Comments on: Mirvac: Land is for Hocking, Not Housing

By: Karl Fitzgerald

Karl Fitzgerald — Tue, 31 May 2011 21:42:43 +0000

Unfortunately not – first home owners and the like are hit at least three times. They have to pay the higher land and house price with the developer levy passed on. Then they have to borrow more from the bank to pay the levy (higher interest payments for the entire mortgage), and lastly they have to pay substantial rates to keep the council running – so they can provide all the extra services the new residents will need.

Meanwhile 46,220 properties lie dormant, many in inner melbourne with utilities already provided.

Additionally, many of the sites in the new development will be drip feed to the market, as Mirvac demonstrates in this article. Due to our CIV rating system, the family home will pay 20 – 30% more in council rates than their neighbouring land banker. Add on top HECS payments for education, the burgeoning costs of pensioners, the fact that superannuation levies prop up CEO bonuses, the carbon challenged future …and you wonder when Gen X., Y will be in the streets…

By: PT

PT — Tue, 31 May 2011 12:18:05 +0000

If the house owner is now paying up front for infrastructure that used to be paid over time in the past, does that mean that new home buyers have lower council rates ( or whatever the appropriate fee is called ) because of what they have already paid up front?

By: Triple the Supply Side Squeeze | Prosper Australia

Triple the Supply Side Squeeze | Prosper Australia — Mon, 15 Mar 2010 00:17:57 +0000

[...] Property developers have openly stated they are reducing the supply of property to the market in order to massage land banking profits: [...]

By: K2

K2 — Tue, 24 Mar 2009 00:36:37 +0000

Mark, I'm sorry but as author of the above article I can't let you have the last say! Using your mentality we should have $20 tollways for driving and similar $20 train fares. Using user pays mentality always fails because it does not consider the holistic effect of infrastructure on the surrounding communities. The benefit of a new train = higher land values. Please check out the Developers Map of Sydney and also please please read Wheels of Fortune (scroll down) to see how East Asian train companies can be profitable with minimal user fees. Why should one generation have to foot the bill for developer charges when for over century council rates have funded them over 20 years and a multitude of owners? For an understanding of effective council rating please read this report prepared for the Aust Institute of Urban Planning ahh that feels better! Karl

By: Mark

Mark — Thu, 26 Feb 2009 12:00:50 +0000

May I also mention how refreshing it is to see a rational and civil, internet based discussion!

By: Mark

Mark — Thu, 26 Feb 2009 11:59:24 +0000

Ultimately infrastructure charges are a “user pays” system; but yes, I agree that the taxation system could also be used to great impact in preventing urban sprawl. As you mention, other techniques such as urban growth boundaries can also be highly effective. Ultimately though, urban sprawl will require a cultural shift in Australia; away from the ideal of the detached dwelling with a private yard. The efficiency of high density development is obvious but that doesn’t mean it will be desirable to those accustomed to “their own space”. There really is no one method that will see Australian cities reach that almost utopian ideal of sustainability in growth based, capitalist economy. It’s a problem that is so complex that it needs to be confronted from many different angles. Infrastructure charging is just one of these but I believe it has a positive effect.

By: Henry

Henry — Wed, 25 Feb 2009 22:12:10 +0000

I agree that upfront developers’ costs are far from the main reason for rising land costs, Mark, but they do add significantly to the price of a block, and if the developer simply adds them to the cost, it seems to me that hitting homeowners for wanting to live somewhere seems a bit perverse.

I agree we need to address urban sprawl, Mark, but wouldn’t the Earthsharing idea of higher taxes on property tend to discourage sprawl and encourage more intensive development within the existing urban footprint?

By: Mark

Mark — Wed, 25 Feb 2009 12:03:50 +0000

Yes, it does up the purchaser’s cost as I mentioned. Again, only fair as they are the people using and creating the new demand on infrastructure. As I also mentioned, on a lot per lot basis these costs are a tiny fraction of the jump in property prices witnessed in the last ten years. Up front infrastructure charges are not to blame for unaffordable housing prices (I’d place the blame for that on easy credit, landbanking (as this article clearly demonstrates) and rampant speculation on what is a basic human need). Somewhere along the line the cost of infrastructure must be met. Hitting developers up front gets that money in the kitty fast where it’s needed to meet the new demand generated by development. At the end of the day, it’s a far superior system if we want to create orderly, well-planned development.

By: Henry

Henry — Wed, 25 Feb 2009 10:21:24 +0000

“Scott free”, Mark? Developers must be penalised for subdividing and providing services? Why should this be so, particularly as it obviously adds significantly to the cost one must pay for a home site?

As land values rise over a period of time, why shouldn’t the owner contribute some small part of this uplift in value back to the community? That is, initial headworks charges and maintenance become recouped by the state over a protracted period of time.

Trying to get it all back ‘up front’ from developers is the sort of arrant policy nonsense into which the community has slipped, clearly adding enormously to the cost of a piece of land. We usen’t do it this way, and we shouldn’t now.

Once it’s known that headworks charges will be recouped gradually over time in property rates or land tax, this must act to reduce homeowners’ initial land purchase costs. It used to work quite well this way – and the only change is nonsensical public policy.

Surely, slugging the property developer up front really only sends the purchaser’s costs up, Mark?

By: Mark

Mark — Wed, 25 Feb 2009 09:26:26 +0000

Jeff,

Infrastructure charges are completely fair in my opinion. Let’s say a developer gets a hold of a nice big parcel of land 5km from an exiting population centre. They get approval for let’s say 100 lots and they clear it, put in water/sewer pipes, dedicate road etc and generally get it ready for people to setup houses there. The developer sells the lots and leaves. In the meantime 100 new families move in. These 100 families add use on the infrastructure they connect to. Roads, sewer, water treatment, parks, community facilities, stormwater, water supply etc. So why should the public at large pay for the strain created by new developments while the people who profit from it walk away scott free? Infrastructure charges mean that the costs of development are worn by those who benefit from it. Yes, these charges are ultimately born by the purchaser but contrary to the claims of the housing industry, on a lot per lot basis, they are not at levels high enough to explain Australia’s crisis in affordable housing.