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The Forum > Article Comments > Planning bungles overheat housing > Comments

Planning bungles overheat housing : Comments

By Bob Day, published 12/9/2005

Bob Day argues planning regulations have resulted in an unaffordable housing market in NSW.

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Increasing unaffordability is not just a Sydney problem. Its also happening in the areas where these people are moving to, such as the Gold Coast where I live.

The best comment I've heard on this topic came from a cabbie a couple of months ago. He argued that his generation has stolen housing from the young. While he's already in the market he's happy with rising prices and the capital gain it will bring, so he also ownes a couple of investment properties as well. It was when his children then started to think about buying into housing that he realised someone's got to pay for it (rising prices) in the end. It will be the next generation that's missed this housing boom.

It seems fairly typical though that the housing industry will blame this all on the planners. Bob Day doesn't seem to notice some of the absolute $!#&holes his members developed before the more stringent planning codes came about. Live in any growing area of Australia and you'll constantly hear of the fighting between current residents trying to maintain their lifestyle (fair enough) and developers who want to build something 'bigger and better' to maximise returns (also fair enough). I would hate to be a planner having to balance these competeing interests.

What else may have contributed to rising house prices - how about special deals for the housing industry with the introduction of the GST or the special tax treatment for homes regarding capital gains tax. It all adds up!

What the Federal Government has done, as opposed to State governments, has been to drive an over-investment in housing stock at the expense of other productive asset classes or even the infrastructure that has to be built to support continued housing development. Politically expedient, but poor outcomes.

Now the next generation of housing buyers can rightly feel that affordable housing has indeed been stolen from them, by a greedy generation supported by a Government that should have seen this coming.
Posted by Chilli, Monday, 12 September 2005 1:02:06 PM
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Howard was catering to his baby boomer constituents when he decided to add fuel to the international price rise in real estate with the 1st home buyers scheme. Now 1 st home buyers can't afford a house. Also white collar immigration from Europe, South Africa and Asia has kept wages stagnant and fuelled demand for housing. White collar have higher wages and the immigrants usually a stronger currency. I didn't grow up in an Australia where people couldn't afford houses but now this is the case. I wonder when we will have the first favela?
Posted by magic jess, Monday, 12 September 2005 1:28:23 PM
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Good article. It is not widely appreciated but local government planning schemes constitute a massive market intervention. If a State or Federal government were to propose this degree of intervention in functioning markets under their portfolios they would be clearly identified as very left of centre and the world's markets would respond accordingly by devaluing the currency.

But a combination of interventionist bureaucrats and the green movement have taken advantage of the lower scrutiny accorded to a level of governemnt that is not even recognised under the Federal constitution to impose their very same highly interventionist agenda on one of our key economic engines.

And as we watch helplessly, while the love is ground from our children's marriages by mega-mortgages, a simple economic truth slowly dawns on us. EVERY MARKET INTERVENTION HAS A COST. And ultimately, we will all pay, somewhere, sometime, for that intervention.

The townhouses up the road that we objected to ten years ago may have become the convenient first home of our grandchildren. But they now live two hours away and spend their time in day-care.

Make some room on the roost there, folks, the chickens are heading home.
Posted by Perseus, Tuesday, 13 September 2005 9:34:15 AM
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The current round of planned land releases in Sydney validates the author & comments received.

If those land owners/investors who reap a bonanza from a rezoning were also compelled to finance basic infrastructure from their speculative / or 'gifted' state issued planning gains, then the community's costs in terms of infrastructure & the retention of affordable greenspace may be better met.

No one has a right to redevelop without licence. Unfortunately, our planning system is a shambles as any proactive planning initiatives are compromised by party politics (with Council's seen as training grounds for future state MP's, rather than dispassionate locals representing residents), Developer donation sponsored State Planning Policies's continually overriding Local Environment Planss and Development Control Plans and the Land & Environment Court judges’ acting as croupiers in the game of chance provided by the current legal system.

Fix this and then we can get back to housing...
Posted by Reality Check, Tuesday, 13 September 2005 9:49:05 AM
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Bob Day is spot on when he says that home affordability has been destroyed by planning decisions that have stifled land supply thereby driving up land prices. Those who argue that demand stimulators like the first home owners grant, negative gearing and capital gains breaks are the problem completely overlook the fact that if there is adequate supply in any market that demand stimulators are neutralised. It is no surprise that when the supply of land is stifled the price goes up and the blocks get smaller. When Prof. Patrick Troy from Griffith University wrote in his book 'The Perils of Urban Consolidation' that this planning approach will produce mean streets and not green streets he was dead right. People need space to move, kids need space to play and trees need room to grow and the planning approach we have now is denying all these things. Worst of all, it is preventing ordinary people from getting a home of their own. Has anyone thought about the social and economic costs of large numbers of the next generation reaching retirement without a home of their own?
Posted by PTM, Wednesday, 14 September 2005 12:32:25 PM
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PTM is absolutely correct about the effects of urban consolidation. I would hate the idea of having to live jammed together with other people, never able to enjoy the simple pleasure of a garden where children or grandchildren could play unsupervised or to get away from the sounds of my neighbours' arguments, sex lives, child rearing problems or tastes in music. Mean streets indeed! But what about the urban sprawl problem chewing up agricultural land and increasing commuting times, pollution problems and energy use? In the US sprawl has been found to be due 50% to population growth and 50% to increased space per person, e.g. smaller households (see www.cis.org).

Here in Australia, whatever the long term effects of below replacement fertility, at present, two babies are born and one immigrant arrives for every person who dies or emigrates. Economic opportunities are being restricted to a few major cities. The combination leads to a blow-out in land prices, enriching the developers and their pet politicians, and ensuring that the average wage now buys 10% of a house instead of 50% like 40 years ago. We need to stop mindless population growth and decentralise.
Posted by Divergence, Wednesday, 14 September 2005 12:50:53 PM
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