Smaller blocks could be one key to affordability
It’s been quite some time between reports. But perhaps a clue of the strategy within the upcoming third National Housing Supply Council report came when its long-time chairman Dr Owen Donald told a housing conference to look to smaller blocks to help resolve home affordability supply issues.
Donald told the Darwin audience that there was a need to increase the diversity of dwelling types – a richer mix of medium- and high-density housing, including detached housing on smaller lots.
"Let people divide their 800-square-metre lots in half," he suggested.
The council was established in 2008 as an independent body to provide forecasts, analysis and advice on land supply and construction activity to meet housing demand and improve affordability over a 20-year forecast period.
It was set up by the Rudd government as a yearly report card of housing supply.
Its last report was in April 2010, when the National Housing Supply Council issued its second state of supply report.
The delay in its third report, due any day now, stems partly from the fact that in May the federal government added new members to the council. The council now includes Sue Holliday, Professor Graeme Hugo, Nigel Satterley, Dr Judy Yates and Saul Eslake, people from academia and the finance, economics, building, planning and urban development sectors.
"We need to see that [smaller lots] happening so housing affordability for young people is not impossible," Donald said.
The territory suffered a housing shortfall of 10,000 last year – and the situation is getting worse.
Donald noted that Darwin’s small size and reputation as a boom-bust town made developers wary of investing in residential developments.
The last report by the National Housing Supply Council estimated a national shortfall of 178,400 properties, a gap projected to grow to 308,000 within five years and 640,600 by 2028.
Reducing land sizes are a sensible start to the complex issues involved, and the trend towards small is on the rise perhaps everywhere other than the top end.
The substantive issue remains the cost of infrastructure in development charges resulting in higher prices for buyers.
The first state of supply report was released in March 2009 highlighting the considerable gap that exists between housing supply and demand.
Current economic conditions and headlines are certainly having an effect, with the tightening of credit for the housing industry meaning stalled projects while developers get pre-sales to meet stricter pre-sale requirements being imposed by banks.
Other issues noted by the initial report were planning, zoning, subdivision and development approval processes that are often lengthy, and are a major continuing constraint on supply. To overcome these issues, a co-ordinated approach by federal, state and local government is required.
And as one developer suggested to me last weekend, dropping the GST on new housing could make a world of difference.
