The four pronged plan that will profoundly affect property markets around the country

Over the last two weeks there have been four significant strategic announcements from the Federal Government that are likely to have a profound impact on the Australian housing market.

  • The new membership of the National Housing Supply Council were announced and their first meeting will be held in June of this year with the key objective of undertaking and releasing the third ‘State of Supply’ report which is widely regarded as the bible for measuring the level of housing supply in Australia.  The most recent report, which highlighted a housing undersupply of about 180,000 dwellings, was released just over a year ago.  You can view the most recent report here and view the media release announcing the new council members here.
  • The National Urban Policy ‘Our Cities, Our Future’ was released by the Department of Infrastructure with a focus on the planning and infrastructure priorities for Australia’s largest cities.   The plan accompanies the Federal Budget announcement of $181 million to be devoted towards the Livable Cities and Urban Renewal Program, the National Smart Managed Motorways Trial and the Sustainable Australia-Suburban Jobs initiative.  The document and summaries are available to download here and the media release can be viewed here.
  • The population strategy for Australia was released:  ‘Sustainable Australia – Sustainable Communities, A Sustainable Population Strategy for Australia’.  The report, a year in the making, was released by the Department Sustainability, Environment, Water, Population and Communities.  The objective of the report is to provide strategic guidance for population growth across Australia.  While the principals and themes expressed in the report are very sound (less urban sprawl, maximization of infill targets, higher densities around key transport nodes and higher levels of population growth in the key regional areas where labour demands are the highest) however the report is a complete failure in the sense that it provides absolutely no guidance or measurement about population growth targets or objectives. Without the hard and fast numerical backing for a population strategy, the paper is nothing more than a fuzzy view of how population growth should be managed without any hard and fast guidelines about how the strategy is to be executed, how fast or slow it should occur and what are the measurements of success.  The report can be downloaded here and the media release can be viewed here.
  • Finally, the Productivity Commission released their ‘Performance Benchmarking of Australian Business Regulation: Planning, Zoning and Development Assessments’ report.  The report, which didn’t seem to catch the major headlines for some reason, contains seven recommendations aimed at streamlining the planning and approvals process for new housing and non-residential developments (recommendations are contained within the ‘Leading practices document here).  The report highlights the inconsistencies of council planning regimes, a lack of any standards associated with the fees and development charges applied to new developments and the amount of land released for urban uses.  The report also benchmarks a wide variety of factors between the states and territories such as supply of land, integration of planning and infrastructure, median elapsed time for development approval etc.   If the recommendations are accepted and implemented we can expect a dramatic improvement to what is currently a very complex and inconsistent planning and approval regime.  Less development cost, shorter approval process, more strategic land use objectives and greater transparency around development costs.  The report can be viewed here.

The strategies and reports vary widely in their effectiveness and clarity; however the holistic view when all these initiatives are brought together is very positive.  Apart from the lack of substance within the population strategy, the reports are strategic in nature and provide a much better direction for the management of population growth, associated infrastructure improvements and land release, required dwelling construction and a better town planning regime that is more standardised nationally.  Importantly they provide a national cohesive vision for Australia’s planning environment.

The big challenge for the Government is likely to be state and local opposition to some of the strategies which may be viewed as interventionist.  Clearly the state and local governments have generally failed to date and in my view it is time the Federal Government takes a stronger and broader role.

The other key challenge is going to be execution.  There are a lot of interests at play from both a public and private perspective and there are three levels of Government that are going to have to cooperate a lot more than they have in the past.

Add changing long held consumer lifestyle preferences to the list of challenges– it is going to be a slow process encouraging more Australians into higher density housing.  Affordability factors will play a key role in encouraging this paradigm shift away from detached housing, as will faster commuting times to major working nodes, better access to the necessities of life such as health care, retail facilities and social precincts.

How will it all pan out?  Time will tell.

 

About Tim Lawless

Tim heads up the RP Data research and analytics team, analysing real estate markets, demographics and economic trends across Australia

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