Land sales slump but prices hit new heights Marika Dobbin - domain.com.au January 19, 2011
Sales of Melbourne house blocks have slumped by three-quarters in a year, but buyers into new suburban estates cannot expect any discounts with developers raising already record land prices.
News that the median price has hit $190,000 a block comes as the development industry celebrates three Baillieu government policies aimed at increasing land supply on the urban fringe, reducing the burden of infrastructure levies and making it cheaper to hold land.
Housing Industry Association figures released yesterday show residential land sales fell by 74 per cent in Melbourne over the year to September, yet median land prices grew by 15 per cent over the same period, despite the size of house blocks getting smaller.
The drop-off in sales corresponded with an end to the federal government's $14,000 grant for new homes in metropolitan areas and despite the state government increasing its grants for building a first home by $2000 to make up part of the shortfall. Developers have repeatedly blamed soaring prices on dwindling land supply, calling for more rural land to be rezoned for housing and a faster planning process for new estates.
'Land is in such short supply that the situation is critical,'' HIA Victorian executive director Gil King said. ''Until the mismanagement of land supply is fixed, prices are going to keep going in the same direction and we are going to become the least affordable city in Australia very quickly.''
However, industry critics have said that Melbourne is already the world's eighth most sprawling city because it is wasteful with land, and that a few large companies are banking land to control the market and push up prices.
The previous government extended the urban growth boundary early last year to include an extra 46,000 hectares for development and before that, in 2005, to include an extra 11,000 hectares. The new government has said it will review the boundary every two years to ensure there is enough land supply.
Planning Minister Matthew Guy yesterday told The Age the Coalition would also change the controversial infrastructure levy of $95,000 a hectare in Parliament, so that landowners have to pay only when they are ready to develop a new estate - not at the point of purchasing land for development.
The move will save big landowners hundreds of thousands in holding costs while planning permission is sought. However, the growth areas infrastructure contribution will still sting home buyers, adding up to $5000 a block.
In other policy developments, Mr Guy said the government would retain Melbourne's land release planning agency, the Growth Areas Authority, for the time being in a bid to increase housing supply.
Mr Guy once described the statutory authority as a ''waste of money'' and told The Age in December it would absorbed into the Planning Department.
''It was our election policy to wind up the GAA and bring it in as part of the department but it is not going to be scrapped tomorrow,'' he said. ''Our priority is not an obsession with departmental structure but in bringing land to market quicker and increasing supply during a time of growth. We expect the GAA to be more efficient.''
Mr Guy also confirmed the government would consider selling some of a $450 million land bank owned by state development agency VicUrban, so that it could focus on developing urban rather than greenfield sites.
''If there was to be any disposal of land assets it should not be done in any type of fire sale, as was being contemplated by the previous government,'' he said. ''But we have made no formal decision to do that.''
The HIA figures showed just 1500 Melbourne house blocks were sold in the September quarter, the lowest in at least a decade, compared with almost 6000 in the September quarter of 2009.
