This new bleeding heart "Affordable Housing" lobby Group

[Savanna100]

This is a worry. We REALLY need an national investors lobby and support system too.

Here is a sample of the way this new group is thinking:

Housing is unaffordable, Australian Financial Review, 20/09/2011, Ben Hurley

"More than 60 housing, welfare and the community sector organisations have formed a coalition to lobby for government policies that make housing more affordable, including scrapping investment housing tax breaks and financial assistance for low-income renters. Australians for Affordable Housing say housing costs as a percentage of the household budget have increased 11 per cent in the past six years. AAH spokesperson Sarah Toohey said house prices had risen 147 per cent in the past 10 years while incomes had risen only 57 per cent. Rents had risen at twice the rate of inflation in the past five years, she said".

 

[Deltaberry]

Oh easy, kill off all the baby boomers. There'e, demand/hoarders fall, supply goes up.

 

[Aaron_C]

Whatever. They can keep renting off me while their little lobby group fails like all their predecessors

 

[VYBerlinaV8]

Any group that uses generalisations and emotive rhetoric to achieve a point that is vague at best is hardly something to be concerned about.

 

[Rolf Latham]

Any group that uses generalisations and emotive rhetoric to achieve a point that is vague at best is hardly something to be concerned about.

dont such group(s) hold the balance of power in Australian Fed Gov right now

ta
rolf

 

[devo76]

Affordability is going to improve over the short to medium term now anyway.
no need to push things at this point. These groups need to push there interests on the run up not after the horse has bolted.
A soft landing is whats needed at this point.

 

[TomW]

They shouldn't worry too much. The Eurozone will do the heavy lifting for them as far as improving affordability goes. I see Italy was downgraded overnight.

 

[Aaron Sice]

dont such group(s) hold the balance of power in Australian Fed Gov right now

ta
rolf

hahaha touche!

be very aware - these lobby group heirarchies come from unions and the housing sector.

they KNOW how to lobby.

the meeting i had yesterday with government presented both a challenge and an opportunity all at once - it all depends on which side of the fence you want to sit and try to squeeze money out of.

 

[Savanna100]

Here is the website for this organisation, it's being steered by the welfare housing lobby.

www.housingstressed.org.au/

Worth a read.....

they wont be happy till all tax concessions for investment property are gone.

 

[Ausprop]

I dream of neg gearing being abolished. RIP should be about returns, not tax breaks. And renters should pay the cost of the house they are living in, not the taxpaying public

 

[devo76]

To soften any neg gear removal backlash you would probably see existing neg gearing set ups allowed to continue.
Which would mean those currently neg gearing would continue to benefit while also enjoying a rise in rental return due to its removal for future IP's.

( If rents do actually go up yada yada yada, im not starting that argument again)

 

[Aaron Sice]

I dream of neg gearing being abolished. RIP should be about returns, not tax breaks. And renters should pay the cost of the house they are living in, not the taxpaying public

amen. these groups fail to understand the flow-on mechanics of what they're proposing - affordable houses equals unaffordable rent - ask an American.

 

[MarkB]

What I find interesting about this (this discussion has been had before and will happen again) is that every time someone raises housing affordability (putting aside whether you think it is a crock of ***** or you're dead against it) they invariably look for solutions on the demand side of the ledger - and even now they're talking about scrapping tax breaks for IPs, and offering assistance to renters [which are both demand side measures].

Imo moves like that are doomed to failure.

Back in 2007 I posted this -

A growing list of international reviews / papers are all finding the same thing - that the answer to the "problem" of rising house prices is on the supply side of the equation, not the demand side, which is where the Australian focus (FHOG / Stamp Duty exemptions) has tended to be.


The Barker Review in the UK recommended the "introduction of flexibility at the local level through the allocation of additional land in Local Development Frameworks, with the release of this additional land triggered by market signals" and the "establishment of a Community Infrastructure Fund to help to unlock some of the barriers to development".

The UK Government responded by saying it would "reform the planning system to make local and regional plans more responsive to housing markets and increase land supply".


In Austin, Texas, they recognised that rising house prices were pricing many people out of the market so they established a S.M.A.R.T. Housing scheme which "encourages residential and commercial development and redevelopment outside the City's Drinking Water Protection Zone by reducing fees and providing other incentives to projects that meet Smart Growth criteria. S.M.A.R.T. Housing provides for certain fee waivers and expedited review and inspection for all housing developments within the City limits that meet applicable criteria".

The results of the program are encouraging*:

- More than 7,402 S.M.A.R.T. Housing units have been completed and nearly 73% of these rental and home-ownership units are affordable to families at or below 80% of the Austin Area Median Family Income (MFI).

- Since 2001, an increasing proportion of all single-family housing citywide has been S.M.A.R.T. Housing. In 2005, over 23% of all building permits issues for single-family residences in Austin were for S.M.A.R.T. homes.

- The program is expected to continue to grow at an impressive rate. Thus far, proposed developments representing over 33,700 units have been certified to participate in S.M.A.R.T. Housing, and of those over 16,000 are proposed for single-family homes




The Centre for Housing Research in NZ last year published a paper called “Regional Housing Markets in NZ: House Price Sales and Supply Responses” and they said that:

- If high house prices are a concern, a key policy focus has to be on ensuring that construction costs and land prices are kept to a minimum consistent with other objectives (such as ensuring adequate building standards and appropriate land use for the community, and that environmental impacts comply with the RMA),

- In turn, this requires planning and regulatory processes that are conducive to the development of residential land (or in-fill subdivision of existing land) and to the construction of new dwellings (whether single or mutli-unit).




And just in the past few days [note I posted this in 2007] , Demographia have published their 3rd annual review of housing afforadability and they have recommended that

- "liberating land use processes is likely to have the greatest impact in restoring housing affordability as it could create markets in which the impetus for development is driven more by market forces than by government plans. An important part of any such program would be to phase out land shortages on the peripheries of urban areas and make approval procedures as expeditious as possible. Liberalisation would involve a presumption favouring development, except where reasonable environmental standards would be contravened, rather than a presumption that new housing for people can only be built when the government determines that land releases can occur"



* “S.M.A.R.T. Housing: A Strategy for Producting Affordable Housing at the Local Level” - City of Austin, Texas. Paper presented at International Leading Practices 2006 - November, Rotorua, NZ

 

[Ausprop]

prefab light weight construction 1 or 2 bedroom park style homes, land remains vested in the govt, buyers lease the builidng at commercial rates which would still be affordable. That's what people "can afford". Then if they want 1000sqm with water views and two storey brick construction they save up for it.

 

[MarkB]

There's an interesting case before the NSW Supreme Court at the moment.

I don't know Chris Condon, but I know what he's like. He's a very ambitious and very deep pocketed developer who tends to get what he wants (it may take him a while, but his dogged determination is incredible).

Lennox Head Real Estate Quarrel

10 May 2011

THE row over plans to build affordable housing units at Lennox Head’s ritzy Greenwood Grove estate has reached the Supreme Court of NSW.

Residents of the estate are taking the legal action, including Ballina Shire Council general manager Paul Hickey and his wife Penelope who bought land there in 2007 and have since built a house.

Other plaintiffs are Barry and Thelma Harrington, Angus Lambie, Joanne Scotcher, Robert and Katrina Warren, and Jacqueline Ulrick.

On the other side is Greenwood Grove Estates Pty Ltd, directed by Chris Condon.

A three-day hearing started in the equities division of the Supreme Court of NSW in Sydney yesterday.

According to court documents, the plaintiffs are seeking an order that would “permanently restrain” Mr Condon from pursuing the development as submitted to the council in February.

Mr Condon has a current development application with the council for 74 affordable housing units, called Greenwood Chase.

But the plaintiffs say this proposal is a breach of their sale contracts.

They are claiming that they will suffer “loss of amenity due to increased noise, adverse visual impact, increased local traffic and parking difficulties, increased use and crowding of local public areas” if the development goes ahead.

“It would be unconscionable for the defendant to carry out the proposed development,” the plaintiffs’ submission states.

Instead they want any future development to comply with the Greenwood Grove Management Plan from 2005.

However the submission from Greenwood Grove Estates Pty Ltd states that only “hypothetical questions” have been raised.

“Until such time as development consent is granted on acceptable terms and conditions to the defendant, it cannot be known whether the defendant will be entitled or financially able to carry out the development,” according to the submission.

It also states that it is “unreasonable to restrict the development of the land for affordable housing.

“The needs of the general population for affordable housing must outweigh the personal interests of the plaintiffs.”

*******

and now...

********
Affordable Housing Appeal

15 August 2011

AN appeal could be lodged over the Joint Regional Planning Panel’s (JRPP) decision to refuse an application for 74 affordable housing units at Lennox Head.

The application was refused last month, with the panel deciding the development was “out of character” with the area.

Greenwood Grove mostly consists of single dwellings on 1200sq m blocks of land.

But developer Chris Condon’s recent victory against nearby residents in the Supreme Court of NSW has prompted speculation he will appeal the JRPP decision and continue to push for the affordable housing units.

Speaking on behalf of Mr Condon, town planner Steve Connelly would not say whether they were considering an appeal.

“An appeal has not been ruled in or out at this time,” he said.

“However, the time to lodge an appeal has recently changed under the act and an applicant now has only six months to make a decision.”

At the time of refusal, chairman of the Northern Region JRPP, Garry West, said there was “no doubt” affordable housing was needed on the Northern Rivers.

However he said he “struggled” to agree that Greenwood Grove was a suitable location for the proposed development.

 

[tom32]

be very aware - these lobby group heirarchies come from unions and the housing sector.

From Savanna's link to the org;

The solutions highlighted by industry commentators to increase first home owner grants, cut stamp
duty and release land don’t address the fundamental underlying problems in our housing market. These
solutions help people who make money from selling houses, they don’t improve the situation for those who
live in them. At best they’ll provide a quick fix that doesn’t last long; at worst they drive up house prices
even further.

What part of the housing sector though?

How does land release not push down housing costs and in a sustainable way? There is always talk of Australia being such a vast continent why is housing so dear here etc and then following this land release has nothing to do with it... It does not matter how vast your continent is if only 1% of it is capable of being made into resi then it makes no different how vast the rest incapable of development is, incapable only by law not by physical characteristics. Open up the rest expect the value of said land to fall.

A larger lot of land say 10 ha. in Sydney basin capable of development or immenently capable (say in the next 5 years it is a near certainty) of it at say maraylya is worth around 3 million.

http://www.realestate.com.au/property-studio-nsw-maraylya-105090354

A block in Sackers or Maroota never capable of development (well not in the next 35 years according to the plan at any rate is worth 1/5 of that at best.

http://www.realestate.com.au/property-residential+land-nsw-maroota-2839736

OK at present maroota has a bit of a stigma and marginally less amenity (fixed with roads and gov services anyway over time) but if a developer was allowed to have a crack there enne masse you cannot tell me this could not be fixed and procurement at that price leaves a gaping reduction in his normal out turn costs.

What do they think would happen if the entire Sydney basin was capable of development giving developers options where to procure anywhere, not negotiate with the lucky handfull who own that land deemed developable? I am not suggesting more houses would get built but they would be a hell of a lot cheaper to develop so I dare say this would create some cost pull against price if nothing else.

The reverse has happened since Labor got in, in NSW and adopted the urban consolidation policies like the UK. first fringe land capable of development went up in value than the market more broadley. Add a heap of tax on new development on the fringe and of course this is going to create cost push pressures. Of course demand pull factors like the FHOG and boosts from time to time pull price up as well but I am not sure if this is significant compared to things like interest rates etc.

The other wrong question in my opinion is around housing commish. They talk about the UK with 20% public housing and say we only have 5% what a tragedy. The UK has real affordable housing...not.

I guess the upshot of all this is that I suspect based on reading their 2 papers that this organisation is more of a welfare lobby group rather than an industry player.

What is frustrating is the noise made by the gov and wringing of hands when for example;

If the government employed me and allowed me to buy land anywhere in the Sydney basin capable in a physical way, i.e. gently sloping, lightly forrested, not flood prone, deep or non-existence of acid sulphate soils etc etc and pick anywhere in the basin I would have a freeway built out there capable of taking 100,000 dwellings / 300,000 residents (only a portion use freeway of course each day!); with levies out of sale to fund freeway and hospital, schools etc. 100,000 dwellings taxed at 100k a pop = 10bn dollars for global infrastructure. Between GST from home build and ipvmts state gov levy and local council this is what they take now and deliver squat! A freeway for 50km hooking in to the new proposed freeways north west out of Sydney = 1.8bn on greenfield land a heap of local roads and schools out of the 10 bn...

built out where land is cheaper i.e. not currently capable due to law alone. So procure land at around the 20k per lot or less, 60k development costs. With 100,000 in the one place or an area it could be potentially cheaper than 60k per lot in actual hard production costs... finally 100k levies for global infrastructure = 180k per lot costs excluding interest and income tax. I guess interest costs would be rather large but the early stuff like land procurement are not a big component at all in this case so most of the costs occur close to realising revenue anyway or at least within 12 months.

Gov sells them for 250k per lot and hey presto affordable housing and likely in a nice forrested area with lots of young families rather like south of Perth etc, like the old days of new estates where FHB'rs could actually afford to live in them in stead of in established areas.

In stead of what we have now they build stuff all out to the west after taxing the hell out of all new blocks and what they do build they then put a blighted toll on as well...

 

[tom32]

... they invariably look for solutions on the demand side of the ledger - and even now they're talking about scrapping tax breaks for IPs, and offering assistance to renters [which are both demand side measures].

Imo moves like that are doomed to failure.

Kudos for all those references!

It stands to reason that demand is a part of the equation but it cannot in isolation cause price distortions except in the short term.

In the long term if it was truly not a supply issue than supply would go out of control as prices ran well ahead of production costs.

Some argue that supply has over reached in Australia over parts of the last decade, but this is yet to be seen in Australia... well in Sydney at any rate.

 

[hobo-jo]

Remove:

- First home buyer grants
- First home buyer concessions

This will pull out the bottom rung of the housing market and all other prices will fall with them.

We don't need more intervention, we need less.

 

[tom32]

prefab light weight construction 1 or 2 bedroom park style homes, land remains vested in the govt, buyers lease the builidng at commercial rates which would still be affordable. That's what people "can afford". Then if they want 1000sqm with water views and two storey brick construction they save up for it.

Building costs have moved with inflation on a per sq.m basis though.

This is not the trouble and in places without ridiculous land release policies and without massive state government charges we get development at reasonable prices.

In fact I don't think Perth has an issue around affordable housing anyway. 350k for a 3b.r. double skin brick home is not too shabby and with fast train access, beach 10 minutes away etc who is complaining - look somewhere like port kennedy.


You might say land is dearer in Sydney but in terms of greenfield, if it is not zoned resi knowing the difficulties changing this it is often cheaper than in Perth from my scratching the surface!

Try buying a lot like that one I posted above at Maroota around Perth, You would be looking at least the same money probably more. i.e. Sydney land outside where it is ever likely to be developed is pretty cheap. Some inside the development area is also cheap if due to levies it is unviable to develop. this is the case in places like the north end of the central coast where there is land ready to go from a regulation angle with "progressive" councils but even if you do realise the 200k per lot by selling you would likely get up that way maybe a little less now, you would be only just making ends meet on your development after you pay the developer taxes etc to same council, state gov and the buyer pays GST on improved value (Which includes the lumping big other taxes!).





Late Edit: I should have added above about perth being affordable now on the fringe that like Brisbane because of this cheap fringe development negative price pressures are now on the entire market. As prices for the entire market are falling the land conversion into resi just keeps coming. Not so in Sydney. Price falls a whisker and development stops in its tracks.

 

[tom32]

Remove:

- First home buyer grants
- First home buyer concessions

This will pull out the bottom rung of the housing market and all other prices will fall with them.

We don't need more intervention, we need less.

Releasing land is removing interventions.

A land market used to work on competing use value. A block of land in the middle of no where was worth more as a farm than a house lot so it stayed farm.

A lot on the fringe was worth more as a housing block so it became this.

Now they mandate land is to be commercial when it is worthless as this like in the North of hobart. It will not be commercial for 30 bloody years yet as residential it would go now.

I will take you through a thought excercise hobo if you have time to read through all this;

If land release / supply side has nothing to do with it say this happened from tommorrow;

1. No more new land release in Sydney, Melbourne etc.
2. Existing land release too late to change back to environmental protection was subject to a new federal government developers super profits tax but in stead of on profits it is levied on a sq.m basis at 700k per hectare or about 90k per lot.

What would happen next. Lets say you remove the demand side issues.

OK building work slumps, house prices collapse because affordability is destroyed and unemployment rises.

What about longer term.

Not a single house is built till such time price returns to a level capable of meeting costs on these developments. Not a single house. Even bearish predictions have to take account population growth in Australia so what happens over the next decade?

Lets say conservatively in 2022 we have an additional 18% of population. They will have to live in all in our existing housing stock because the government has ensured it is not viable to build new ones.

Affordability would still be cactused so we would live more to each home because no one can afford the taxes to develop fringe land so we gotta live somewhere.

Over time our population goes on growing with no new release no new dwelling construction.

OK so you destroy the economy short term and reduce house prices short term but how will this work in the long term if it simply costs bucketloads to build new homes? None get built at all and due to higher costs than price expectations.

We turn ourselves into a Hong Kong or Singapore when we have no physical constraint against building at all only a notional government constraint. There is no difference between physical constraints and notional government ones to a developer. If he holds land that cannot be developed it might as well be the ocean for what good it is to him.

We will be living in units and 4 or more to a dwelling our size just because no one is building and yet we have no physical constraint at all here just a notional one!

You might say that aint what happens now but look at what it costs in Sydney to develop blocks of land. You will soon see the issues facing developers. As I said above land capable of development costs up to 150k per lot. Fringe land 20k per lot. That is a stonking 130k per new house lot land release issues cause. Then 100k of taxes another 100k embedded in the cost of a block in Sydney.

no wonder a 450sq.m block in kellyville costs so much!