As housing becomes more expensive, affordability has become increasingly prominent in political debate. That raises questions about whether governments (federal, state and local) are either helping or hindering the delivery of reasonably priced housing.
Princess Ventura, a property economist at urban planning and economics consultancy Urbis, says policy at all levels has failed to address underlying issues associated with a lack of supply. Whilst demand side measures such as first home owner grants are relatively straightforward to implement, she says reforms on the supply side are more challenging.
First, there is infrastructure. Whilst Melbourne’s more extensive road and rail assets have enabled the delivery of housing across a more widespread area, Ventura says a lack of infrastructure investment within Sydney until recently underpinned pressure upon inner urban markets in which people have needed to live in order to maintain good access to employment.
Also in New South Wales, Ventura said planning systems are cumbersome and non-transparent, with developers often facing considerable levels of uncertainty with regard to issues such as rezoning approvals, approvals for developments of greater heights than is specified within the plan, or what technical reports will be required in certain areas. In Singapore, for example, land release plans are known 10 to 20 years in advance, and there are processes in terms of bidding for rights to develop land.
By contrast, processes in NSW with regard to bids to redevelop the White Bay Power Station site, she said, were unpredictable from the beginning insofar as there was no clear time frame with regard to decisions being made. Having gone through to a short-list and then a preferred partnership involving Google and Lend Lease, the government made a last-minute call to take charge of the $2 billion project to develop the precinct itself. All this uncertainty, Ventura maintains, adds greater risk for developers and increases the final cost associated with delivering the outcome.
At a local level, Ventura said councils have little incentive to facilitate greater housing supply within their municipalities. Indeed, she says, the degree of power which is concentrated in the hands of local government at the municipal level over new development is incongruous with the need to cater for population growth on a metropolitan wide basis.
Going forward, Ventura would like to see a metropolitan-wide approach toward new housing delivery. An example to look at would be London, she said, where funding received by local government is tied to the achievement of housing creation targets.
To reduce the cost associated with new housing delivery along with that associated with people relocating into dwellings which best suit their needs, transaction related revenue measures such as stamp duty could be replaced with a broader land tax, she says. Ventura would also like to see concessions which encourage speculative investment and drive up house values such as negative gearing and capital gains tax wound down as well as higher rates of capital gains tax applied to foreign buyers.
Finally, Ventura says places like New South Wales could look at shared equity schemes such as the Keystart scheme in Western Australia, through which the government co-owns up to 40 per cent of properties purchased by low and moderate income earners. Such schemes, she said, offer promising pathways to home ownership with less onerous deposit requirements and mortgage sizes for low to moderate income owners.
Housing affordability is a challenge throughout Australia.
Whether or not governments are helping or hindering remains an interesting question.
This article first appeared in Sourceable. View the full article here.