The Australian Bureau of Statistics this week released new data showing that housing prices in Sydney rose by a massive 8.1% in the June quarter this year. That is – prices rose, on average, across Sydney, by 8.1% in just 3 months.
 

While many capital cities saw price rises, only Canberra saw a slightly higher level of price growth (8.2%).  This is a blow to housing affordability and reflects the supply crisis in Sydney.
 

According to the ABS, the mean price of residential dwellings in Australia rose by $52,600 to $835,700. The mean price of residential dwellings in NSW ($1,093,100) remained the highest in the country, with the ACT ($891,700) now the second highest, marginally ahead of Victoria ($891,500).
 

In an effort to have the NSW policy makers address the crisis in housing supply which is pumping up prices, Urban Taskforce has made a comprehensive submission to the Commonwealth Parliamentary Committee into Tax and Revenue’s Inquiry into housing supply and housing affordability.
 

The submission highlights the many independent assessments that have been undertaken that note that particular failures of the NSW Planning System.

• NSW has the slowest planning system in the nation (Mecone Report prepared for NSW Productivity Commission, 2019)
• NSW Planning System is inflexible and fails to adapt quickly to changes in demand or market conditions (Glenn Stevens – Report prepared for the Premier in 2017)
• Housing supply has not kept pace with demand for housing in NSW and this has caused an underlying demand for housing which is forecast to get worse in coming years (NSW Productivity Commission White Paper 2021).
   

The policy focus of the Department of Planning has gradually shifted to address the efficiency of the planning system, but the results speak for themselves.  While some of the timeframes have improved, NSW remains the slowest system in the nation. by a long way.  The number of approvals was on the rise, reflecting the fast tracking of projects during COVID last year, but has again dropped right off.
 

NSW is way behind securing the number of approvals necessary to place downward pressure on housing prices.  If you don’t have a pipeline of approvals, you cannot have sufficient housing supply.
 

Each and every day there is more news about the housing supply crisis.  Average household occupancy rates are rising as children are forced to live with their parents and grandparents for longer because it is too expensive to buy a new home.  Sydney is getting to the stage where our best and brightest 25-40 year olds are being pushed out of Sydney due to lack of housing choices and affordability near where the jobs are. 
 

All this and immigration has been in reverse – imagine what will happen when demand from immigrants and students returns, as it surely will.
 

The focus of the NSW Government on delivering additional housing supply through suburban development of town houses (the missing middle) has comprehensively failed.  The policy of handing strategic leadership back to Councils has also failed.
 

The Commonwealth has now stepped in as the numbers published by the ABS cannot be ignored. 
 

Covid safety aside, housing supply is the number one policy item requiring attention.  This requires the urgent attention of the NSW Government and some honest leadership from its public servants.

Click here to view the ABS data.
Click here to read the Urban Taskforce submission to the Commonwealth Inquiry into Housing Supply and Affordability.

Urban Taskforce is pleased to advise that the Group Deputy Secretary of DPIE, responsible for Housing and Property, Michael Wright has worked hard with Minister Melinda Pavey to complete the Government Property Index portal.

This portal maps Government owned land and the Housing and Property division of DPIE is keen to hear from the private sector on development opportunities.

At this stage, the portal does not nominate which Government agency deals with each parcel of land, but generally, property that has development potential is managed by three agencies:

• Crown Lands
• Non metro land owned by TfNSW
• PPP opportunities managed through DPC

Urban Taskforce is keen to see this excellent work further developed so those responsible for ownership or management are able to be identified through the portal.

It was this group that also produced the State’s Housing Strategy “Housing 2041”.  For the first time, the task before the Government was laid bare. 

This all builds of the excellent work of the Regional Housing Taskforce, also commissioned by Minister Pavey.  Changes in resettlement during COVID-19 has driven up demand for houses in the regions of NSW.

Many have large employers wanting to relocate to the regions, but the housing shortage means there is no where for the workforce to live.

After years of calling for decentralisation, the is now strong demand.  Minister Pavey and Deputy Premier Barilaro pulled no punches.  The Regional Housing Taskforce, chaired by Garry Fielding,  was told to look at each and every opportunity to push up housing supply.  Utilising Government owned land for low-cost housing or to generate community benefits is one means through which this can be achieved.

To view the Property Index Portal click here.

Prime Minister Scott Morrison, Premiers Gladys Berejiklian and Dan Andrews have at least one thing in common: they are committed to open up the economy commensurate with the uptake of vaccines and the attainment of 70% and then 80% of the population having received two doses of an approved COVID vaccine. BRAVO!
 

Soon after that, there will be inevitable pressure from universities and from businesses which are struggling to fill jobs to safely re-open the doors to international students and to skilled migrants. Prior to the Delta lockdowns, Governments were already cautiously moving in this direction.
 

Against this backdrop, record low interest rates and relatively loose APRA controls on lending have combined with State and Commonwealth stimulus to drive demand for new housing.  The issue that now has everyone’s attention is the problem with supply.
 

Urban Taskforce has welcomed financial assistance for new or first home buyers including homebuilder (versions one and two); the first home borrowers loan scheme; concessions on stamp duty etc.   This has worked with generous government support in the form of Job Keeper, Job Seeker and more recently, Disaster payments, to maintain and boost demand for housing.  But in so doing, prices have been pushed up because of the lack of supply.  The return on ex-pats has further added to demand for new homes on the outskirts of the metropolitan areas.  But interestingly, prices are also going up in the apartment market – over 7% in the Sydney Apartment market so far this year, despite there being a mass exodus of international students and migrants on temporary visas.
 

Every newspaper will tell you the story - prices are going up - even though the bottom has fallen out of the key drivers of demand in the apartment market – particularly in areas proximate to the major city capitals.
 

There have been two factors at play here in NSW.  The planning system as a whole (the EP&A Act, the myriad of SEPPs, Regulations, Ministerial Directions, Councils with their own agendas, DPIE, Government policy, and the Panels) is complex, slow, duplicative and is widely recognised as a massive hand brake on the productivity of the State.  DPIE has acknowledged this and has driven several positive reform initiatives in NSW. Some of these are showing signs of working, but the slowness of change is exacerbated by the difficulties with changing the Act and the desire to “not offend” Councils by leaving the responsibility for assessments to them and for decision making to government appointed panels. Most of all – everything is incredibly slow and very expensive.
 

As the Delta related lockdown of Sydney hit hard, the NSW Treasurer and Minister for Western Sydney did an outstanding job to secure the partial re-opening of the construction sector after it was initially closed for two weeks altogether.  In NSW, we now operate at 50% of maximum site capacity with workers from the “restricted Councils” (in which over 50% of the Sydney area construction workforce reside) being required to have had at least one vaccination (plus a regular Covid test up to 21 days after the first vaccine dose).
 

The construction industry (including construction companies, developers, peak associations and unions) was at the vanguard of COVID-safe re-opening.  We were the first to actively support a direct link between working and being vaccinated. We led the trials of Rapid Antigen Tests as a stepping-stone between one vaccination and COVID safety.  Not everyone supported all this – many were concerned about the obligatory nature of the settings. But ultimately, it was clear that the NSW Health officials would not let our industry work without a mandated push towards vaccination and both figuratively and literally, we rolled up our sleeves and got on with it.
 

Unfortunately, the NSW Planning system has not yet risen to the challenge (though we remain optimistic).  The approval numbers speak for themselves (see link to the ABS data here Click here). The ABS data released on 31/8/21, shows there has been a drop off in approvals across Australia, but most concerning in NSW, is the number of new house approvals is about the same as the number of new apartment approvals (this contrasts the 25 year overage of a 35%-65% split between new homes and new apartments).  This reflects some recent increases in approvals in new houses prior to the June lockdown (partly bolstered by homebuilder funding from the Commonwealth), but was worryingly followed by a massive drop off in apartment approvals since the second lock down began.  The positive initiatives from last year to accelerate approvals helped get us through 2020 – but there was no significant change and prices continue to rise.
 

We are at a cross-roads. At a time when housing prices are already rocketing upwards, we need some one-off big steps to drive up housing approvals and housing supply.  Urban Taskforce has called on the NSW Government to focus the efforts of DPIE on reforms that deliver more housing approvals fasters in all markets across all of greater Sydney and indeed, across NSW.  The call from industry has been to defer new policy initiatives which make the system more complex, that reduce feasibility or yield. 
 

As we enter the new year, the economy (well – NSW and Victoria) will emerge from its cocoon. International travel and immigration will return.  International students will return to our universities and skilled migration will come with a rush to fill the many areas of strong demand.  But the big constraint could very well be the planning system.  If approvals are not there, and demand continues to grow, the housing affordability crisis will bite hard.  Affordability is an increasing issue as parents and grandparents increasingly realise that younger generations will have to seriously consider moving cities to find an affordable abode.
 

Housing approvals and housing supply is the main game in town and all eyes will be on each State’s planning system to ensure it delivers.
 

This is an edited extract of Tom Forrest’s opinion piece. Click here to read the full article as published in Sourceable.

The NSW Productivity Commission was commissioned in April 2020 to undertake an exhaustive review of infrastructure contributions in NSW.  On 2 December5 2020, Peter Achterstraat signed off and published their final Report. The comprehensive Final Report made 29 recommendations for reform.  The Government, despite having been integrally involved with the preparation of the Report in both its draft and final iterations, only signed off on the recommendations in March 2021. It endorsed the reforms in full and committed to the implementation of all recommendations.
 

Part of the process was to make historic changes to the rate capping system. The Report proposed that Councils would have their rate caps changed so there would be an automatic adjustment when the population in a Council area goes up as a result of changes to urban density.  Until now, the cap was set so Councils had an active incentive to oppose increases in density, despite not meeting housing supply targets across Greater Sydney. The Government has done the right thing by changing the Council rate pegging restrictions. 
 

The Productivity Commission recommended that local infrastructure contributions be paid by developers when the building was complete (OC) rather than before construction began (CC).  This measure was implemented early as a COVID-19 stimulus.  The Government agreed to make this change permanent as part of the Infrastructure Contributions reform package.  Again, this was welcomed.
 

The phased in replacement of Stamp Duty with a broad-based property tax, as flagged by both the NSW Productivity Commission and announced by the Treasurer in the 2020 Budget was a sensible way of raising funds for infrastructure.  The economic logic goes like this:  If higher density is proposed, the value of the land will rise.  This rise in value will generate greater revenue for government, and that revenue will fund the infrastructure needed to support the increase in density.  Such a change requires a broad base.  It supports growth in housing supply; it supports an efficient use of land (in Sydney, our most precious resource); and supports an efficient mechanism for funding infrastructure. We were assured time and time again that the legislation would be developed as a package and the detail would be consistent with Productivity Commission recommendations and report.
 

So far … so good.
 

The Productivity Commission did an excellent job.  But the implementation of the reforms was handed over to Planning and the process unravelled.
 

DPIE proposed a timeline which suggested that “Enabling Legislation” would be considered (certainly not introduced) in June 2020 – but the detail of how the package might work (the Regulations, the Ministerial Directions etc) were not to be developed till October.  Suspicions were already raised in local government and also among industry peaks.
 

To be fair, the Government began general consultation with industry peaks fairly early on establishing an Infrastructure Contributions External Advisory Group. The message back to DPIE from industry was consistent and unanimous.  There was concern about the detail regarding the overall impact of the proposed changes. The quantum of revenue to be raised was a concern. The application of the proposed new `Regional Infrastructure Charge’ (RIC) was not outlined in any detail. Concerns were also expressed regarding the introduction of a new value capture tax by another name (Land Value Contribution or LVC charge).  This was to be set by local Councils and no appeal mechanism was proposed in the legislation.  We needed to see the detail.
 

Early on, Urban Taskforce reserved judgement because the Productivity Commission made many good suggestions and had always said that the introduction of a broad-based RIC would result in significantly lower SICs.  Nonetheless, concerned we were, and we asked to see the detail and agreed to work with the technical working groups (which at that stage had not yet been established).
 

The Government then suddenly introduced the new legislation (a Bill to amend the EP&A Act) and coupled Amendment Bill with the NSW Budget (they made the Bill “cognate” with the Budget Bills).  Unfortunately for the success of the reform package, this tactic was short lived.  The Opposition moved to have the Bills ‘separated’ so the Infrastructure Contributions Amendment Bill could be independently scrutinised by an Independent Upper House Committee. Desperate to see the Budget passed in the context of COVID, the Government agreed.
 

This all appeared to catch the Minister for Planning by surprise.  Upper House members were provided no briefing notes on the Bill and the rationale for its rushed introduction was scant.  The Government did not even make a written submission to the Upper House Committee of Inquiry (every Industry Peak, LGNSW and a range of academic experts all did).  The common theme was “the devil was in the detail” and we all want to see the detail.  The Upper House Standing Committee resolved not to support the progression of the Bill and await the provision of further details of the regulations and the impact of the changes on Local Government (an IPART Review) and on industry.
 

The Department of Planning then rushed to establish technical working groups to consider the detail of how these RICs and LVC might actually work.
 

It turns out that as the detail has become more visible, Local Government has pushed back hard.  They have taken the extraordinary step of joining together (Councils of all political persuasions) and taking a full-page advertisement in the SMH and the Telegraph opposing the changes (see above).
 

The property development industry has expressed great concern that the legislation provides the establishment of new taxes with no limit on the rates (they could be changed by an amendment of a regulation).  The changes would see more revenue going to the State Government for infrastructure (through the RIC) but there would be no requirement to spend that money anywhere near the location of the rezoned land is and the money is collected.  The concept of “nexus” that at least existed with the old SIC regime was abandoned.
 

The Councils have strongly objected to changes to the “Essential Infrastructure Works list” recommended by the Productivity Commission and included in the legislation.  This Essential Works List is proposed to be extended in its application to limit Council expenditure derived through both s.7.11 and s.7.12 local infrastructure levies. The revised list will explicitly exclude the funding of community facilities works.  The list currently says you can levy for the” land” for community facilities. IPART in undertaking the review of the list has been tasked with making it more explicit that the building of community of community facilities is excluded.
 

As noted above, this was done by the Government on the basis of Councils being able to obtain increased rates – in aggregate - through the removal of the cap and a direct link to population growth.  Confusingly, this change was the subject of a separate amendment Bill and the Government had agreed that IPART would review the changes proposed to rate pegging.  But then, the Government rushed this Infrastructure Contributions Amendment Bill into Parliament before IPART had undertaken its work. While Urban Taskforce supports this change as proposed by the Government, it is no-wonder Councils are upset.
 

As more of the details are exposed, it is becoming evident that this entire process is simply a tax grab – from new home buyers, from developers, from local Councils and from communities.  There is no direct link between additional new taxes and faster approvals – or increased housing supply.  Contributions to infrastructure are supported by industry – but there needs to be a direct link to increased housing supply. Further, the longstanding planning maxim of a nexus between the impact of a planning decisions and charges for infrastructure has been completely abandoned. 
 

While an extensive package is to be publicly exhibited, the bizarre process of (non) consultation on the detail has poisoned the outcome.
 

Unfortunately, the early push by the Treasurer for reform of stamp duty has disappeared – at least for now.  In an effort to appease Councils, the Minister for Planning has promised that they will not be worse off.  Our concern is that he will look to the development sector to make up any difference (once the enabling legislation is passed, the rates can be easily changed).  What started as an effort to reduce the impact of infrastructure contributions in NSW (keeping in mind that we have by far the highest charges in the nation) is now at risk of completely collapsing.
 

Whomever advised the Minister for Planning to push enabling legislation through parliament before the detail, the rates, the mechanisms, the regulations, the IPART Review, and the impact on development sites were examined, is the author of this sorry tale. Urban Taskforce will work with Government to try to secure the positive provisions detailed at the top of this analysis. Sadly however, as Mike Baird found out to his demise, once Councils form a cross-political block, it does not matter how much you have sought to appease them in the past, those with weak knees will always see them fold.

Sydney Metro – Western Sydney Airport receives final approval

The Sydney Metro – Western Sydney Airport project has received its third and final planning approval.  The Australian Government has approved the work to be carried out within the boundary of the new Western Sydney International airport. This  follows the NSW Government planning approval received in July.

Click here for more information.

IPART releases draft report on developer contributions in the Bella Vista and Kellyville station precincts.

IPART’s draft report has identified changes that would reduce contributions by around $3 million. Under IPART’s draft recommendations, contributions would be $22,525 for a 2-bedroom dwelling, a decrease of $1,437 or 6%.

Submissions to the draft report can be made up until 15th October.
 

Click here to read the draft report.



Online Briefing: “Tomorrow’s City Today – Opportunities in the Bradfield City Centre and Western Parkland City"

Western Parkland City Authority (WPCA) is holding an online briefing: “Tomorrow’s City Today – Opportunities in the Bradfield City Centre and Western Parkland City”.

The briefing, to be held in a few weeks, is for industry to learn more about future tender, investment and partnership opportunities in the Western Parkland City.

The WPCA briefing is to be held on Friday 8th October from 9:30am to 2:30pm,

Click here to view the full program.
Click here to register for the event.

Registrations of Interest invited for final two land parcels at Honeysuckle

Hunter and Central Coast Development Corporation is seeking a development partner to transform the final parcels of land at Honeysuckle.

Registrations of Interest (ROI) are sought for two parcels of land - Honeysuckle Quays and Honeysuckle Quarter - and is the first of a two stage process. The ROI period will be followed by a Call for Proposals process in 2022.

Click here for more information.

Lismore Regional City Action Plan Finalised

The Lismore Regional City Action Plan has been finalised by government. The development of the Action Plan for Lismore was a priority action of the North Coast Regional Plan 2036, released in March 2017.

The Plan seeks to maximise opportunities for jobs and investment while also ensuring future housing needs are met to cater for a variety of lifestyle choices and needs.

The finalised plan can be accessed here.