Written by
Fixing what seems to be a never-ending debate on housing affordability must be the priority of both sides of government in the upcoming NSW election.
Moreton Bay Council (in South-East Queensland) deserves a lot of credit after pulling out all the stops to stand from the crowd.
Just last week, Moreton Bay Council made a radical announcement that it is waiving all development fees and infrastructure charges in attempt to incentivise private sector construction of affordable housing.
Moreton Bay Council alleges there’s no hidden traps in this policy except that the facility will need to be managed by a community housing provider.
Mayor of Moreton Bay Council said:
“We want to send a strong message to the private sector that we are willing to work with them…in the current market where materials are expensive and labour is hard to find, we want them to know Moreton Bay is the best place for their bottom line.”
In property development, there are three components comprising the cost base, with profit being added on top as a percentage:
According to the Housing Industry Association, if a new dwelling sells for $775,000, more than $294,000 (or 38%) goes to the government in taxes and charges.
Government charges include local and State infrastructure contributions, GST, stamp duty and land tax. There is also talks of introducing a ‘property uplift value-capture’ tax, which is a proposed charge to landowners and developers on rezoned land.
Canberra has put state governments on notice to overhaul planning and zoning legislation to build what seems to be an impossible 1 million homes by 2030.
In NSW, in addition to exorbitantly high and volatile construction costs, the excessive government fees and charges have hamstrung the ability for developers to respond to housing demand.
There’s plenty of ripe land in Greater Sydney that has undergone rezoning for high-density residential development. However, the gross realisation value of those projects, in today’s climate, generally cannot justify the construction cost and risk.
Something has to give if the government wants to succeed at making housing more affordable in Sydney.
And given the government (including local government) has control over their fees and charges, it only makes sense that this cost component be scrutinised, particularly in relation to land in Greater Sydney.
If the authorities reduced some (not all) of their fees and charges, new and more dwellings could be delivered at considerably lower cost. Ultimately, this influx of new supply would naturally reduce the market value of new dwellings and improve home ownership rates, which are at an all-time low.
Although more broadly, even rival media newspapers, The Sydney Morning Herald and The Daily Telegraph, agree that the NSW planning system is in dire need of bold reform.
Subscribe to
Find us
Australia Square
Level 44, 264 George Street
Sydney NSW 2000
Mon-Fri: 9am – 5pm | Sat-Sun: Closed
Subscribe to
Propertied Insider is a planning and development digital publication dedicated to the NSW Market.
