Prosper Australia

photo credit: Dean Terry

If ever we needed any more motivation to burn the midnight oil, the Brumby government’s latest handout to the property lobby is just this. Just nine months since he handed out free lunch with the 90,000 blocks of zoned land announced in March, Brumby has now extended the 2030 boundary to accommodate 134,000 new homes.

Royce Millar was using the right language when he said:

BIG-NAME property speculators were celebrating yesterday, with the proposed stretching of Melbourne’s city limits set to deliver windfalls of many millions to some of Australia’s largest developers.

Will people put 2 and 2 together to realise that these windfall gains could help fund the abolition of regressive taxes like the GST? Do they realise there are more effective ways to push down the price of land?

Why did Brumby roll out the picnic blanket? Because the property lobby asked for it. What the property lobby asks for, the property lobby gets. The backbone to the release was a growing cascade of property reports showing that housing construction is falling behind population growth. But as our friends at bubblepedia have so eloquently shown by analysing Census figures, construction has outpaced dwelling growth by 4% (scroll to bottom of link).

Land supply is not the solution or the 90,000 land blocks released in March would have made a difference to Victorian land prices.

Land banking is the problem. Speculative hoarding of prime locations is the advantage land speculators have over other small businessmen. A higher Land Tax or Site Rental would discourage such activity and ensure the community gets a share of re-zoning windfalls over the long run, rather than hitting current first home buyers once off with a $95,000 development fee per hectare. Developers will laugh this off by passing on the $4,750 per site to buyers.

A new report by Tohm Curtis will soon expose the need for greater utility of land and housing for housing – not speculative hoarding. The inner city has thousands of vacant abodes and blocks of land that should be used before more greenfields are ripped up.

One day young people are going to realise how badly they are getting ripped off.

The front cover of today’s Herald Sun has a huge photo of Horse Stud owner Steve Spiteri (looking hard done by!) with a caption: ‘Thanks Premier: Steve Hits Paydirt’. Yesterday’s announcement to rezone all land residential within Melbourne’s 2030 boundary has made landowners, typically land bankers and the occasional farmer on the edge of the sprawl, rich overnight. Mr Spiteri bought his property for $375,000 twelve years ago and with the new zoning is now estimated to be worth $11 million dollars.

How much money will Spiteri make when he sells the property? Lets give him a million dollars for council rates, real estate commissions and to cover the next few years Land Tax (about $330,000 p.a). If we assume he pays capital gains tax at 30%, he will take home over $7 million dollars. This equates to more than 122 years income for the average wage earner.

That’s as if he’s earnt $11,217 per week for the last 12 years. Staggering!
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Prosper Australia today applauded the State Government’s announcement for taking housing affordability more seriously. However, questions must be asked about who benefits most from this announcement.

“Today’s declaration of residential zoning has made Victoria’s land bankers more money in a day than many earn in a lifetime.”

“Questions must be asked why the government is releasing 90,000 blocks of land when the property industry swallowed up at least 38,000 sites in just one year, as reported in the Age (22/09/07).” stated Prosper Australia spokesman Karl Fitzgerald.

“The property industry has dictated all housing affordability policies at both state and federal level.”
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Below we can see 2 examples of former Commonwealth land being released ‘to the market’. Snapped up by a developer in Melbourne’s most impoverished neighbourhood (Braybrook), such large ‘land banks’ are manipulated to drip feed houses to the markets so that high prices are assured. The building of homes is moderated by land bankers to ensure the supply of housing does not push down housing prices.

Is this the sort of level playing field we should be happy with? Kevin Rudd’s plan to release more land will result in the similar trends. It is only when a decent holding charge on land is implemented that housing prices drop. Why? The higher holding cost for land ownership will see the main component of an auction price – the land – pushed down through added supply. Land bankers will become land (& housing) builders.

Spinoffs include benefits to the poor when GST and (in time) income tax are abolished by the transition to holding charges on land through a Land Value Capture tool. Anyone for self funding public transport?

Braybrook’s Central West land bank has been a gravy train for close to 5 years, with a handful of building teams limping the supply of auctionable houses along. One can see this by looking at the top right hand and bottom left hand corners to see many vacant blocks of land. An auction is held every couple of months. In the meantime, young families are forced to live on the outskirts, spewing pollution and steaming in frustration by the time they return home from the commute.

Future home owners are being held to ransom by a tax system that encourages wasteful use of our most precious resource – land.

• Central West Land Bank



























• Laverton Land bank