Prosper Australia

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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Here we can see 2 examples of former Commonwealth land being released ‘to the market’. Snapped up by a developer, such large ‘land banks’ are manipulated such that the building of homes is kept under control 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.

The Central West land banking has been going on for over 4 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. 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