13 June 2012
Victoria Planning Minister Matthew Guy has made big land price falls on Melbourne’s outskirts a certainty with his extension of the metropolitan boundary by around 7000 hectares.
“The gaping chasm between developer supply and buyer demand has never been wider.” Prosper Australia Campaign Manager David Collyer said today. “Minister Guy has just added to the chaos.
“This new supply will help drive down the market price of finished residential lots by a forecast 30 per cent over the next two years.
“The value of undeveloped land zoned residential will fall much further. Landbankers and their financiers are looking at very big losses. Many face bankruptcy as their leveraging works in reverse.
Finished lot sales are down 42 per cent from 12630 in the year ending March 2011 to 7340 lots in the year ending March 2012. Meanwhile, property researchers Oliver Hume says outer Melbourne already faces a land supply glut, with a record high of up to 200,000 lots to be ready for development in 2013/2014.
“That difference is too wide, too stark, to be closed in an orderly manner.
In normal times, Minister Guy would have just gifted landowners a $420 million windfall as landbankers typically gain $60,000 a hectare at the instant of rezoning, according to Urbis research.
“This landowner wealth-extraction process is as old as cities, and handsomely aided by Australia’s very bad taxation system that advantages capital gains over wage earnings and business profits.
While some owners benefiting from the rezoning are individuals on small acreages, most go to landbanking corporations who correctly foresaw government boundary changes and methodically bought up ahead of it.
“Anyone considering buying a new home on Melbourne’s outskirts is advised to stand aside ahead of these utterly predictable falls,” Collyer cautioned. “Those taking our advice a year ago have already saved an average $58,000.
“We urge homemakers to wait, save a giant deposit on the price difference between renting and buying, and take advantage of future lower prices.
“Don’t Buy Now!”
Media contact: David Collyer email@example.com
About Prosper: Prosper Australia is a tax reform lobby group and
think tank that is now 120 years old. It seeks to move the base
of government revenues from taxing individuals and enterprise to
capturing the economic rents of the natural endowment, notably
through Land Value Tax and Mining Tax.