When it comes to residential #development, the terms “feasible” and “affordable” are often used, but what do they really mean and how do they differ?
🔍 Feasibility: All About Perspective
A feasible project, put simply, makes economic sense. The numbers add up for developers, investors & financiers – with enough return to warrant the risk taken.
#Feasibility is based on demand in a given market, cost of construction, financing, planning & design, and a suitable profit margin for risk & time involved. If these elements align with end prices buyers will pay, a project is feasible.
Feasible projects are inherently “affordable” in the sense that buyers in that location will pay the money for the new dwelling given desirability/amenity/lifestyle factors. It does not mean they are affordable to most new home buyers.
If a project is not feasible, it doesn’t get built.
💰 Affordability: Broader Goal
Affordable (with a capital A) dwellings are accessible to the average or below income buyer (or renter) at a price, or total cost of ownership, which does not stretch their financial limits unduly.
Given increasing delays and costs of creating new housing, fewer & fewer market developments are able to deliver Affordable housing. Instead, Affordable housing often needs incentives, subsidies, or public land & investment to make them feasible, particular in higher density housing (and #familysizedapartments).
Many greenfield or townhouse projects can still be both “Affordable” and “affordable” when other barriers are removed from their delivery.
🏡 Benefits of New Supply
Every new dwelling, regardless of its initial price point, contributes to the overall housing supply ecosystem.
Even if targeted at cashed-up upgraders or downsizers, a newly built dwelling frees up a home somewhere else – as people move into new properties, they vacate others, which can then become available to different market segments.
🔄 The Downstream Effect
A new, premium-priced development might be out of reach for many, but it allows those who can afford it to move, opening up their previous homes to others. This cascade can lead to more options and potentially more affordable prices down the market chain – if supply keeps up.
By understanding the distinct yet interconnected concepts of feasibility and affordability, we can start to appreciate the role new development it plays in shaping the Australian housing landscape.
🤔There is no point focusing on approving projects which aren‘t feasible; work on those that are.