The New Daily’s Michael Pascoe did a great job demolishing the lie that if Australia simply relaxed planning restrictions, and let developers built apartment wherever they want, then Australia’s housing crisis would magically resolve.
“Sure, “everybody” says councils are holding up building more housing”, Pascoe writes.
“Sure, there are councils that could make building easier for developers and individuals, but that’s not what the housing crisis is about”.
“Before a council can approve an application, the application has to be made. Turns out applications and approvals are pretty much in balance – proportionately very few are rejected and there are generally more approvals than dwellings proceeding”, Pascoe explains.
“It also turns out there actually is a large stock of potential housing already approved, but those planning approvals are being sat on by developers awaiting the most profitable moment to start building”.
“On top of that, there is something of a credit squeeze happening with banks leery of lending to builders, having watched so many go broke over the past year”, he adds.
Pascoe then sites a specific example from Victoria proving his points:
“In the first half of this financial year 19,231 planning permit applications were received, 2569 were withdrawn or lapsed and only 532 were refused”.
“Not only is the planning/approval process not to blame for the shortage of dwellings, it is running ahead of developers willing and/or able to build”.
Pascoe is spot on, of course. There are literally tens of thousands of home approvals across Australia that are rotting on the vine because it is not profitable for builders to proceed.
Therefore, simply relaxing planning restrictions, as now being championed, will not solve the “supply” problem.
We should also recognise that is not in developers’ interests to flood the housing market with new supply because that would reduce their profits.
They are better off financially drip-feeding supply to keep prices higher and fatten their margins.
This is why Mirvac sat on 157 empty apartments in its LIV Munro development in Melbourne for nine months during the worst rental crisis in living history:
Developers make fat profits from perpetuating the housing shortage, and that won’t change unless our governments decide to regulate land release to force development and sale.
Short of actually forcing developers to supply housing, the only surefire way to increase housing supply is for governments to develop new housing stock directly via public housing.
Sadly, Michael Pascoe is also a long-time ‘Big Australia’ shill and refused to mention the other side of Australia’s housing equation: excessive demand via extreme levels of immigration:
If we genuinely want to solve the nation’s housing shortage, then net overseas migration must be reduced to a level that is below the nation’s capacity to build both housing and infrastructure (i.e. long-term historical levels below 150,000 a year).
Otherwise, population demand will continue to exceed supply and the housing “supply crisis” will roll on.
