Councils warned: deal with housing targets or relinquish planning control
Councils in New South Wales have been assigned five-year housing targets but with development approval times blowing out, continued high building costs and property prices still breaking records, councils will need plenty of resolve to tackle the housing crisis.
Councils across the state have been assigned their five-year housing targets and judging by the response from some, the challenge will be as much about the delivery of the required housing, as it will be about encouraging councils to genuinely try.
The targets for 43 Local Government Areas (LGAs) are the NSW Government’s way of seeking to keep its commitment under the National Housing Accord to deliver 377,000 new, well-located homes across the state by 2029.
With its major rezoning announcements and Transit Oriented Development (TOD) Program provisions, which the Opposition has introduced a bill to undo, the state government has attempted to clear a path for developers to theoretically be able to deliver more housing.
On the plus-side, most councils included in the TOD program appear willing to work with government to plan for more housing. But it’s an incomplete solution.
In reality, many new housing projects fail to satisfy the feasibility requirements the private sector needs to take the risk and commence construction. High building costs, including high materials costs and skilled labour shortages, show little sign of easing in the short term.
Delays in development application approvals are another major cost and for this, the excuses must end.
Federal Treasury figures show NSW is second only to Victoria in terms of the average time it takes to secure a DA approval. This financial year, DAs in NSW are taking on average 114 days to be approved. In Victoria, it’s 144!
All the while, prices keep rising. CoreLogic this month reported Sydney’s median house price has reached another new record high of nearly $1.45 million. Only through more housing can the affordability and rental crises finally be addressed.
Many councils have failed to deliver the housing needed. For this, they are partially at fault for the supply shortage and affordability issues currently affecting so many in the community.
With defined housing targets, councils now know what is expected of them. Those unwilling or unable to play their role should be relieved of planning control. It’s as simple as that.
And while this applies pressure to councillors, council officers and staff, there is work for other levels of government to do too.
Faster approvals, lower property costs
Taxation is a major impost not just on consumers, but also on those expected to build the housing we need. It’s commonplace for people to label developers ‘greedy’ but the fact they are not embarking on new projects tells us something.
Government has cleared the path for more housing in a zoning sense, but not in a feasibility sense.
Clearer guidelines for councils and developers would help. With clarity as to what constitutes a compliant development, councils could be instructed to rubber stamp applications that satisfy those clear parameters straight away. Faster approvals mean reduced costs and increased feasibility.
Then there’s the familiar problem of politicians prioritising politics over policy.
The latest example is the NSW Opposition’s plan to introduce a bill in an attempt to effectively abolish the government’s nominated TOD locations.
In the absence of government undertaking the role of developer directly, this is a time when the private development community needs encouragement to take a risk on new projects. If both sides of politics recognise the need to increase housing supply, it’s incumbent on both to remove – not introduce – obstacles with the potential to undermine this outcome.
In a hypothetical scenario in which the state’s housing targets are met, or at least approached, investors will have the opportunity to play an important role.
About a third of Australian households rent and as the population grows, the need for more homes for people to rent grows too.
Investor appetite for new developments proposed as a result of recent reforms will go a long way to determining their feasibility and, by extension, the likelihood of NSW reaching those ambitious housing targets.
