “islands of poverty in a sea of private-market housing”. In contrast, the majority of Vienna’s residents live in subsidized apartments which are provided by both government and a limited number of for-profit housing associations. This approach reflects that housing is a basic human right and that society as a whole should be responsible for accommodating affordable and accessible housing as it impacts all levels of the socio-economic ecosystem. Where housing is concerned, completely free market mechanisms seem to become the obstacle to ensuring safe and clean accommodation for all. Just as roads and sidewalks are deemed a human right of access for all, perhaps housing should be deemed as a similar right for society as a whole. In Austria, 80% of all new housing is subsidized by public funds, whether privately or publicly owned, thereby reducing the social stigma attached to public housing. Furthermore, the architectural quality of Vienna’s public housing stock is indistinguishable from private accommodation.

In Singapore, 82% of their residents live in government built accommodations. However, the government encourages public housing residents to eventually purchase their apartments when they are able to. Today, 90% of Singapore’s government assisted housing is actually owner occupied. The remaining stock is left for those who have no other options. Austria’s approach is to use housing subsidies as instruments of redistribution, whereas Singapore’s approach attempts to promote economic growth in general through the use of innovative financing tools, such as rental geared to income which allows similar units in a neighbourhood to be made available to all no matter what their income levels, reducing the stresses in a society that result from inequality. Thus Singapore’s disruptive model looked at their housing crisis as an economic development opportunity for “nation-building”. These examples of disruptive approaches to housing accommodation are not perfect but help to redefine what social housing means. In the USA, it tends to mean dealing with crisis management: offering short sighted and temporary solutions to households who need government assistance to find a roof of any kind over their heads, while Germany, Austria and Singapore appear to take a longer view to benefit society and its economy in tandem.

This article first appeared in MyLiveableCity (www.myliveablecity.com)

John G. Jung
Urban Planner; Urban Designer; Economic Developer; Author; Speaker; re. Smart & Intelligent Cities; Co-Founder/Chair ICF; ICF Canada, Global Cities Navigator.
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