Kerry Bartlett (Macquarie, Liberal Party) Share this | Link to this | Hansard source

There was some discussion in this chamber today about declining levels of housing affordability around the country, particularly in New South Wales. Much of that was rhetoric, not founded on fact. I thought it would be helpful to relay to the House some of the findings of a fairly detailed report—in fact, a very thorough report—from the Property Council of Australia, released earlier this year. The Property Council identifies a number of major reasons for the decline in housing affordability. The first is limited land supply. It says:

Limited land supply, induced by restrictive land release policies of state and local governments, is a significant driver of rising housing costs.

Clearly, if supply is not keeping up with demand then there is upward pressure on prices. It goes on to say, for instance:

In Sydney in 2003/04, 3,500 lots were subdivided against underlying demand of 7,600 lots.

So only about half the required number of new blocks of land, of land releases, are coming onto the market, therefore putting upward pressure on the price of land. The report goes on to say:

Residential land undersupply is a major national issue which is now having long term affordability impacts, creating major market distortions and generating migration and inequality rather than urban consolidation. Limitations on land supply have already added just under $30,000 to the price of a block of land.

So the first reason they identify is the lack of land. The second reason is infrastructure costs. The report says:

… state and local infrastructure levies applied to new home buyers under a ‘user pays’ argument are adding significantly to the combined weight of government taxes and compliance.

It goes on to elaborate that, instead of the principle that operated in the past, whereby state governments and local councils took care of many of the infrastructure costs—the roads, the planning, the electricity, the water and so on—now, under the adoption of a user-pays approach, those costs are added to the cost of the land and the purchaser of the land has to meet the costs of those infrastructure facilities that are part of new developments. So, secondly, the change in state and local government policies towards development has added substantially, the report says, to the price of land.

The third reason the report gives—and this is probably one that we would not have an argument with—is the increased environmental compliance costs, which have also added to the cost of new housing. The report states:

These costs in NSW now add between $14,000 … and $25,000 to the cost of a new home unit.

That is perhaps a price that we might argue is justified because we all want to make a contribution to addressing environmental issues. The fourth reason the Property Council identifies is levies and charges by state and local authorities. The report says:

Government related taxes, fees, levies, charges and compliance costs are also adding enormously to the cost of new housing. These … costs have increased by typically between $50,000 and $100,000 (even more in NSW) in the last five years alone.

So state and local government charges have substantially added to the cost of land and housing in Australia.

If you add those four things together—the shortage in land supply, increased infrastructure costs and environmental costs and the outrageous, exorbitant taxes and charges levied by state governments and local authorities—you have most of the reason for the rise in the cost of housing and the reduction in land and housing affordability.

The other point I might make is this: if interest rates were not as low as they are now, if interest rates were even close to the 12.75 per cent they averaged right through Labor’s 13 years in government, affording a house would be almost impossible. One of the saving features now is that interest rates are far lower than they were under the last government. The last thing we need is a return to the inflationary policies of Labor that would put upward pressure on interest rates and make housing far less affordable than it is now.

Question agreed to.