Prosper Australia

Finally a breath of fresh air has been blown upon the housing affordability issue. The ACT government has acted upon its long history of innovative financing by proposing a system of leasing land. Income earners below $75,000 will be able to lease the land at 2% p.a of its’ unimproved value.

The immense benefits from such a move are summarised by Tom Skotnicki from the Canberra Times in this key article:

“A family with a household income below $75,000 could rent a $90,000 block for $35 a week, compared with the $165 a week that borrowing $90,000 for the land component would cost in a typical mortgage.”

With land accounting for the majority of all mortgages, paying just 21% of the comparative cost for the land component will help give low income households a fair go.

Better yet, this policy will ensure the people share in the higher value the community place on living in that neighbourhood. The yearly rental calculation will take into account this judgement.

In time we hope that this scheme will be expanded to include all households in the ACT. We must do all that we can to assist this positive development.

An editorial has just been placed on the leasehold system proposed by Canberra Times editor at large Jack Waterford.

Today’s report on the Melbourne 2030 urban growth boundary cries out for a comment from Prosper Australia members. Melbourne University academic Rob Moodie rolled out the usual suspects in recommending that dwellings per hectare improve on the urban fringe, that there be a smaller, more intense concentration of transport hubs and lastly, the latest bureaucratic decree, that all new developments have a set percentage of housing set aside for low income people.

What is needed is an analysis on council rating systems and how this has contributed to today’s problems. CIV rating penalises home building and encourages the waste of land, in effect subsidising the land banking speculators that have held ‘doughnut’ suburbs like Braybrook and Sunshine to ransom. That’s the real supply issue. If 20% of all new developments are restrained for low income earners, what will stop the developer upping the price for the other 80% to cover this profit shortfall?
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