Council roadblocks ramp up housing costs
Council planning delays could be costing Australians tens of thousands of extra dollars when they buy a new home, according to fresh research undertaken by Urbis on behalf of the Property Council.
The Greenfield Cost Impact Assessment has calculated the cost to homebuyers when councils delay the assessment of greenfield sites in Queensland, uncovering a significant increase in the cost per square metre of new greenfield land.
From 2009 to 2015 the average lot size in South East Queensland decreased from 591 sqm to 515 sqm in order to maintain affordability. Despite the reduced size, the price of an average lot has increased over this period from $227,000 to $236,000.
“Assessment delays have a significant impact on housing affordability,” says Property Council Queensland executive director, Chris Mountford.
“For every month that a project is held up, the developer has to pay more land tax, more council rates, more holding costs and more interest on their loans – adding thousands to the end product.”
The analysis found that each year of approval delay increased the cost per residential lot by $64.
The report also found that developments fast-tracked by the Queensland Government are likely to take four years to be approved, while those left to local government take twice as long.
“The research shows that if Queensland developments could be rezoned within the same two-year timeframe that we see in Melbourne, the lot price would be reduced by $36,800,” Mountford explains.
“Even if we could improve our local government approval processes to be as quick as the state government processes, we could achieve a saving of $21,153 per lot.
“That’s a real saving for homebuyers and an efficiency gain for the Queensland economy.”
The Greenfield Cost Impact Assessment recommends that the Queensland Government undertake a review of ‘best practice’ approaches to greenfield approval to develop a streamlined planning approach.
Jane Fitzgerald, the Property Council’s executive director in NSW, says Queensland is not alone, and that NSW’s planning regime has “big flaws”.
“We need better strategic planning, less delay and a reduction in costs,” she says.
“Land supply across infill and greenfield markets lags demand, and the regulatory hurdles of the approvals phase are high and excessive. A poor planning system creates delay and extra cost – both of which translate into higher house prices when young families want to buy their first home.”
The story is similar in South Australia.
“Our local government-based planning system struggles to keep up with private sector vision, which means it needs to be properly resourced to enable new developments to get off the ground quickly,” says Daniel Gannon, the Property Council’s executive director in South Australia.
“What we currently have in South Australia is a lethargic and adversarial system that often doesn’t meet the vision, and a system that builds development barriers rather than enablers.”
According to Property Council chief of Policy and Housing, Glenn Byers, the Property Council is continuing to work closely with state governments around the country to address planning issues affecting the residential sector.
“This is a case of the ever receding finishing line. As always, we continue to work with all levels of government on behalf of members to continually improve our planning systems. Improving these systems will not only improve housing affordability, it will remove uncertainty and in turn, will be good for the economy.”
Download the Greenfield Cost Impact Assessment and fact sheet.