Ten years of state reforms to ease supply restrictions have enabled the development of apartments in the inner city and produced a stable supply of land in the outer suburbs.
With the number of housing construction reaching a record level, the national planning system is clearly able to cope with growing market demand. Regardless of the location and quality of new houses, the increased number of buildings will not provide cheaper houses, and the treasurer does not seem to want this. In fact, he spent a lot of time in his speech to remind people that eliminating negative equity or oversupply of apartments may bring risks to the real estate market.
Since our housing system is very dependent on the private sector, the real problem is how to keep the building functioning as the market cools. If Morrison, the treasurer, really cares about affordability, he should also ask how to get affordable housing in new developments without reducing the value of the entire established market.
Encouraging developers to provide affordable housing is an obvious solution and one that the real estate industry has been lobbying for. This requires government support to promote investment in the development of affordable rental housing and realize a series of new housing products, such as equity sharing and low-cost housing ownership.
Currently, only about 2% of new homes are provided by affordable non-profit housing providers. Regardless of the market cycle, with the assistance of the government, a wider range of affordable housing sectors can use innovative sources of institutional financing to maintain new housing construction.
The Commonwealth should negotiate with the states to make infrastructure investment and land release closely related to mandatory targets including affordable housing. In this way, you can ensure that there are opportunities for affordable housing before land prices rise. This will help stabilize housing production while increasing the supply of well-located and affordable housing.
Reduce the cost of infrastructure to match housing
Robin Goodman, Associate Dean of Sustainable Development at RMIT Global, Urban and Social Studies School and Joe Hurley, Senior Lecturer on Sustainable Development and Urban Planning at RMIT
Plans, costs, and the provision of appropriate infrastructure may increase housing costs. But the actual cost of housing must include the ongoing cost of living. If there are almost no public transportation, schools, services and jobs in very close places, these will increase greatly.
The widening gap between prices in expensive and unaffordable areas and urban fringe areas suggests that people value infrastructure and services when buying houses, and the opportunities that these opportunities provide. Morrison’s view that infrastructure costs hinder housing supply believes that we should reduce infrastructure spending. If we do this, we will greatly exacerbate this growing inequality, which will have an impact on livability and prosperity.
At present, part of the financing of infrastructure comes from donations from real estate developers, part of which will be transferred to home buyers, thereby increasing the purchase cost. The government directly funds some infrastructure, but the current federal government is ready to do this through highways and roads, and less for public transportation and facilities. Housing affordability is a broader issue, involving the cost of buying and renting and the ongoing cost of living in houses and cities.
The real problem is not to reduce infrastructure funding or let developers make some contributions to the infrastructure, but to accurately target the investment where it is most needed. The most urgent need for the new outer urban area is adequate public transportation to begin to provide all residents with more equal jobs and opportunities.
Relax land and relax regulations
Steven Rowley, formerly Associate Professor of Economics and Real Estate at Curtin University School of Business
The core driving force for the supply of new housing is profit, and profit is the result of demand (revenue from sales) and cost (actual construction, land, finances, taxes). There are many obstacles to this profit and the supply of new housing. The frequently proposed solution (we hear the treasurer again) is to remove land use planning regulations that unnecessarily hinder housing supply.
It sounds wise, but it is not good to just let go of the land and expect development. Policymakers must understand that increasing land does not necessarily lead to more development. For example, why would developers flood the local market with similar types of new products; it would only lower the price, thereby reducing profitability.
There was almost no mention of infill development in the speech, that is, development within the area of existing buildings. In response to urban expansion, states are responding to the challenge of increasing the proportion of new housing on the infilled land. Large-scale, coordinated infill projects can provide open space and convenience facilities, adding quality to our existing urban areas. Without the intervention of the public sector, this scale would be difficult to achieve.
Filling space faces many challenges, including community opposition, upgrading existing infrastructure, and allowing housing diversification (independent houses and low-rise apartments, not just high-density towers). If the government wants to change the housing supply in places where many people want to live, they need to promote large-scale development and provide large amounts of affordable housing on government-owned land. This will not be popular among local communities and local council members, but it is essential to provide the diverse housing that is essential in our city.
Where do you plan to place more houses
John Daley, CEO, Gratton Institute
Treasury Secretary Morrison is correct. Planning is the biggest lever to make housing prices cheaper. The current regulations make it fairly easy to build an apartment in the CBD-this is what we want. But this also makes it difficult to subdivide and create additional residential areas within the central ring of our capital (up to 20 kilometers from the CBD).
It is important that the new supply should be concentrated in the inner ring and central ring of major capital cities (2-20 kilometers from the CBD). The new development of the edge is still a long way from creating more job opportunities. In the past five years, more than half of the net employment growth in Melbourne, Sydney and Brisbane have been located within 10 kilometers of the central business district.
CBD apartments will never meet the demand for barrier-free housing-the land area is small and the supply is limited. The government cannot do anything about employers deciding where to create jobs. But the government can make planning rules to build houses appropriately.
But, unfortunately, even though Treasury Secretary Morrison exaggerated the benefits of making it easier to subdivide and release land, he masked the impact on existing home prices. At the same time, he did his best to believe that the reform of the negative debt ratio will neither have any impact on housing affordability, nor will it cause housing prices to plummet.
Not all these things are correct. By definition, if the housing price is cheaper, then the price will be lower. Frankly speaking, changes in the negative debt ratio will have a smaller impact on housing prices and affordability than on the plan. On the other hand, changes in the debt-to-asset ratio will also reduce the distortion of investment decisions and prevent excessive private sector leverage.
