integrated planning & implementation of redevelopment role ......2018/10/02 · sydney ~$7b per...
TRANSCRIPT
Integrated Planning & Implementation of
Redevelopment – Role of the Development Industry Steve Mann, UDIA NSW, July 2018
AGENDA
▪ Residential Market Update ▪ Development Sector Operating Environment▪ Integrated Planning to driving better outcomes▪ UDIA NSW International Study Tour Insights▪ The Way Forward
An entrenched housing affordability crisis
Source: Demographia (2018) Source: Grattan Institute Source: Newgate Research
Our worsening affordability crisis is becoming THE most important public policy question
Real dwelling prices and full-time weekly earning index: 1970 =100 Community Survey (May 2018) Most Important Issues - Spontaneous (%) n = 1,500
Despite heightened supply – we are still not producing enough housing in NSW
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Greater Sydney, Dwelling Completions & Net Population Growth
Houses Multi-Unit Net Population Change
A 100,000 dwelling backlog underpinning the affordability crisis
Source: UDIA NSW, DP&E Source: UDIA NSW & PWC
Ratio of dwelling completions to population change in NSW
Liveability is under pressure
CongestionThe on-going challenge of growth is leading
to spiralling congestion with infrastructure not
keeping pace. Congestion currently costs
Sydney ~$7B per annum.
Household Debt
Australian household debt levels are
alarming high on a global scale – driven
by our unaffordable housing stock.
Community Facilities
As our population grows community
facilities and open space needs to
increase, which councils cannot fund.
The liveability of our major cities is under threat across various dimensions
Relevant Picture
Trends in Total & Avoidable Congestion Cost levels for Trip DelaysHousehold Debt as a % of GDP
Source: ABC Source: BITRE
Infrastructure spending increased significantly, but still a massive deficit to address
The solution is responsible supply with growth aligned to infrastructure
Committed Government Infrastructure Funding, by Jurisdiction
Source: Infrastructure partnerships Australia Source: Grattan Institute
Market cooling with APRA smoking out investors & banks tightening lending criteria
Investor Lending Share of Housing Finance
Without sufficient supply pipelines the softening property market conditions likely to be compounded
Source: ABS, ANZ Research
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Sydney - Weekly Auction Clearance Rates
Stock (LHS) Clearance Rates (RHS)
Source: Domain
NSW has the most complex planning system in the county
Dwellings in Gateway (April 2017)
Source: RPS
The NSW housing supply chain marked by significant delay, uncertain timeframes & unpredictable regulatory frameworks
Source: UDIA NSW
Who pays?
• It is fundamentally unfair for new residents to bare the burden for providing liveability – the beneficiaries are across the whole community
• Just charging the impactor hurts the whole community. Everyone will use the infrastructure, not just people who bought new houses.
Impactor Pays
Those that create the need for
additional infrastructure pay for the cost
of that infrastructure.
Beneficiary Pays
Those who benefit from additional
infrastructure pay for the cost of that
infrastructure.
Taxpayer Pays
The cost of additional infrastructure is
socialised across the entire community
through the tax system.
Who pays? Currently it’s greenfield buyers and developers
2017 scenario
• S 7.11 capped at $35,000/lot
• Modelled on $600,000 lot
• Taxes high, but margin allows development
2020 scenario
• S 7.11 uncapped
• Modelled on $600,000 lot
• 2.7% margin too risky to develop –will constrain supply
The outcome
Increasing developer contributions to the point where development is not feasible either leads to:
1. House price increases; or
2. A halt in development.
Both lead to poor outcomes
• UDIA-PwC modelling shows over 5 years, a 10 percent drop in housing supply would cause economic decline felt across NSW:
The ‘Big Picture’ planning was the easier part…now comes the hard graft of implementation
The GSCs strategic vision of a Metropolis of Three Cities sets a clear city growth agenda
▪ A key implementation requirement will be the (re)formation of an Urban Development Program (UDP) which provides one source of truth for where future growth will occur and help with prioritising of catalytic infrastructure.
A UDIA NSW delegation recently travelled to Hong Kong, Manchester & London
Key insights include:
▪ Strong Leadership supported by robust governance frameworks pays off.
▪ Far sighted integrated transport development can result in high amenity high density environments.
▪ Delivering first class urban renewal projects takes time, patience and lots of bi-partisan support.
▪ Build-to-Rent is fast becoming a critically important part of the UK housing mix – but required various government incentives.
Growth and Density
• Sydney’s population is growing – and the family home is bursting at the seams
• Mum and dad want to retire to their dream destination
• The kids will soon have their own kids and need space
• Grandma and grandpa need professional aged care
• People are moving to Sydney from the regions and overseas because that’s where the economic opportunity lies
• But there are benefits
• More housing supply means more jobs, more stimulation to the economy
• Density means more efficient infrastructure financing and more affordable housing options
• Opportunity to grow around transit hubs – i.e. Transit Oriented Development
CGI of Crown Group’s Infinity @ Green Square
Millennials to re-shape the way we build new communities
• Young people have always preferred urban areas (before having children) –close to employment and networking opportunities.
• Affordability is key. A great new community means nothing if nobody can afford to live there.
• Density may ‘kill two birds with one stone’ – more users of local amenity and more affordable homes for residents.
• Supply, supply, supply.
‘Affordable Housing’
Myths• ‘Affordable housing’ is the same as social housing. Building
more of it will solve the public housing backlog.
• Affordable housing is for key workers – police, nurses, teachers, firefighters and paramedics etc.
• Inclusionary zoning will deliver housing for all
• Developers do not want to deliver ‘affordable housing’, government needs to force them
Facts• Social housing caters for a very different demographic of
people who have the least access to the market. Only the Government can afford to provide housing. 60,000 people in NSW still on the waiting list.
• All of these jobs earn too much in the first year to be eligible for affordable housing (as a single)
• Inclusionary zoning can make projects unfeasible.
• Partnership between government and industry is the way forward – incentives crucial
• More supply = more opportunity for private ownership, this is what key workers really need
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Standard AHSEPP
Housing Under Affordable Housing SEPP
Market Affordable
Reduced market
housing results in
an unrecovered
• SEPP provides a 0.5 FSR bonus if 50% of dwellings are affordable
• 40 Unit 2:1 FSR site under the affordable housing SEPP
THE MARKET NEEDS INCENTIVES TO DELIVER
AFFORDABLE HOUSING
Diverse Housing
• Greater Sydney has huge shortage of ‘missing middle’ housing – key part of solving affordability
puzzle
• UDIA NSW wants councils and NSW Government to be partners in delivering the Low Rise
Medium Density Housing Code and Complying Development
These are the controversial ‘manor homes’
Actually more of a ‘gentle’ density, compared to apartments
The way forward
A complete rethink of how we fund local and regional infrastructure. Shift from an impactor pays to a beneficiary pays model.
Introducing an Urban Development Program – a ‘single source of truth’ for alignment of growth planning and infrastructure provision.
Accepting housing typologies as the way forward – millennial housing, smart density, housing for everyone, missing middle.
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