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.