Australian Property News

Homeowners to suffer as reforms are ditched

Posted on Wednesday, September 01 2010 at 12:40 PM

The New South Wales Government's decision to lift the cap on local council development levies from $20,000 to $30,000 will cost homebuyers $5.4 billion, according to the Urban Taskforce.

Taskforce chief executive Aaron Gadiel said the higher levies would make housing less affordable for ordinary homebuyers.

"Less new homes will be built, those that are built will be more expensive, and fewer people will have the opportunity to own their own home," Gadiel said.

"NSW has hit new record low levels of housing construction every year from the past four years – and high development levies have been a major cause of our housing undersupply."

"NSW produces less new housing per head of population than any other state in Australia."

Gadiel said only 64 per cent of Sydney households own their own home, down from 70 per cent 10 years ago.

"Sydney's level of home ownership is now lower than every Australian capital city, bar Darwin."

"In contrast, Brisbane's level of home ownership has increased from 63 per cent to 68 per cent."

"Victorian local council development levies are below $20,000, and they're managing to produce twice NSW's level of housing, despite their small population base."

The Property Council of Australia said highlights of the original NSW plan announced prior to the State Budget – to cap section 94 contributions at $20,000 per lot and use the Independent Pricing & Regulatory Tribunal (IPART) to independently assess all plans – had been ditched.

"The government has walked away from landmark reforms that had the potential to deliver substantial savings to homebuyers on the cost of new housing," NSW executive director Glenn Byres said.

"We have a housing supply shortfall in NSW – estimated to be as high as 60,000 in Sydney alone – and excessive infrastructure levies have stifled production."

"The government had intended to introduce a strict cap and ensure a rigorous, fair and transparent process was in place for financing infrastructure."

Byres said this was a sound initiative that recognised homebuyers ultimately bore the cost of infrastructure charges and levies.

"The package is less than two months old and the government has now caved into threats from councils refusing to issue development approvals," he said.

"They have allowed a higher cap in some areas and reduced IPART's scrutiny of infrastructure charges – without a guarantee development approvals will flow."