Drip fed supply juices Canberra land prices

ScreenHunter_01 Jun. 02 20.31

By Leith van Onselen

I wrote on Tuesday how the ACT Government is deliberately manipulating urban land supply in order to maintain exorbitant land/house prices.

Despite having an abundance of developable land, the Government has for a long-time drip-fed supply to the market, maintaining an artificial land shortage (scarcity) and, in the process, forcing buyers to pay high prices.

In 2010, at the height of the last housing boom, the ACT Government’s supply restrictions even led to buyers camping out for up to one week in freezing conditions in order to secure a lot.

Now, we are seeing similar, albeit less extreme, conditions once more, with the careful release of a small parcel of lots by the ACT Government leading to land prices being bid up to exorbitant highs:

Land in the new Belconnen suburb of Lawson has been snapped up with blocks selling on average $100,000 over the reserve price at auction on Tuesday.

The Land Development Agency is auctioning 124 single blocks over two days in the first residential land release for the suburb.

During the first session of auctions, the blocks were selling for an average of $504,000 which was about $100,000 over the average reserve price…

Land Development Agency executive director of land development Chris Reynolds said the agency had not been surprised by the strong sales

“What we’ve seen though is a very well informed market and purchasers willing to pay a little bit more to secure their dream home on some unique land that’s well located.”

He said a lot of people had been keeping an eye on the release of the land, which had been on the land release program for a long time.

And to think, the ACT Government is now looking to curb its land release program!

The median house price in the ACT is a whopping $562,000 according to APM, with median house rents a ludicrous $463 per week – ludicrous because the ACT is effectively a large town with abundant vacant land in and around the “city”. This decision by the Government to strangle land supply will exacerbate any perceived land shortage and place upward pressure on prices, to the detriment of younger Canberrans and those locked-out of the home ownership.

The higher prices will also likely make it more difficult for the government to attract workers to the ACT and place upward pressure on wage costs.

In short, it is planning madness writ large.

unconventionaleconomist@hotmail.com

www.twitter.com/leithvo

66 Responses to “ “Drip fed supply juices Canberra land prices”

  1. disco stu says:

    One wonders the point at which civil disobedience will become justifiable in the face of the sort of financial oppression, by way of strangulation of housing supply, that young and new Australians are being subjected under this approach to planning and revenue raising.

    For all the mainstream media discussion about the ponzi land scheme that is being used to finance many layers of Chinese Govt, there is virtually no recognition of the fact that Australia is essentially running exactly the same model, abit not as excessive (for the moment), but the same underlying principals non-the-less.

    • mykef says:

      “One wonders the point at which civil disobedience will become justifiable in the face of the sort of financial oppression, by way of strangulation of housing supply, that young and new Australians are being subjected under this approach to planning and revenue raising.”

      It won’t come to civil disobedience, the young ones will start to leave if they have the ability / certification / internationally recognised skills to obtain employment in other parts of the world.

    • PhilBest says:

      The Chinese model has the redeeming feature that MOST of the “planning gain” is captured by the government and used in lieu of tax revenue; keeping taxes low meanwhile.

      In Australia, the gains are mostly to private rentiers, although government tries to grab some of the action.

  2. PNG01 says:

    And to think they had to delay release of that land due to all the asbestos and heavy metals in the soil (it used to be a naval communication station). Who needs topsoil anyway?

    The average block in that release was under 500m, apparently for $504,000. Within less than a kilometre you can buy a 3 bed house for less than that. The biggest block (1500m) went for $800,000, which buys you an established 4 bed, 2 bath house on 1000m about 5 minutes walk away. I guess the desire for new housing sans trees is strong.

    Madness indeed.

    • Wing Nut says:

      From what I’ve heard about the local builders, that 20 year old house will be around longer than any if the new builds.

  3. flawse says:

    I have always wondered what it was about Canberra…all that land, no barriers, with all those dead set ugly houses.without eaves, cramped on top of one another . It’s become just plain ugly.

    • The Lorax says:

      Awful place. Awful climate.

      • drsmithy says:

        Awful place. Awful climate.

        A friend of my wife agrees – she works for DFAT and has taken “hardship” postings in Solomon Islands and Kabul, just to avoid having to live in Canberra.

        I have pointed out to her a couple of times that taking a job in DFAT when she hates Canberra was probably a poor decision. :)

    • Lori says:

      It is Alice’s Wonderland.

    • Wing Nut says:

      Become ugly: nailed it flawse. The newer suburbs here are nothing more than a copy / paste format. Stand in Gungahlin (called Gunghetto here) and you could be in any new subdivision in Australia. The older suburbs are nice but the cost is a dead set joke. That said, after living in a couple of places, we enjoy living here.

    • aj. says:

      Not just Canberra Fl. Been to Townsville lately? Right next to a development of dog-box houses with no eaves on absolutely tiny blocks is thousands of acres of barely used, low productivity farmland.

      Pitchforks and mobs are in order for these government and planning ar&eholes.

      • flawse says:

        Yes aj I was therein July last year after a long absence…you are correctemundo! It’s like a disease everywhere.

      • Wing Nut says:

        A lot of those new subdivisions are built in on flood plains.

      • aj. says:

        No WN this is the stuff off the highway – not a flood plain. And in any event there is thousands of acres of higher land right next to it!

        Look at the storm surge map:

        http://www.townsville.qld.gov.au/council/publications/Documents/Storm%20tide%20brochure_FINAL.pdf

        Then google earth Townsville – there is only one reason that the poor are shoved into dogs boxes on postage stamp sized blocks and it aint flooding risk.

      • aj. says:

        I don’t live in Townsville, but driving up the east coast the subdivisions on the inland side of the A1 and ring road near Townsville turned on the light-bulb to the disease that UE has so well described over the years. I’d seen it before unknowingly but never with brutal clarity at the human cost.

        Google earth this location, and marvel at the power and cruelty of the politicians and land rentiers as they box people into little hot-houses on tiny blocks in the tropics next to vast swathes of open land, while at the same time panting breathlessly for the population ponzi to continue apace.

        Disgusting.

      • Wing Nut says:

        aj, the whole of Townsville is built on a flood plain. We use to live in Hyde Park and that flooded along with many older parts of Townsville.

        Agree though, there is no excuse for the boxes on boxes subdivisions, there’s shortage of land in the area just the will to control house prices.

  4. Bubbley says:

    Stupid short term thinking.

    The government says it wants to reduce costs and is sending in razor gangs. They have also talked about wage freezes for government staff.

    A lower cost of housing means less upward pressure on wages.

    Release more land at a lower cost and take the pressure off the cost of housing.

    Its such simple stuff.

  5. Pfh007 says:

    “What we’ve seen though is a very well informed market and purchasers willing to pay a little bit more to secure their dream home on some unique land that’s well located.”

    Chris Reynolds crowing about the high prices obtained
    doesn’t sound very consistent with ANY of the key principles that the Land Development Agency claims to apply.

    Perhaps, the LDA only sound like monopolist profit gouging land bankers by accident or maybe they have a particularly cute interpretation of ‘achieving satisfactory returns to the territory’

    http://www.economicdevelopment.act.gov.au/land/land_supply_strategy

    http://www.lda.act.gov.au/en/publications-and-reports

    The key principles underlying the Programs include the following:

    *Promoting the economic and social development of the Territory, including contributing to the vision set out in the Canberra Plan of a city representing the best in Australian creativity, community living and sustainable development;

    *Meeting the on-going strong demand for residential land in the Territory, particularly generated by increased levels of migration into the ACT;

    *Establishing an appropriate inventory of serviced land;

    *Maintaining flexibility of land releases to ensure they reflect market conditions and do not contribute to rapid land price changes;

    *Providing a mix of land and housing options;

    *Facilitating the provision of affordable housing;

    * Addressing the locational objectives set out in key Government documents such as the Territory Plan and the Spatial Plan;

    *Achieving satisfactory returns to the Territory from the sale of unleased Territory land; and

    *Assisting the operation of a competitive private sector land development market.

    • Lori says:

      Only one is actually achieved, the satisfactory returns.

      Unbelievable, it is anti-human.

    • Mik says:

      The word “price fixing” comes to mind, illegal in any other business unless your in government, then its okay.

    • RE dot con says:

      Re Land Development Agency (LDA) & Economic Development Directorate (EDD):
      In an earlier comment The Patrician mentioned ACCC.
      Would claims by EDD below constitute ‘misleading claims’:
      “The key principles underlying the Programs include promoting the economic and social development of the Territory, meeting the ongoing strong demand for residential land in the Territory, establishing an appropriate inventory of serviced land, and facilitating the provision of affordable housing.”
      Anyone an idea how to promote a ‘misleading claims’ case against LDA and/or EDD?
      I believe ACCC likes investigating stuff.

  6. The Lorax says:

    Leith, if there’s one place I agree with you on artificial supply restriction it’s Canberra. Its all sprawl already with ample room to expand so why blocks are selling for anything like $500k is beyond me.

  7. Frederic Bastiat says:

    I took my concerns to the man himself…Mr Andrew Barr MLA (my real name is not Frederic Bastiat for those not of the Austrian persuasion – Stephen Green…though John Hicks is clearly a fellow MacroBusiness reader)

    https://www.facebook.com/#!/andrew.barr.mla/posts/10152230687561654?comment_id=32650504&offset=0&total_comments=45&notif_t=share_reply

    • Nice job. Keep the pressure on him.

      • Frederic Bastiat says:

        Thanks Leith, your work on this issue has been tremendous and showed me that although credit growth has been a big driver of house prices, supply constraints is the real cause of rising land / house prices.

        I am working on putting together a documentary (short film – perhaps Tropfest candidate if I can get enough crowd funding going and do it well) and would love if it you would be interested in a short interview once I get things up and running. I want to ask others like Steve Keen to also have a few short words. In my opinion, he is the preeminent guy on debt-dynamics, yet you are without a doubt the preeminent analyst of supply side issues and housing policy more generally. Totally understand if you are not interested, but if you are I will email sometime in 2014 when my plans are further developed.

        Thanks again for all your work on this topic, a true inspiration and someone we need back in Treasury / Parliament!

    • Nudge says:

      + 1 It Is a nice job!

    • Pfh007 says:

      Great work Mr Bastiat

      Good to see that he was engaging in the debate but it was a wonderful demonstration of how deeply entrenched are the most pernicious misconceptions about Australian land prices.

      Mr Barr starts from the position that there is nothing unusual about Australian residential land prices and then concludes that policies that seek to maintain that state of affairs must be as natural as mother’s milk.

      Mortgage serviceability (due to low rates) is confused with housing affordability. Banker nonsense 101.

      As usual the fundamental concept that the demand for new housing might rise in response to a fall in the price of new housing is simply ignored.

      For some strange reason, the market for land is the ONLY market where a fall in price is not considered natural and in the interests of consumers of land and the economy.

      We never seem to hear about the importance of ensuring that the supply of television sets or cars is ‘managed’ to ensure it does not put downward pressure on the prices of either.

      No surprise that ignoring this market ‘anomaly’ is standard fare in the FIRE press releases and commentary by the banking industry pet economists.

      Sad but all too typical that an ALP member cannot see through the ‘banker’ self-interested fog of obfuscation when it comes to the assets securing their bloated loan books.

      • Frederic Bastiat says:

        Cheers mate, though I must say how much I have enjoyed reading the comments on Macrobusiness – particularly from people like yourself. The bloggers are terrific, but this site easily has the best discussion going on and there are some genuinely passionate, intelligent people from a wide variety of backgrounds…this and Zerohedge are my two favourite sites by a mile

      • Pfh007 says:

        Yes, I enjoy the range of comments as much as the articles. There is a real conversation and the fact that there is plenty of disagreement is the best bit. Every good idea is forged by fierce debate.

        When you are next chatting to your local member Mr Barr you might want to ask him about the bloated profit margins and costs involved in the section lots that LDA dribbles out to the market. See my comment below on the annual report.

    • The Patrician says:

      Wow! well done Frederic/Stephen.

      Kudos to Andrew Barr for engaging…but as you say Pfh the level of understanding is appalling

      2 Questions for Mr Barr

      1. Do you think it is good for the ACT that a vacant 500sqm house block 10kms from the CBD and a couple of kms from the rural fringe costs half a million dollars?

      2.What is your reasoning for reducing the planned land releases?

      Feel free to pass on my questions Frederic/Stephen.

      Can we send Mr Barr a link to this page?

      • Frederic Bastiat says:

        Thanks Patrician – as I said to Phf007, part of the reason I love coming to this site is to read comments from guys like yourself. I will post the thread and we will see if Mr Barr reads this thread…I think he could benefit from reading this thread and site more generally

  8. Nudge says:

    Tinfoil hat on:- It’s an excuse to give themselves another pay rise to ‘keep up with the cost of living’!

    Tinfoil hat off?:- Someone in here said a few days ago that a lot of it went straight to Indians & Chinese. Not that there’s anything wrong with that…….. according to FIRB!

    I wonder if there is a market for secondhand suitcases – not needed for the return trip?

  9. Dadzi87 says:

    “For some strange reason, the market for land is the ONLY market where a fall in price is not considered natural and in the interests of consumers of land and the economy.

    We never seem to hear about the importance of ensuring that the supply of television sets or cars is ‘managed’ to ensure it does not put downward pressure on the prices of either.”

    I could not agree with you more Pfh007! That is a great point that no one could dispute. However, the idea of ever-increasing house prices is now so deeply ingrained in the mindset of most Australians that many cannot see a problem with ever increasing land prices. Somewhere along the line, the “Great Australian Dream” of home ownership has been morphed into a get rich quick scheme for property and land speculators.

    What seems criminal to me is that the ACT Government has put in place initiatives that are seemingly designed to assist home buyers in the ACT. Land Rent, Concessional Stamp Duty on land purchases and a $12,500 FHB’s grant for new builds are all seemingly great initiatives. But these measures are all paper thin when there is not a single block available to build upon from the Land Development Agency!

    http://www.lda.act.gov.au/en/currently-no-land-available

    • What a disgrace. They monopolise supply and then hold buyers to ransom. Disgusting…

      • The Patrician says:

        Maybe it is time for the ACCC/Prod Comm to look at the practices of the LDA?

        Surely it is more important than shop-a-dockets

    • hamish says:

      Dadzi87, that link is reminiscent of the pictures of empty supermarket shelves under the old communist regimes of Eastern Europe…That, or it’s like the Cheese Shop in the old Monty Python sketch…

  10. Monkey says:

    In search of cheap entertainment, I found myself at an open house in Canberra this morning. It was 40 degrees, the bitumen was turning to treacle and a mixture of dust and blowflies clogged my nostrils. The property on offer was a sixty year old guvvie with a fresh lick of paint inside and out and the sort of cheap renovations that your typical Canberra traddie will charge an arm and a leg for. The yard consisted of a couple of dead sticks, some dog shit, dust and some cracked concrete. “Park like” was how the advertisement described it.

    Looking for a park for my second hand Camry, I fought a desperate battle against an oversized Lexus driven by a peroxide blonde retiree. With her distracted by her Gucci sunglasses and pearl necklace, I won the battle for the last gap between the fifty or so cars parked against the kerb. All were Canberra plated; many were standard issue vehicles for public service bosses; others were massively oversized utes, BMWs, Lexuses and Mercedes. My Camry was an unusual sight, the sort of cheap car that no one here drives anymore. Maxxia and McMillan Shakespeare must love this town.

    Once inside it was pretty clear that the house was a pig with lipstick. The building report (compulsory in the ACT and generally done by a mate of the sales agent) described the place as average for a building of its type and age. That is, it was average for a poorly designed and constructed house that had been left to decay for six decades. What the building report didn’t cover was the subfloor area, the eaves and the roof cavity. “Inaccessible” was the curt remark. Fortunate for the seller, because a bit of snooping and an exploratory stab with a piece of metal revealed rot and decay beneath the gloss of new paint. Whoever buys it better pass it on quick or they’ll be dealing with some costly problems.

    This house, about as big as a public toilet block and with similar design and construction standards, was packed with potential buyers, stickybeaking neighbours and me. The first home buyers were obvious: tatty clothes, squealing infants and desperate stares. The traddies and their wives stood out because of their conversation: “We’ll knock that down, put in a home theatre, Johnno’ll do the wiring on the cheap….” and a jumble of inane plans for sheds, beer fridges, room for the jetskis and other bogan paraphernalia. The wives usually chip in with pearls of wisdom like, “I can’t wait to have my girlfriends over for a glass of Pinot Grigio on the deck. Hey hun, do you reckon we could get one of them champagne stand things they have at restaurants?” But the most obvious group was the baby boomer investors. The wife used the iPad to check mortgage rates and bank accounts, while hollering into the iPhone to her husband who was at another open home and the tax accountant who was doing the sums on potential offers. These were the owners of the luxury cars and the standard issue senior public servant vehicles. Did I really hear the peroxide blonde retiree say, “We can probably get this and the unit with your super” to someone on the phone? In a corner, I heard some poor first home buyer tell his wife that they could probably afford it if they went vegetarian, sublet the spare bedroom and didn’t have children.

    Oddly enough there were no Chinese buyers with suitcases of money, although I heard the agent tell one person that he’d had a couple of calls from China, so better get in quick.

    Having had enough kicks for the day, I headed for the door. A young fella in a shiny suit intercepted me and shoved a contract forward. “Are you looking for a home or an investment?” Was his opening gambit. I wasn’t quick enough with a reply, so he moved on fast “Either way it’s a great place to raise a family, so if you do want to rent it you’re guaranteed to get good tenants. There’s not much like this on the market and it’ll go quick.” I couldn’t resist, “oh, I thought stock on market was up for both sales and rentals, and rental prices were falling?” Unperturbed he replied, “I wouldn’t base too much on the statistics. Trust me, I’m seeing what’s really happening on the ground.” I throw another one his way, “Well, give me a call when your interested in talking sub-400.” The place is listed for $130,000 more than this. “Mate, you’re dreaming he says” as he glances at his fake Rolex.

    On the way back home, I stop to stare into an empty sheep paddock. That’s one thing Canberra’s got going for it, a real sense of open space. The blowflies and dust only add to the charm. I’m glad it’s being preserved for future generations; it would be a national tragedy to lose this unique and special environment. This idyllic moment – for a second I almost thought I was in Tuscany or Provence, or maybe a UNESCO world heritage area – is interrupted by the awful sound of my battered Nokia ringing. It’s the agent, “Mr Monkey is it? It was great talking to you this morning. You seemed really interested in the property and I’ve got some good news… The seller is willing to show some flexibility. He’s willing to take $5000 off the price if you’ll make an offer today. It doesn’t seem like we’re that far apart. Let’s put this one away right now.”

    • Pfh007 says:

      Marvellous Mr Monkey!

      If we can’t laugh about a national tragedy we would all go mental.

    • Snail Cafe says:

      Well told Monkey, these are the type of stories I like….I am amazed that it wasn’t snapped up at 50k over the asking price.

  11. Pfh007 says:

    I recommend having a read of the most recent annual report of the LDA.

    http://www.lda.act.gov.au/uploads/pdf/2_Residential/Publications_and_Reports/Annual_Reports/Annual_Report_2012_13.pdf

    I was curious as to what they do.

    A few rough and ready quick observations. These are rough and ready as there is a bit of industrial and commercial in the mix.

    The triple bottom line report on page 187 is a fun reading and lots of interesting detail.

    94 staff members costing about $11M per year – approx. $117k per employee.

    Land sales in 12/13 totalled 4354 blocks (they were aiming for 5000). in the previous 3 years they managed 4000 per year.

    The income from the sales was about $262M or roughly $60k per block (using 4354 blocks)

    The breakdown of the $60k appears to be as follows.

    Approx $2.5k per block in staff costs.

    Approx. $15k per block in development costs

    Approx $12k per block in purchasing costs – wonder if this cost is inflated by the approach taken by the LGA – that is it is buying land from land bankers at a higher rate than necessary – $12k per block seems a lot for dry sheep paddock.

    Approx $7.5k per block in other costs

    Total approx $37k per block.

    That leaves about $24K per block in juicy profit which is why the LDA was able to pump out $108M in dividends to the ACT government (4354 * $24k = approx $105M).

    It is bad enough that the ACT govt is shaking down $24k profit on every block but in trying to maintain its fat margin it is driving up the cost of all housing and rents across the territory.

    With some sense of the public interest it is clear they could be releasing land for staff costs + some low purchasing costs.

    Lets say $15K per lot tops.

    Any development costs can be handled by MUD bonds.

    If they did so there would be a queue up the Hume and perhaps a little bit of life in Civic beyond a few hours on pension day.

    • Pfh007 says:

      It is hard to reconcile the prices paid for lots in the article. (average $500k) with the annual report figures.

      The most likely explanation is that the 4354 total includes a lot of home units that are much lower cost and the article was about the sale of 124 very attractive detached dwelling lots.

      In any event the fact that the LDA currently have no lots available for purchase tells you everything you need to know about the real priorities driving the agency.

      Shake down the public and support inflated market prices.

      The rest of the ‘key principles’ are just hot air, window dressing and an exercise in deception.

  12. countach says:

    There is some truth to this article, but it’s rather exaggerated. Lawson is not a fringe suburb, it’s infill rather close to the city. Prices there are not indicative of what prices would be in fringe developments.

    And while there is obviously land in the ACT, it’s not as much as people suppose. Development is hitting the borders and / or the mountainous regions on various fronts, and what with protected areas, national parks, airport restricted zones, areas that are split from existing areas by mountains, and so forth there isn’t THAT much land. And if the govt flogged the lot in this generation, would future generations really think it wise? Probably not. In a few decades, there won’t be much really left to flog unless they cut into national park or something.

    Furthermore, it is quite expensive to develop whole new areas. Bus services have to be set up, services provided etc etc. The ACT govt is not running a surplus. Even if we were to assume the govt could dump a lot of land on the market and lower prices, would it be at the expense of existing tax payers who either now, or in a decade or two, and left holding they baby to pay for it? These are not easy questions to answer.

    Instead the government is trying to restrict the sprawl a bit by encouraging unit building, because Canberra historically has way too much sprawl. This seems to be working fairly well.

    I’m not saying there isn’t any room for criticizing the govt, but it’s not as clear cut as you make out. It sounds very populist, but the details are much more murky.

    • aj. says:

      The only thing murky here is your distorted logic and reason for spinning this response.

      Stopping ‘sprawl’ is debunked – it just creates worse dogbox postage stamp sprawl at a slower rate.

      Leave land for future generations to beg and grovel for? Well this is so absurd it doesn’t rate a response.

      There isn’t ‘that much land’ – I’ll wait for the nos on this – I’m calling bullsh8t.

      • countach says:

        Sprawling at a slower rate is a great result. You want Canberra to sprawl at the rate it did in 1950? Back then house blocks were 1100 sqm and 1km from the city centre. Clearly that was not sustainable, by virtue of pure math.

        Is it really sensible to flog all the land for huge suburban blocks now, and find that future generations have things even worse? That’s what happened in Sydney, the whole Sydney basin was flogged for suburban blocks, now everybody agrees big apartment blocks are needed, except that nobody but nobody, wants them in their back yard. Maybe if they’d done some better planning rather than flogging the lot as soon as possible that gridlock wouldn’t exist. Then it would be at least feasible to buy an apartment at bondi beach, whereas it isn’t, because it’s all taken by low rise housing owned by NIMBY millionaires.

        If the ACT government is so bad, the NSW govt has the power to get in on the act and fix it, since a lot of Canberra suburbs now touch the border. Go ask NSW to extend the sprawl then, don’t blame it all on the ACT. I’d hazard to say there is far more NSW land within the same distance as the city as the outermost ACT suburbs. The ACT Suburb of Banks is some 30km from the city centre. The NSW border is 10km from the city centre.

      • Pfh007 says:

        Canberra is the result of ‘ Maybe if they’d done some better planning …..’

        Excessively prescriptive planning by ‘planners who know better than users of land’ is why the place resembles a university campus on a Sunday during vacation.

        Most existing land zonings should be immediately changed to allow the owners to redevelop (or sell to someone who will) their large low density sections into medium density townhouses, terraces or units or retail or office space.

        By all means allow some important houses to be protected by a conservation register or even complete streets but the default should be that ANY existing land can be used for residential, retail or offices up to 6-7 stories.

        But this will not be a complete solution even if everyone is actually keen to live in medium density close to the centre simply because it will take years before existing owners sell etc. Plus the likelihood of getting such a zoning change through the squeals of the residents of the existing suburbs will be tough – just look at the way the greens and the ALP did all they could to knife a very modest proposal of this type in NSW by the new govt. Oppositions of both flavours find plenty of votes in helping people lock down any change to their suburbs.

        Even if you could get such a proposal up and running for existing residential areas that is no reason to extort those who wish to live in detached housing on the outskirts and force up prices across the city. All you get is over priced medium density in the middle of nowhere.

        It is not as though that new land on the outskirts benefits from very broad and fkexible zonings that leave owners in control of the future use of their land. The heavy prescriptive biro of the know all planners still looms large.

        Loosen zoning in inner suburbs if you can but do not restrict the outskirts – especially if your attempts to loosen most residential zonings in the inner suburbs is a failure.

      • aj. says:

        Unfortunately sprawling at a slower rate does not give the same outcome. Instead of a mix of leafy acre blocks, townhouses and houses we end up with urban ghettos of banal eaveless dog boxes on tiny blocks.

        Most importantly the density of the development results in much less ownership of the environment and much much worse environmental outcomes.

        So we end up with the sprawl but much worse.

        You correctly identify the Sydney issue as failure to allow reasonable infill. Taking speculative and rent seeking housing purchases out would also make an enormous difference, as the nimby response is a response to the white-shoes that would develop the place to concrete hell if they could.

      • countach says:

        @Pfh007 there is tons and tons of land in the ACT that contains housing, but it it permitted to demolish it and build apartment blocks. That’s why if you take a drive through inner Canberra, or even through various town centres, there are lots of units being built. So your complaints in this instance are false. There is absolutely no lack at this point in time of quarter acre blocks on which it is permitted to demolish for units.

        Saying Canberra resembles a university campus is changing fast. The reason for it in the first place was not enough land released RIGHT IN the city combined with too much inner land devoted to quarter acre blocks. That’s changed, most of the city land is now sold or near to being sold, and many inner areas were designated allowed to demolish to build units, so that’s been changing for 15 years now. It’s never going to be Sydney, but its not the disaster it once was.

        A lot of land continues to be released at the outskirts. If you think it’s not enough I suggest to go talk to the shire of Sutton which has more suitable land near Canberra than anyone else, and see if those planners would like to change things.

        And while the proscriptive biro of the planners in Canberra hasn’t been perfect by any means, at least it isn’t such a hodge lodge of bad planning and ugliness that is outer Sydney.

      • Pfh007 says:

        Countach,

        I am aware that unit construction has been encouraged but I am surprised by your assertion that vast tracts of inner Canberra have been rezoned to permit multi-dwellings construction if the owner or buyer wishes to do so.

        Perhaps your idea of ‘plenty’ is the planner idea of plenty – plenty where the planner wants people to build – as against plenty where people want to build.

        Based on my visits to Canberra the unit developments appear to be occurring in very specific and limited locations.

        But if you can point me to the zoning maps that shows all this formerly low density zoning now zoned multi dwelling medium density I would be more than happy to both eat humble pie and assist get the word out to the developers in Sydney struggling to find multi-dwelling sites in good locations.

      • Pfh007 says:

        Countach,

        “…So your complaints in this instance are false. ”

        Perhaps you need to have a look at the territory plan and look closely, you will need to, for RZ2 (Suburban Core – whatever that means) to RZ5 (High Density) zonings.

        http://www.legislation.act.gov.au/ni/2008-27/copy/95226/pdf/2008-27.pdf

        There is hardly any beyond a few blocks around Northbourne Avenue.

        The vast majority of Canberra remains RZ1 – Suburban.

        I couldn’t even find any RZ5.

        So before you starting telling people that there is plenty of land zoned for home units and medium density in the existing inner Canberra suburbs you might want to check the details first.

        Canberra needs two things.

        1. A substantial expansion of the areas zoned RZ3 – RZ5 – say for 1.5 kilometres (a 10 minutes walk) from each major public transport route.

        2. A substantial expansion of new lots on the outskirts.

        Note:

        To avoid the problems created by historic zonings and residential fighting to prevent any change to them, the new land releases on the out skirts should all be at least RZ3. Not because they need medium density but to stop neighbours whinging in the future when people want to develop their quarter or half acre section into terraces, townhouses or units.

        Of course these policy changes may exert some downward pressure on existing house prices, as people who wish to buy and build new houses find they can do so more cheaply, but explain to me the economic rationale in engineering higher land prices than a competitive market would produce?

    • Monkey says:

      Countach, I think you are wrong. Have a look at this official ACT map showing a lot of rural, broadacre and ridge and buffer land in the ACT. http://www.legislation.act.gov.au/ni/2008-27/copy/95226/pdf/2008-27.pdf

      I would ask you, should house prices in the ACT be so high when there is a grass farm within five kilometres of the CBD and horse paddocks within three? Drive yourself towards Tharwa or Cotter Dam and tell me how much empty ACT land there is.

      You are right though that the NSW government should get in on the act and release surrounding land for development. Then again, Queanbeyan is the fastest growing town in Australia.

      • countach says:

        What you call a grass farm, is very very low by the river and very dangerous with flooding. Did Brisbane teach us nothing?

        Ridge and buffer land is part of the National Capital plan, and makes Canberra what it is. Was that a sensible design for Canberra? Doesn’t matter, it’s never going to be changed, its never going to be released. You will never find houses on mount Ainslie overlooking parliament house, so forget it. It’s about equivalent as waiting for the Royal Botanic gardens or Hyde Park in Sydney to be released. Not to mention that most of the ridge and buffer land is actually small mountains, super expensive to build on.

        Some of the areas are reserved because they found some lizard there or something and the Greens got to it, and so it is nature reserves. Yeah, I think its crazy too, but the reasoning wasn’t to trickle land out slower and make bigger profits. Some of it’s in the airport flight path as I said. Some of it is marked as broad acre on this map, but in reality it is the industrial area of Fyshwick.

        Tharwa? You realise how far that is right? Like 35km from the city. Cotter dam is of course a catchment area, and I doubt they can consider building to close for that reason. Not to mention it is VERY steep land around there, thus they could build a dam.

        Yes there is SOME suitable land down there, on the way to Cotter, but like I said it isn’t THAT much, and even of the conceivably suitable land, a lot of it is pretty hilly. You wouldn’t have big normal suburbs, you’d probably have houses running in long ridge lines before the land drops off into steep hills. Not efficient to service with plumbing, bus services or schools like that. Go down to the camp store and get a topographical map before looking too greedily at all those green areas on the map.

        When you consider that Canberra went from sheep station to where it is today in about 55 years, and when you look at how much land is left, the amount within about 20km of the city would be about 10 years of stock if they flogged with the same abandon they did at the beginning. Then there’d be nothing.

        You can say that Canberra wasn’t designed very well, and I think there’d be a lot more merit in that argument than saying there is a conspiracy to keep land prices higher by trickling it out.

      • Pfh007 says:

        “the amount within about 20km of the city would be about 10 years of stock if they flogged with the same abandon they did at the beginning. Then there’d be nothing”

        What is the point of drip feeding so that Canberra grows slowly?

        If people want to live there let them.

        Allow land to be developed as required.

        Personally, I think if allowed to do so cities will naturally develop greater and greater density at the core. The very dense inner suburbs of Sydney – say Potts Point developed without any coercion by planners. People made those choices.

        You may then find that the core of Canberra will start to naturally resemble an organic and attractive urban community with the outer suburbs occupied by those who are prepared to trade space for convenience.

        With less proscriptive planning and zonings there is much less risk of Canberra filling up any time soon.

      • The Patrician says:

        Casting a google-earth-eye south over the Queanbeyan/ACT boundary I came upon the ghostly lines of what looked like the plans of a massive residential development. Bouyed by the prospect of such a large boost to residential land supply so close to the nation’s capital, I dug further. At the centre of the very “Burley-Griffin” concentrically drawn lines was the word “Environa”. What a quaintly utopian name.

        I dug further. Turns out the development was planned 90yrs ago…… and not one block has ever been sold.

        This is the story of Henry Ferdinand Halloran and Environa

        http://pandora.nla.gov.au/pan/131760/20120120-0944/www.nla.gov.au/pub/nlanews/2005/oct05/story-2.pdf

      • aj. says:

        Yes Brisbane taught us that politicians are idiots with the memory of a goldfish. Those dams were designed as overflow for a 1974 flood not as 100% storage.

        You are being selective with your facts here.

      • Monkey says:

        Actually, you are wrong again Countach. The grass farm is low level and subject to occasional flooding, but nothing like what was seen in Brisbane. If it goes under, then Pialligo, Kingston Foreshore, the airport, they’ll all go under as well. Plenty of building there though.

        Not all of the ridges and buffers are within the national capital plan. They’re nothing like the Botanic Gardens or Hyde Park. They are unused empty space. Many of the ridges would be fine to build on. Small mountains is an exaggeration.

        Who cares that Tharwa is 35km. If people want to live there, let them.

        One side of Cotter is the catchment, but the side nearer to Canberra is not. There’s a lot of buildable land there. It’s not really that steep on the western side of Chapman and Mount Stromlo.

        There’s a lot of land out there. It stretches from Belconnen south. Go for a drive on Cotter Road and William Hovell Drive. Plenty of space.

      • countach says:

        “What is the point of drip feeding so that Canberra grows slowly?”

        Right now, it’s because there isn’t that much land left.

        Assuming they dumped the remainder on the market and collapsed prices, prices of all houses would suddenly collapse, and then in the next decade go through the roof when it dawns that “this is the end”. Kinda like digging up all the remaining oil NOW, and everyone driving a Hummer to use it all. Fun for a decade, cheap oil for a decade, then economic collapse when oil goes to $500 a barrel.

        “The grass farm is low level and subject to occasional flooding, but nothing like what was seen in Brisbane.”

        Errr. so? Any flooding is too much flooding.

        “If it goes under, then Pialligo, Kingston Foreshore, the airport, they’ll all go under as well. ”

        No, the airport is definitely higher. Quite possibly Pialligo would go under, but I think Kingston foreshore would likely not, because of the shape of the land, allowing a flood to disperse. Anyway, I’m not the urban planner for floods, but I’m pointing out that armchair planners think they are so clever, ignoring a lot of considerations.

        “Not all of the ridges and buffers are within the national capital plan. ”

        Pretty much all of them are. The ones between Tuggeranong and Woden are. The ones around Belconnen are. The ones around Weston Creek are. The ones in the inner areas are. The river corridor ones are.

        “Many of the ridges would be fine to build on. Small mountains is an exaggeration.”

        Some of them could be. But that is not the urban plan. Like I said, the problem is not so much about trickling land, as the actual design for Canberra is a problem and too spread out. Selling all the land that is planned to one day be released all at once won’t solve that.

        “Who cares that Tharwa is 35km. If people want to live there, let them.”

        They don’t want to live there.

        “One side of Cotter is the catchment, but the side nearer to Canberra is not.”

        What the water runs uphill on that side? lol

        “There’s a lot of buildable land there. It’s not really that steep on the western side of Chapman and Mount Stromlo.”

        Yes, that is one area where there is a bit of space. Right now they are releasing land at Wright and Coombs right next door. You really want every square metre of the territory auctioned off simultaneously?

        Come on. That would be chaos. You can argue at the fringes whether land could be released a little bit quicker or a little bit slower, but in 20 years, the whole argument will be moot, because it will be all gone. Then what? A little bit of restraint now, and a bit more encouragement to build units instead will have a cheaper and more sustainable city in the long run. Burning all the oil NOW, because we can, is not good plan.

      • Monkey says:

        Countach, once again you have twisted things to make the ACT’s absurd planning seem reasonable. It isn’t. It has resulted in a severe distortion in land prices now which is making housing unaffordable now. Your concern for future generations is laudable. I only wish you were as concerned for those who are priced out now.

        Any flooding is not too much flooding. Flooding is just something to plan for and manage. If you know it is a risk, build accordingly. If the ACT government is so concerned about the risk they could insist on a warning in contracts when the land is sold.

        No one wants to live in Tharwa? So why have 3090 people looked at the one house listed for sale in Tharwa? The problem is that it’s just as idiotically expensive. The house is $650k. There’s a rural block there for $850k. I think that if it was cheap to live there then people would. What if $300k got you a couple of acres and a small house? Or $100k got you a couple of acres you could build whatever the hell you wanted on.

        One side of Cotter is the catchment for the dam. The other side, nearer to Canberra, is not. The side nearer to Canberra drains into the Murrumbidgee river, just like the rest of Canberra. Building west of Chapman will not interfere with Canberra’s water supply.

        Do I want all the land released now? If that is what it takes to achieve affordable housing, then bring it on. Am I an armchair planner? Nope. I am just someone who wants to own a home but has been priced out because of the over inflated cost of housing here. As far as I am concerned, the expert planners have fucked up monumentally so far.

  13. Pfh007 says:

    Countach,

    “Assuming they dumped the remainder on the market……”

    Why would you assume that?

    What is being proposed is that if someone wants to build a house within the ACT they are free to do so and not be limited to whatever drip fed blocks the LDA decides they can sell at a nice fat profit.

    Home buyers should be able to approach the LDA or any farmer for that matter and buy land to build. Without the drip feed supply the price of new land would be a lot less than what it is now. Whether it has an effect on existing prices and the magnitude of that effect is uncertain. Certainly it may slow price rises driven by speculation but that does not necessarily mean a price crash for existing houses. Good locations will remain in demand especially if no rezonings of inner suburbs take place.

    That the LDA currently have no blocks for sale says it all.

    And if a person already owns a block of land they should be largely free to knock it down and build town houses or terraces or sell the block to a builder who will. But as I said earlier the resistance to rezonings can be fierce and with some justification, if you buy with a particular zoning in force it is reasonable to expect that it to continue.

    Introducing a highly prescriptive zoning system in the first place is the problem. New land releases should not repeat past errors.

  14. aj. says:

    Hmmm. It’s possible that the worse Canberrians suffer under the yoke of the land bankers and the speculator/rentseekers the better. So maybe better that things stay the same.

    The next generation of bureaucrats/hollowmen in Canberra are more likely to lead change if they get a taste of reality.

    • Alex Heyworth says:

      The perennial problem with that is that those who finally gain entry to the homeowners club always have an incentive to restrict access to others, so as to maintain the value of their “investment”. This nonsense can only be unwound by a giant crash.

  15. Alex Heyworth says:

    Anyone with half a brain would be considering Googong as an alternative http://googong.net/upload/PricelistandAvailability170114.pdf. Freehold title as well.

  16. China-Bob says:

    What bugs me about this whole ACT discussion is the absence of comments about productive ventures that failed to proceed because RE prices / rent killed the opportunity and with it the business.

    All I see is a bunch of Bull’s in Bear suits hoping to force a 20% correction so that they too can join the RE game, they just want a lower entry point so their risk is lowered. There’s nothing wrong with this but it points to a much larger system wide problem when this is the ONLY game. Think of it this way, why cant you find some other business opportunity where your capital is better invested? Why Not?
    Part of the problem is available finance, part of the problem is tax law, part of the problem is “tall poppy syndrome” an even bigger part is the she’ll be alright nature of most Aussies. But the largest part by far is the deep seated belief its just easier to get an IP or 10 and be happy riding the property train. Meltfund would claim that NO venture can create value without that value being reflected in the local RE price, so why try to identify the risky ventures when a simple investment in RE is an effective low risk proxy.

    Personally I can identify a dozen more interesting ventures than Aussie RE, especially at today’s prices but you know whats strange I’ve been saying that for 30 years and I’m not so sure that I’m really that far ahead, so maybe Meltfund is right!

    • Pfh007 says:

      From what I read on Meltfund’s website they do NOT invest in property.

      All they seem to do is buy foreclosed property mortgages as cheap as possible and then sell them as quickly as possible.

      Which suggests their talk about the joys of property has more to do with trying to drive a rising market.

      • dumpling says:

        I have been scratching my head. I first thought meltfund wanted to attract attention by knowingly making outrageous claims – and he had succeeded in that I think – but there may be more to it.

        I stated this before, but it appears that Meltfund is nothing other than a new business – and probably a profitable business, too. But is it that much more profitable than, e.g., FSA?

        It looks to me that meltfund is asserting that it is a good idea to go “all in” with properties now, because it will always go up and hence the timing is unimportant, to which I do not agree.

        George Soros once said along the lines of; if you spot a bubble forming, jump on. He did not say it is a good idea to jump onto an already large bubble.

      • China-Bob says:

        My guess is that Meltfund is a rather amusing joke (hat tip to Robin if this is the case) If they’re serious well lets just say they’re not getting my money.

        The basic premise seems to be that foreclosed properties can be purchase, at any time, for 60% of the true value and quickly flipped at full price. During recessions there are times when the first part of the equation (buy at 60%) is possible, unfortunately these are not the same times as its possible to quickly sell said a property at full face value.

        There’s also the small matter of checking that the distressed property is even worth the 60% price. I played around in the early 90′s, flipping some S&L disasters in Texas and the one lesson I learned was to be VERY careful. Most of the available stock had some major problems (structural failure, Termites, intentional damage (holes kicked in every wall in the house) you name it, all the appliances missing, windows missing (frame and all) In Texas Black Mold was one of the big unknowns, the banks new what they were doing dumping this housing stock. The 64K question was did you know better, or know some shortcut to cover-up the problem long enough to pass-it-on.