No land shortage, blame taxes by Anthony Klan
26 Feb 2007 - news.com.au
MORE than 150,000 housing lots are available for development in the nation's three biggest cities, refuting the Howard Government's claims of a land shortage.
The figures, compiled by The Australian, show there are 155,500 lots across Sydney, Brisbane and Melbourne zoned for residential development - between three and eight years' supply - despite John Howard's claims last week that a shortage of land was contributing to the housing crisis and driving up rents.
In Sydney, where housing affordability is the lowest in the nation and continuing to deteriorate, developers have thousands of housing blocks ready to sell, and are sitting on tens of thousands more.
"Every time I see John Howard blaming land supply I see red because it's just not true - there are literally thousands of lots available," said Peter Icklow, chief executive of one of Sydney's biggest developers, Monarch.
Mr Icklow said rather than land shortages, it had been increases in property taxes - levied by all levels of government since the beginning of the property boom - that had led to the affordability crises. He said there was plenty of land available for sale and for development, but there were no buyers at current prices and developers could not drop prices any further without losing money.
"I've got about 3000 lots of land and I can't develop any of them until they take some of these taxes off or we get a 20 per cent lift in prices," he said. "And we're not doing this to be greedy, we just need to make a return. The bank won't lend me money if we can't show a return."
Residential Development Council executive director Ross Elliott said governments at all levels had used the property boom as an easy cash cow, but now that the boom had receded the effect of the new taxes had come into stark focus.He said inflated taxes were stifling any recovery in the property market and in turn driving the rental shortage. Starting with the Howard Government's introduction of GST on all new homes, and culminating with the NSW Government's infrastructure levy on new homes introduced last year, property taxes had ballooned since 2000.
Taxes associated with a typical house-and-land package have grown by an average of $77,000 nationally in the past six years, with the problem most pronounced in Sydney's northwest, where government costs have ballooned by $115,000 in that time, according to research by consultants Urbis JHD. The group said taxes and red tape cost more than the land.
Illustrating the amount of zoned land available for development across the nation, Stockland, Australia's second-biggest property group, controls 66,600 housing lots, which it will gradually feed to the market as conditions improve. But lot sales are expected to remain low until at least next year in the face of poor rental
returns and low housing affordability. Of the 1900 blocks Stockland sold in the past six months, just 96 - or 5 per cent - were in NSW. And ANZ senior economist Paul Braddick said there was no historical evidence to suggest lack of land supply had significantly driven up prices.
- State Governments (who generate land tax revenue and money from land sales via the LMC)
- Banks (higher mortgages mean more profits from interest) and
- Large Developers (whom the LMC seems to sell the state land to).
You might possibly add in newspapers (who do a heck of a lot of real estate advertising).
Now I don't dispute that the unfair land tax and the GST have contributed to housing inflation, but even if they were removed entirely, houses would still be priced far above their true market value.
It is interesting that the 2 of the land triumvirate are the ones that fail to acknowledge land supply as a root problem. Why would they? They are a main beneficiary! Until other developers (including private land holders like farmers) are able to enter the market, they can (and will) sit on their land til it sells at astronomical prices.
See also: Why Land is Bananas
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