Delays in planning approvals are costing buyers in Queensland residential developments up to an additional $36,800 on the price of their new homes according to new research published by the Property Council of Australia.
Analysis undertaken by Urbis, on behalf of the Property Council, has calculated the cost for homebuyers caused by delays in the assessment of Greenfield sites in Queensland.
“Assessment delays have a significant impact on housing affordability,” Property Council Queensland Executive Director, Chris Mountford, said.
“For every month that a project is held-up, the developer has to pay more land tax, more council rates, more holding costs and more interest on their loans – adding thousands to the end product.”
“For each year of approval delay the cost per residential lot increases by $6,450.”
The new analysis has determined that if a Queensland development is able to be fast tracked by the State Government it is likely to take nearly 4 years to achieve approval. If left to a local government process, the approval would usually take twice as long to achieve.
“The research shows that if Queensland developments could be rezoned within the same two year timeframe that we see in Melbourne, the lot price would be reduced by $36,800,” Mr Mountford said.
“Even if we could improve our local government approval processes to be as quick as the State Government processes, we could achieve a saving of $21,153 per lot.
“That’s a real saving for homebuyers and an efficiency gain for the Queensland economy."
“A $21,153 saving on the original price of a new home is really more like a $40,000 saving over the life of a 30 year mortgage,”
“When you consider these savings across all residential lot sales in Queensland, a conservative estimate would calculate the total cost of planning delays at well over $300 million per annum.”
The research also uncovered a significant increase in the cost per square metre of new greenfield land. From 2009 to 2015 the average lot size in South East Queensland reduced from 591m2 to 515m2. Despite the reduced size, the price of an average lot has increased over this period from $227,000 to $236,000.
“With sizes decreasing and prices increasing over the last six years we have effectively seen a 27% increase in the cost of greenfield lots,” Mr Mountford said.
The report recommends the Queensland Government undertake a review of ‘best practice’ approaches to Greenfield approval in order to develop a streamlined planning approach for Queensland."
“It is vitally important that the State Government’s ongoing South East Queensland Regional Plan review results in a new plan that gets the settings right to facilitate the speedy delivery of greenfield land.”
“The draft revision of the SEQ Regional Plan, due next month, must address the cost of planning delays."
“Any serious response to the housing affordability issue must tackle this problem."
“The State Government must ensure that their regional growth strategy is reflected in local government planning schemes, or the new plan will simply be a theoretical exercise with no real effect,” Mr Mountford said.