New report reveals nine Master Plan Communities costing $5.9 billion in higher housing costs
A new report entitled Staged Releases: Peering behind the land supply curtain from Prosper Australia has revealed the profits developers enjoy through the strategic releasing of sites.
Karl Fitzgerald, Director of Advocacy at Prosper Australia says, “This research is the first time Master Plan Communities in Australia have been properly investigated to understand their role in influencing the high cost of housing.
“Our report shows that despite there being over 110,000 approved sites, only 26,000 sites, or less than a quarter, had been sold over the past decade. Essentially, the slower the sales, the more developers make.
“Instead of land and housing prices falling as home buyers were promised, prices increased by an annual rate of 5.5% above inflation – even though 76.2% of estates were vacant.
“If developers continue to control prices like this, we could concrete over the entire nation and still not make a dent on affordable housing. First home buyers have been lured into Master Plan Communities under the false premise that supply is the key to their dreams.
“This control was most evident in 2017, when supply was building to a point where it could make a difference. Instead of prices falling as promised, developers in our study preferred to pull 48.7% of supply from the market. The record books show that 2017 recorded the highest increase in land values on record.
“This report highlights that the entire edifice of Australia’s housing policy focus on supply is only acting to make wealthy property developers more powerful.
Despite regular housing inquiries amidst a 20 year housing crisis, little has been asked by housing ministers and other public officials as to why supply rates are staggered in staged releases according to market conditions. Planning departments around the nation have been crucified for decades, but nobody had shone the mirror the other way to see what developers do to preserve their profits.
“It appears that housing supply is the fair weathered friend of affordability. It is there in the good times, but as soon as the market sneezes, the rug is pulled out from the market.
“Forget red or green tape as the impost on prices. Developers instead prefer to hold the approved supply behind a gold tape that they only release when the market is buoyant.
“According to the sales ratios we have witnessed, it appears that these developments will take more than double the typical development framework to sell out, with some taking more than 40 years to complete.
“Most concerning was that even in the master planned community Willowdale, where sales rates were double our study average, prices at developer Stockland still increased by 6.47% above inflation.
Across the study, practices such as this saw families and homebuyers pay an extra $194,000 for a typical site.
“This report shows that there isn’t enough scrutiny on developers who are manipulating the supply shortage to benefit from rising land and housing costs. If we want to actually address the housing affordability crisis in this country, we need to start prioritising supply delivery over land banking,” said Karl Fitzgerald.