The Treasury Department this week released its response to the Harper Review into competition, in which it backs recommendations that land-use strategies and planning and zoning laws be improved upon.
“The Government recognises the productivity benefits of removing unnecessary red tape and implementing effective land‐use planning, including through the transparent application of a community net‐benefits test,” the response said.
“The Government encourages the states and territories to review planning and zoning regulations and include competition principles in the objectives of planning and zoning rules so that they are given due weight in decision making.”
The Government’s response has been welcomed by Property Council of Australia chief executive Ken Morrison, who said a new approach needs to be taken to deal with affordability.
“The Treasurer has today put a workable model on the table to get the states and territories on board with reforms to address housing affordability,” Morrison said.
“Applying a competition incentive framework to housing affordability can ensure we get the housing supply we need linked to infrastructure and jobs,” he said.
Morrison said he believes an indication from the Federal Government in the response that it would consider paying states and territories to make improvements would encourage reform, something Paul Blackburne, managing director of Blackburne Property Group said is necessary.
“Red tape mostly at a local government level is holding back housing supply. Mostly in terms of increasing density and apartment living,” Blackburne said.
“State Governments needs to be far more proactive in increasing heights and allowing increased density, especially near major public transport hubs and town centres,” he said.
But while Blackburne believes future generations may be critical of current policies for not dealing with supply and affordability issues, others have a more pragmatic approach to the situation.
“Affordability is an issue, but I don’t think it’s going to change quickly though,” Ben Kingsley, chief executive officer and founder of property investment advisory firm Empower Wealth, said.
“Developers might be able to turn around medium and high density projects pretty quickly, which might lead to some oversupply in 2017 and 2018, but if people aren’t willing to live in those sorts of developments then that’s not going to really help,” Kinglsey said.
“There’s no easy fix. Maybe developers need to start building three or four-bedroom medium density homes and that might drag a few people towards the outer areas.”
Kinglsey also said there needs to be a reconsideration of whether affordability issues, particularly in major cities, can ever really be solved.
“There does need to be a bit of a reality check I think when it comes to global cities like Sydney and Melbourne, both of which are moving towards the top 100 in terms of population in the world,” he said.
“Cities like that are always going to have very expensive pockets of property because of what they offer in terms of jobs and other attractions and that’s an issue that’s never been solved.”
While he said some areas may never truly be affordable, Kinglsey said policy makers may eventually be forced to adopt measures to alleviate the issue.
“The only thing that really helps in any way is fast rail, the kind used in places like Japan and China that can move large numbers of people into the city in an under an hour.
“It’s inevitable. You look at cities like Beijing of Shanghai, they’ve got six or so underground rail networks connecting the city.
“As cities tick up to the 4.5 or 5 million population mark then they have no choice. Current road infrastructure and turn of the century rail transport with gates and level crossings needs to be upgraded or cities will just clog up. “
