Everyone deserves access to quality housing and choice to suit their stage of life. Yet, housing is the single biggest cost for most of us. High housing costs mean too many people must live in housing stress which lowers productivity and threatens sustainability.
As home prices and rents have increased sharply, public attention has focused on what governments can do to make housing more affordable. There is broad consensus among experts that the best way to improve housing affordability is to increase supply.
However, there are significant barriers to bringing desperately needed homes to market. To help shine a light on these barriers, the Property Council has engaged Savills to develop a three-part report examining the impacts of increased taxes and charges on housing supply and affordability across the six cities region in NSW.
Since 2018, NSW Government has introduced a swathe of new taxes and charges including Sydney Water developer contributions (up to $45,000 per house) and Housing and Productivity Contributions (up to $12,000 for houses). Many Councils have also increased the taxes and charges applied to residential projects with some Councils charging over $60,000 per house.
The first instalment of the report, Release the Pressure No. 1 (10 May 2024), examined the impact of taxes and charges on residential development feasibility in two locations, Central River City and Western Parkland City.
The second instalment, Release the Pressure No.2 (12 June 2024) examined two further locations, Eastern Harbour City and Illawarra-Shoalhaven City.
The final instalment, Release the Pressure No.3. (23 September 2024) looked at the Lower Hunter and Newcastle, and the Central Coast.
Key Findings across all three reports:
- Government taxes and charges make up:
- 24% of greenfield development costs in the Central River City;
- 33% of greenfield development costs in the Western Parkland City;
- 11.3% of infill development costs in the Eastern Harbour City; and
- 40% of greenfield development costs in the Illawarra-Shoalhaven City.
- Over 20% of greenfield development costs in the Central Coast City.
- Almost 15% of greenfield development costs in the Lower Hunter and Newcastle City.
- A typical 250-unit apartment development and a 115-lot greenfield development in both the Central River City and the Western Parkland City are no longer financially feasible in 2024.
- In the Eastern Harbour City, planned increases in taxes and charges will make many infill residential developments unfeasible.
- In the Illawarra-Shoalhaven City, infill residential development becomes closer to being feasible when developer contributions are suspended.
- In both the Central Coast City and the Lower Hunter and Newcastle City, planned increases in taxes and charges will make many greenfield residential developments unfeasible.
- Implementing a maximum 12-month planning approval pathway significantly reduces holding costs, increases developer certainty and improves development margins, thereby unlocking projects that contribute to supply.
- Planning reforms that target even faster streamlined timeframes (i.e. 6-9 months) will further boost developer confidence and continue to increase development activity.
