Undersupply to keep prices up
The ongoing and increasing undersupply of national land is having major repercussions on the affordability of Australian housing, according to a recent report.
The annual Urban Development Institute of Australia State of the Land Report provides an assessment of land supply in Australia’s capital cities.
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UDIA national president Julie Katz said the report illustrates the growing gap between land supply and demand throughout Australia, and why this problem must be addressed by all federal political parties' economic and social policies.
“The report paints a concerning picture for policy makers around the country and especially for new homebuyers looking to enter the market, as the increasing undersupply of land and housing is putting substantial pressure on housing affordability,” Ms Katz said.
According to the report, the most severe shortage is currently being seen in the 'affordable' bracket.
“What is desperately needed is a suite of government policies which will bring about an accelerated, but more coordinated, approach to serviced land release while simultaneously departing from the inequitable first user pays approach to funding infrastructure,” she concluded.
The report recommends the federal government to require cities to maintain a ‘rolling supply’ of development-ready land to meet the demand driven by the growing population.
While investors benefit more from a limited supply of land, Robert Mellor, managing director of research house BIS Shrapnel told Smart Property Investment that to stimulate construction, the government must reduce infrastructure charges and land tax.
Mr Mellor suggested a shift of focus on ‘specific areas’ being required to fund the land development and infrastructure costs to a spreading across the ‘whole society’ is a better approach.
“In other words, the whole of society typically benefits when there’s an upgrade of development in an area, or an upgrade of rail infrastructure or other sorts of infrastructure," he said.
“Therefore, we should basically spread across the whole of society rather than loading it totally onto the new development areas,” Mr Mellor said.
