Big World Homes – A New Housing Revolution?

What makes a city truly great? Is it the people? The culture? The architecture? The weather? Many different factors combine to make a great city, just as there are many different cities that can be considered great. New York, Hong Kong, London, Paris, Sydney – the list goes on. And of course there is Copenhagen, declared the 2016 world’s most livable city by the Metropolis magazine. Naturally the demand to live in these cities is high. And you don’t need an economist to tell you that where there is high demand, high prices follow.
BY CAL MCGUIRK

Housing affordability is an increasingly important issue in Copenhagen and Pioner has already explored this issue previously in a separate article titled ‘CPHcontainers’. However for today we have travelled all the way ‘down under’ to Australia’s largest city, Sydney, to investigate a new solution to their housing affordability issues. Sydney is currently the 7th most expensive city in the world to buy a house (Copenhagen doesn’t make the top 20) and also boasts the largest average house size in the world.

A tale of an unaffordable city

When people think of Sydney they think of the beaches, the harbor and of course the Opera House, designed by the Danish architect Jørn Utzon. What they may not know is that Australia not only managed to avoid a downturn during the global financial crisis of 2007-8, it is now in the middle of 25 years of uninterrupted economic growth. It has integrated itself in the Asian market and by most indicators is a dynamic, prosperous and growing economy with a diverse job market. However for young Australians, the great Australian dream of owning your own home is now largely out of reach. It is no longer a question of working hard and saving hard – property is now simply too expensive for the average income earner.

House Prices in Sydney have risen dramatically over the last 40 years. In 1975, the average house price was four times the average annual income. Move forward to 2016 and the average house price is now 12 times average annual income. With a current average annual income of $81,900 AUD (approx. 420,000DKK), this means the average home (i.e. not a mansion on Bondi Beach) sells for $980,000 AUD (approx. 5.1m DKK). Teachers, tailors, builders and bakers that used to be able to purchase property are now priced out of the market, needing to save 50% of their income for five years to afford a deposit on an average home. This is almost impossible for most people to do.

With or without the government

The Australian Government has little interest in providing a solution – property developers provide some of the largest donations to political parties and the baby boomer generation (those born in the post-World War II baby boom, approximately between 1946 and 1964), the beneficiaries of this property boom, make up the majority of the electorate due to Australia’s ageing demographics, while also making up the vast majority of Australia’s politicians. The Grattan Institute, a leading Australian based think tank, recently stated in their 2016 report on Australia’s property tax system that Australian negative gearing tax arrangements (negative gearing allows those property investors who can afford to purchase more than one property to deduct the net expenses of the costs of those additional properties, such as interest on loans and depreciation, from their personal income tax) go beyond broadly accepted principles in other OECD countries, and that negative gearing primarily benefits those on high incomes. Introduced in 1987, ostensibly to encourage growth the in property industry, the policy has increased homes purchased by investors from 14% in 1992 to 51% in 2015. Despite being a ‘hot topic’ at the recent 2016 federal election, nothing changed.

A price-conscious solution

Fortunately, a group of Australians have come up with a groundbreaking solution. They have split the housing market equivalent of the atom – the strong force that has wrapped together the value of land and the price of the building into the total house price. Welcome to Big World Homes.
Big World Homes aims to be the new model of sustainable, affordable housing. Designed and founded by architect Alexander Symes, Big World Homes is an ecologically sustainable mash-up of the tiny homes movement and IKEA. Tiny modular homes (13.75m²) are shipped flat-packed directly to the customer, and can be set up in just a few days, with no tools other than a drill and a hammer. The houses come with water tanks and solar power units so it’s completely off the grid and can be set up literally anywhere there is flat, available land. They’re also modular – so you can connect two or more if you want more space. The price is just a fraction of the cost of most of the homes currently on the market. By removing the other component of traditional housing (land and labor), Big World Homes can price their product at an affordable level for all Australians. The first BWH house cost $65,000 AUD, a price less than the average annual income in Australia.

Each home is built on a custom made trailer that is durable, lightweight and fits the solar batteries and water tanks underneath its deck. As long as the trailer is registered it is considered a vehicle and in most places in Australia there are no restrictions on parking a registered vehicle on private property (think of caravans). This means that virtually anyone can house a Big World Home, you can even put one in your backyard. But for those without access to vacant land (the majority), Big World Homes is trying to solve this problem too. Through partnerships with landowners like universities and local councils, unutilized land will become home to Big World Homes communities.

Big World Homes Ambassador Ella Colley explains:

“The idea is to create pop-up communities on land that’s underutilized. For example when a developer buys a piece of land, the process of getting approval to build might take two or three years. In that time, a Big World Community can provide affordable housing for people who need it. Those people can then take advantage of the benefits of city living, like public transport and access to services and jobs. When the permanent structure is ready to be built, the mobile Big World Homes can be moved to a new site.”
“These homes provide a lower point of entry into the housing market – somewhere between renting and home ownership. For young people like me, it’s a chance to get out of the cycle of renting, which takes up such a huge portion of income without investing anything in the future.
“In terms of the bigger picture, this project also aims to challenge our assumptions about what ‘home’ means. Australians have some of the largest average house sizes in the world, and so much space is wasted. We want to encourage a more sustainable and community-focused approach to housing, where people can take advantage of the sharing economy to a greater degree“ says Ella Coley.

A big world owner and big world aspirations

Ms Colley, a recent graduate of The New School in New York City where she completed a Masters in International Affairs and Media, is both the ambassador of the brand and the test pilot. She will soon be moving into the first prototype Big World Home for four months, which is located in central Sydney. “I can’t wait to move in. When I saw it for the first time I was actually really surprised – it was bigger than I’d imagined, even with the full kitchen and bathroom. You wouldn’t call it luxurious, but it’s perfectly comfortable for just one person. I’m going to have to get creative about how I use the space, and definitely reduce the number of things I own. But I’m really looking forward to the challenge. I like the idea that I’ll gain a greater understanding of things like my energy and water usage, and how much waste I create,” says Ella Coley

Time will tell how much success Big World Homes achieves, however they have already made giant strides and have a team of over 25 talented professionals with varying expertise working on the project. They have been featured on all major TV stations and newspapers in Australia and even on Good Morning America on ABC. They also have several major partners backing the project, including IKEA. While there is still work to do, the Big World team will announce details of their first Big World Community in early 2017 and have been in talks with banks to ensure affordable financing products are made available to folks looking to fulfil the Great Australian Dream of owning their own home.