Affordable housing, a challenge
A THINK tank created by a real estate group in Fiji plans to look into solving the challenge of affordable housing in Fiji. The Blue Horizon Property Group yesterday announced that it had created an Affordable Housing Think Tank which includes high profile Fijian companies with the experience and skill set to solve one of Fiji’s largest needs. According to the group’s estimate that there is an immediate need for between $30,000 – $60,000 new affordable homes and this doesn’t take into account future demand.
It said this affordable housing demographic included residents in urban centers who could afford between $250 to $500 per month on rent or mortgage payments. The group came up with a case study how affordability is not currently achievable based on current market rents or purchase prices. According to the group if we assume the average affordable monthly rent in urban centres is $500 per month, then the question becomes how will the average resident be able to afford this based on current average wages? “In this example we look at Citizen X who starts work at the age of 19. In his first five years in the workforce, he would expect to earn $8000 per annum.
Typically, most people can afford to spend 33 per cent of their annual income on housing. This means Citizen X can afford to spend $220 per month, half the average affordable rent.“Using this same line of reasoning, Citizen X will have to earn $18,200 per annum to afford the current average rent of $500 per month. “It typically takes 8-15 years for a typical citizen to earn $18,200 per annum. However, during that time, other expenses will continue to climb with the likelihood of marriage, children and other expenses.
“In addition, rent and affordability will continue to rise with inflation and capital growth. In essence, it is unlikely that Citizen X will ever afford the current average affordable rent or be in a position to purchase their own home, unless the cost of land and buildings become much more affordable.” Meanwhile the group highlighted that the major challenge was finding a building technology that was affordable and complied with minimum building and safety standards. In a statement the group confirmed that with innovative building technology, the Affordable Housing Think Tank was working together with government and private industry to provide a solution.
Source: Blue Horizon, PBS, Fiji Times 19 Feb, 2020