The popularity of McMansion-ville suburbs dwindles as genuine home-buyers look for communities with character in New home sales retreat: HIA

Sales of new homes in Australia dropped in October, an industry survey showed today, in a further pullback from stimulus-driven gains earlier in the year.

The Housing Industry Association said sales dropped 6 per cent in October, on top of a 4.3 per cent decline in September. That largely unwound an 11.4 per cent jump in August as people rushed to take advantage of additional first home-buyer grants.

“It is looking like 2010 will be a year where the number of new homes built will fall well short of what is required to match Australia’s rapidly growing population.”

A drive through any of these corporately designed communities will see a dearth of community hubs, clubs and information centres. This is the infrastructure that creates a community. However, any such ‘third place’ imposes a reduction of sell-able property. The profit making mantra has decided these are not worth it. However, some developers are bucking this trend.

In a carbon challenged future, the lack of public transport (and any hope of funding it under the current model) may also be impacting on buyers’ decisions.

With property prices continuing to move upwards, home buyers are instead competing for land and houses in older suburbs where the housing mix was allowed to evolve by a raft of competing builders and architects, rather than by a centrally controlled, profit making developer.

And what do we get in response? Knowledge that housing will only get more expensive as supply will be crimped next year (as Hudson warned recently).

But yet our houses are the biggest in the world:

The typical size of a new Australian home hit 215 square metres in the past financial year, up 10 per cent in a decade, according to Bureau of Statistics data compiled for Commonwealth Securities.

The answer we are looking for is in the need to break open the dominance of the big 6 developers and to open up the large land banks to everyday builders. However, our tax system ensures all the advantages lie with big companies. How?

Low land taxes allow developers to drip feed properties to market to ensure prices can be manipulated upwards. It also encourages mcmansions by under-playing the role of land in the affordability equation.

On Saturday I spent a few hours driving around Hillside, at the far end of our sprawl past Keilor, in shock and awe at the hoodwinking job going on in Melbourne. The vast majority of streets I drove down in this McMansion-ville had vacant blocks of land littering the community. So much for additional land supply as the answer for affordability! Check the flickr page to see just some of the sites.

The tax system also supports large developers and land bankers alike at the local level. CIV (capital improved valuations) council rating sees the family home paying more than the land banker, as they have no improvements/ no house to be taxed. Local governments are complicit in allowing the family home to subsidise the land banker by upwards of 30%.

One of the many other advantages for any large business is that quarterly GST can be saved up over 3 months and the interest earnt on it used to offset the costs of hiring accountants. The accountant can then spend time investigating tax loopholes to minimise the developer’s contribution to the community.

The community will continue to be duded for as long as it ignores these self imposed tax tricks.