News - Planning & development

Canberra has a problem with housing affordability and availability, and it is hurting Canberra.

Economics editor for the Canberra Times, Peter Martin and ACT Chief Minister Jon Stanhope are having an ongoing debate through the newspaper as to whether housing prices and lack of supply are stalling the ACT economy. The latest statistics seem to be backing Peter Martin.

Martin kicked off the debate on 22 January with this article:-



Chief Minister Jon Stanhope had the following rebuttal article printed two days later, in which he pointed out that 'already we have seen 750 blocks released in West McGregor and 700 blocks at Casey...another 1400 blocks through a joint venture at Crace.'



The problem of course is that not a single one of these blocks has actually been released - the developments are only in the planning stages and many many hundreds of people are walking away empty-handed from land ballots of the few blocks that are'released'.

The pivotal question that went unanswered in Mr Stanhope's rebuttal was how the Land Development Agency, who are supposedly the land development experts, and through them the ACT Government, got caught out so badly? Or was it as many accuse, a strategy to drive up prices?

Now the latest economic data on the Australian National Accounts shows ACT has the worst-performing economy in the country.



In an interesting coincidence, GCC was recently invited by the Chief Minister's Social Inclusion Board to participate in a workshop on the progress on the Canberra Social Plan - not to be confused with the Canberra Spatial Plan. You can read previous such progress reports here. A key plank in this Plan is the issue of housing affordability.

The reality is - by design or accident - the ACT Government is benefiting financially on the supply shortage that they created. No matter what they implement via their much-vaunted housing affordability taskforce, it has already been wiped out and then some by their own market distortion.
 
The LDA appears to be taking advantage of the situation by driving prices ever upwards. There has probably been a $30-40,000 increase in the prices of equivalent blocks between the Wells Station and Franklin developments less than two years apart - and who knows how much more by the time Crace and Casey blocks are released? They will tell you that it is 'the market' that is driving prices upwards. But let's face it - the ACT Government IS the market.

The ACT Government could fix this by putting a moratorium on land price increases in new releases until their supply rate is adequately meeting demand. This way the supply crisis wouldn't continue to skew the market. A moratorium on price increases also wouldn't hurt those of us whom have already bought land like other measures might.

The government argues that unless they sell new blocks of land for the price buyers are prepared to pay they are distorting the market and affecting the prices of existing houses. They argue that it is'not fair' that those who get cheaper blocks of land get a windfall profit. These issues can be addressed in a fair and equitable way - if the desire is there.

Unless the Government puts a stop to increases in the price of new land - at least until they catch up with demand - one could be forgiven for thinking everything else is just window-dressing...

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