Free up the traffic jams to get property built: David Tricarico

Free up the traffic jams to get property built: David Tricarico
Free up the traffic jams to get property built: David Tricarico

GUEST OBSERVER

Too many people are getting overwhelmed with property prices in Australia, specifically in Melbourne and Sydney.

Scott Morrison’s recent speech identifies certain tax breaks and incentives for first home buyers and downsizers. As well as now looking to implement the 'bond aggregator' model in which new dwellings could be developed that would be targeted at people working in lower paid jobs or those who otherwise can’t generate an adequate income (such as self-funded retirees). Everything is becoming so very technical and as the government tries to shut the door on one end another will always open and loopholes will always emerge.

Something that I truly believe in regards to property supply is so simple yet continually over looked.

Victoria's population growth is approximately 100,000 people per annum a little more if you look at the Australian Demographic statistics quoting 127,000 for (Sep 15-16). If we look back we can see between June 14 to June 15 the population growth was 99,400.

Now let’s compare this to planning permits and number of dwelling approvals. Where Victoria's total approved dwellings through planning was 72,700 (June 14-15) consisting of 8,175 dwelling permits. An obvious shortfall, quite a large shortfall!

Now factor in a few other outliers that the general community does not know. Average time for development to commence and complete (dependent upon size) would be 12-18 months from planning permit issue. On an average, approximately 30% of these planning permits don’t go ahead and become obsolete.

If we look at these statistics again using year 2014- 2015 as an example.

  • Population 99,400
  • Dwellings approved 72,700 let’s be generous and say 80% get developed - 58,160 dwellings
  • The time those dwellings will be ready best case December 2015 - taking into consideration all permits were issued June 2014
  • Now let’s add another 49,700 as average population growth from July-Dec 2015.

In a nutshell, in 18 months from June 2014 to December 2015 we have 58,160 homes ready for use and 149,100 people moving here. Yes, now there maybe 2-3 people moving into each dwelling, however we cannot stipulate nor accept that this will be the case on every single dwelling when comparing number to the additional population growth.

My point is very simple - supply and demand is the obvious answer. However, for housing prices to become ‘a little easier on the eye’ and supply to catch up to demand, it is the efficiency of local municipalities and creating platforms and/or generic regulations where developers, owners/builders etc., will be able to use and get building faster before the influx of people becomes too great and the governments find themselves in a position where they need to make radical changes to the property market that in turn could be worse for all.

 

David Tricarico is a Co-founder of Adepto Co.

Tags: 
Victoria Property Prices

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