It has been well publicised and is quite well understood that, in NSW, there is a chronic housing shortage. Essentially, the availability of housing is not in line with the ongoing increases in the population of this state, and nowhere is this being felt more severely than in areas in close proximity to the city.
Government and public concern is mounting about the apparent ‘housing crisis’ and the NSW government has implemented drastic actions that are necessary for drastic times. These ‘drastic actions’ involve efforts by the government to stimulate the state’s construction industry.
What is the government doing?
The NSW government has taken the unprecedented step of inviting developers and landowners to contribute ideas as to where Sydney’s new housing estates should be built. Such a step marks a separation from conventional planning practice; previously, a top-down approach has been used, whereby government planners have focused new housing estates in two growth centres — in the city’s north-west and south-west.
Time has shown construction to be quieter than anticipated in these growth centres and there have been fewer building permit sought and granted than expected. Approximately 17,000 new dwellings are constructed in Sydney each year and this is significantly less than the 25,000 new homes that are actually needed to accommodate Sydney’s ever-increasing population.
The NSW government has declared its commitment to increasing new housing levels to the 25,000 that are needed. Part of this new approach saw the government contacting landowners and inviting them to put forward land holdings (predominantly in rural areas) that would be appropriate for large scale residential developments — and quick development at that — ideally within three years.
What was the response?
Forty-three landowners responded, recommending in excess of 12,000 hectares of land in total, positioned mainly on Sydney’s fringe, as suitable locations for expansion and development.
It is little surprise that property developers have perceived the government’s move most favourably. For many, this represents an incredible opportunity to increase business and suggests that the processes and time taken to secure a building permit may be hastened.
However, housing experts and councils have been more surprised by the government’s approach and questioned whether it will really make a difference. Representatives of these two groups have queried whether a lack of supply of appropriate land actually explains why as many new homes are constructed in Sydney each year as in smaller cities, such as Adelaide.
It is clear that some people are disillusioned with government promises and the time that it takes to not only construct new homes, but to ready land and create the infrastructure necessary for sanitation and essential services. In 2008, the North Kellyville area was rezoned to accommodate 5200 new homes, but it was not until December 2010 that water, sewerage and other infrastructure essential for the building of new homes was installed — and to only half the lots of land.
The remaining home sites are not scheduled to be supplied with pipes and power until 2016, eight years after the initial rezoning of the land.
The need for infrastructure…
Of course, infrastructure is fundamental to the development of new housing estates. Many people, including industry experts and representatives of councils, advocate that in order for rates of housing construction to increase in NSW, the government needs to invest significantly more money in infrastructure. Increased investment in this area is critical to the avoidance of delays such as those previously described.
However, there is much concern that the NSW government’s new housing strategy specifies that “…new sites are to be developed at no additional cost to government.” If this remains, responsibility for the funding of infrastructure will fall to the developer, who will pass these costs on to home buyers. Alternatively, the government will need to agree to change its priorities in relation to existing capital programs.
How does NSW compare to other states?
Some are frustrated and annoyed that the costs of new home construction are significantly lower in other states than in NSW. In Melbourne, a house and land package being sold by a developer costs $345,000, whereas the exact same house in Sydney would be priced significantly higher, at $575,000. The disparity in price is a reflection of reduced construction costs and increased government investment in infrastructure in Victoria.
There is a definite need for more housing construction in NSW, but additional expenses, such as infrastructure costs, need to be carefully considered in spite of significant areas of land being earmarked for development.