By David Collyer from Prosper
In an extraordinary outburst, the Australian Housing and Urban Research Institute (AHURI) has today embraced planning constraints on urban subdivision, elevating ‘developer certainty’ over the risk – heaven forbid! – of oversupply.
I kid you not:
While it is almost impossible to untangle the many influences on house prices in any jurisdiction (e.g. local desirability, good amenities, etc.), a well-run and timely land release policy can help with the supply of new houses. When planning controls deliver certainty about what is going to be developed where, and that information is made widely available, then each developer can plan the nature and scale of their developments with confidence. In fact, without planning controls developers may be unwilling to risk an investment that might be devalued by a flood of competing developments that lead to oversupply.
There is a lot of fuzzy thinking going on here. Local desirability and amenity boost prices relative to less appealing sites, but offer no insight on the objective reality that land costs have detached from their fundamental economic relationship to rents, wages and the overall economy.
A well run land release policy would neutralize landbankers’ ability to withhold land from sale to drive up prices. Obliging them to compete to provide lots would be of enormous economic benefit – but this is contrary to the planner ethos of order, staged (delayed) infrastructure spending and high density living for everyone.
Land supply restrictions on the periphery of Australian cities drive up the price of land everywhere. It is about time AHURI woke up to themselves and realised the damage wrought by value extractors where broadacres are manufactured into home sites.
