The NSW Government’s land release package will unblock the supply of new housing on Sydney’s fringe, but not before a lack of short term supply and major new development levies drive up new home prices in Sydney’s west said the Property Council of Australia.
The Property Council delivered a mixed reaction to the package, lauding the new approach to planning and infrastructure delivery but slamming its high reliance on developer levies to fund state infrastructure.
“This is a smart, integrated approach to delivering new housing and is among the most innovative in the country, but the Government is dreaming if it thinks levies won’t be passed on to home buyers,” said NSW executive director Ken Morrison.
“The certainty of a long term planning framework, the commitment to fund infrastructure upfront and the use of a powerful new development corporation to manage the process is all good news.
“This plan should deliver the supply of greenfields housing Sydney needs over the medium term.”
However Mr Morrison said the plan would only begin to deliver the needed 8000 lots per year in 2008, leading to a lack of supply in the short term.
“New development levies of up to $65,000 a lot (on top of levies for local infrastructure) coupled with a short term supply squeeze will be price inflationary,” Mr Morrison said.
“While the Government claims the levies won’t reduce housing affordability, this is clearly not the case.
“Three quarters of the $7.8 billion infrastructure price tag will be borne by levies on new development.
“Never before have home buyers been asked to pay for the cost of new hospitals and schools.
“All the research shows developer levies are the worst way to fund state level infrastructure.”
Analysis by the Allen Consulting Group commissioned by the Property Council in 2003 showed that funding $5 billion worth of infrastructure through development levies would cost 3100 lost jobs and only increase economic output by a mere $800,000 in economic output.
However using government debt to fund the same level of infrastructure would create over 12,500 jobs and deliver a $13 billion increase in economic output.
Ken Morrison, NSW Executive Director on 02 9033 1906 or 0412 233 715