Excessive housing costs continue in spite of land releases

For the benefit of the  odd Cat person who does read the Herald Sun I have an article on land planning and housing costs in this morning’s edition (the print edition was edited and a bit garbled at the end).

The government seems to think that if it expands the urban growth boundary it will increase land supply and prices will reflect costs.  Costs, due to government imposed land supply constraints, are $100,000 above the free market level in Melbourne – more in Sydney and about the same in other mainland state capitals.  Freeing up supply is a good starting assumption but the problem is the array of other regulations (over 600 individual ticks required before a house is completed).  And even when a housing minister seeks to reject the cacophany favouring land starvation from planners, academics, Age journalists, developers who hold land bought at excessive prices, and others all that happens is that the releases gets bogged down in the next regulatory tier.

This is an issue that seems to cut across party lines.  Liberal Minister Greg Hunt has boasted of how he, following in his father’s footsteps, has thwarted land development in southern Melbourne.  And inded, the present Minister, Mathew Guy, while expanding the growth boundary as a whole, has cut it back in areas where politically powerful voices are especially loud.  Opposition is from two directions: those who want to force a compaction of urban areas so that they will all look like an idylic but inaccutate picture of Paris or New York with an abundance of theatres, chic cafes and so on; then there are those who oppose because they don’t want the urban footprint enlarged – sometimes arguing, as does the Commonwealth Iinfrastructure Department, that the city edge is vital for food prodcution (I’ll eat my own cucumbers if more than 1% of urban food supply comes from the farms on the periphery).

The outcome is a vast distortion of supply which is ok for thoose owning theri own home but disasterous for those who aspire to do so but are priced out.  Democracy at work?