Planning Lead Recovery

Hat tip to Stephen Kirchner who spotted this RBA nugget:

We estimate that home buyers will pay an average of $873,000 for a new apartment in Sydney though it only costs $519,000 to supply, a gap of $355,000 (68 per cent of costs). There are smaller gaps of $97,000 (20 per cent of costs) in Melbourne and $10,000 (2 per cent of costs) in Brisbane. The large gaps are sustained by planning restrictions. The shortage of apartments is most severe in the inner suburbs of Sydney, where height limits prevent more construction.

This is econo speak which says that planning restrictions, yes you local government, add up to $355,000 to the cost of an apartment in Sydney (lesser but still significant amounts in Melbourne and Brisbane).

Note the reference to the inner suburbs of Sydney, home of the ABC, the Greens and the Labor Party left.  Not to mention Sydney University and UTS.

Can someone remind TAFKAS which political parties dominate Sydney City Council, Inner West Council, Waverley Council and Randwick Council?  Planning policies to protect the wealth of the bureaucratic bourgeoisie it seems.

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21 Responses to Planning Lead Recovery

  1. Spurgeon Monkfish III

    Planning policies to protect the wealth of the bureaucratic bourgeoisie it seems.

    Barely concealed racism as well. White middle class middle aged inner city boomer leftists (BIRM) aren’t keen on inflicting instant ethnic ghettos on themselves.

  2. H B Bear

    $520k “cost” build a Chinese dog box sounds high. Anyone have int’l benchmarks (sans CFMMEU)?

  3. Bela Bartok

    Aren’t they forgetting things like Stamp Duty?

  4. BoyfromTottenham

    TAFKAS – does the $520k cost include the land component?
    Oh, and RBA is quoted as saying: ‘…it only costs $519,000 to supply, a gap of $355,000 (68 per cent of costs)’. Well, my trusty HP calculator says that $355k is 40.6% of $873k, not 68%. Does the RBA need a new slide rule?

  5. Mak Siccar

    When allowed by interstate travel restrictions, I visit my son and family near Macquarie University, an area where there are numerous multi-storey (25-30) dog boxes that have been or are being built.

  6. Spurgeon Monkfish III

    have been or are being built

    Not sure that “built” is the correct terminology. More like “slapped together” (temporarily, until a second after the seven year liability period expires).

  7. Judith Sloan

    Gosh we don’t want more of these slums of the future. And taller ones at that. Take away the ridiculously high migrant intake and this is all sorted.

  8. Watch Your Back

    Is this not a function of demand? We can see that, by dint of its economy, that Sydney attracts folks who want to work in the CBD. They bid up the price of apartments. This is much less true in Brisbane where the apartments sector was more aimed towards overseas investors. At the moment, Brisbane has a glut of apartments. I’m not sure, but perhaps Melbourne does too?

    I’m also struggling to see where more apartment blocks can be built in. Downtown Sydney.

  9. Shy Ted

    Grammar police! Planning led. technically not grammar. I blame spellchecker

  10. Pyrmonter

    @ TAFKAS

    CoS is controlled by a cult-like team of bourgeois left independents. For my money, better than the Green or ALP, but largely because they aren’t either Moscow-line communists in the first case, or a cog in the unreformed, on-going operations of the Sussex Street machine in the second.

  11. BoyfromTottenham

    It is interesting to speculate for how long overseas students will be unable to study in Australia. The sheer number of them has surely driven a goodly part of the demand for basic / middle quality apartments near most of our universities. The plan – build – sell cycle for high rise apartment blocks is probably in the order of 3-5 years, meaning that quite a few already in the pipeline are going to be completed regardless of the current lack of o/s students to occupy them. The $million question is how long before international travel bans are lifted and overseas students once more grace our shores. I notice from the Worldometer above that at last the global rise in total cases has started to level off (see the 7-day moving average version) after its relentless rise for the last 6 or 7 months. In the absence of a ‘global second wave’ and a widely available vaccine, IMHO when this chart is showing a low and still falling number of global cases it might be safe to start to lift international travel bans, which all things being equal looks like at least 6 – 9 months away. By which time perhaps apartment prices will have fallen sufficiently for them to be affordable for young Australians.

  12. Spurgeon Monkfish III

    Sydney attracts folks who want to work in the CBD. They bid up the price of apartments

    Not any more. The need for many thousands of office workers in the CBD has been killed stone dead by the Bat Flu.

    Additionally, most of the high rise existence pod exoskeletons in Sydneystan are incredibly shoddily built and/or cursed with extortionate strata levies (not to mention ongoing litigation to rectify significant construction faults in a number of them). The levies and construction faults are a significant disincentive for potential owner occupiers and a massive headache for investors who can’t claim some or all of the levies as a deductible expense, especially given that rental demand for CBD existence pods is now in freefall.

    Good luck selling an existence pod in this abomination, for example.

  13. Watch Your Back

    Indeed Monkfish,

    One was assuming the study is based on conditions prior to the virus. I’m querying the assumption that high prices are caused by not building higher.

    As to whether dense city centres have a future, that’s moot.

  14. H B Bear

    Land component of most dog box developments would be negligible. The real problem is the CFMMEU rates feeding into construction costs. Just like infrastructure in this country.

  15. stackja

    Hong Kong refugees move into the inner city and voting out the leftists?

  16. Pyrmonter

    @ stackja

    I like your thinking.

    @ HBBear

    Development land sells on multiples of the units that can be developed. A decade ago, in the wake of the GFC, land values fell to just below $20,000 – not trivial; but it’s several-fold now.

  17. Old Lefty

    The ABC has been foaming at the mouth, like the Greens, about the Westconnex/M4 project. Keep those Westie redneck bogans out of Trendurbia!

  18. Squirrel

    Those comparative gap figures look suss (every city has its share of do as I say, not as I do planning nuts) , but whatever the truth of the matter, there’s going to be lots of office buildings available for “re-purposing” in coming days, and fewer people clamouring for the joys of high-rise dog-box lifestyles.

  19. mareeS

    Johannesburg CBD is a good predictor of what happens when white investment moves out and the villagers move in.

  20. John A

    I know English is a funny language, but please fix the egregious error in the title: LED not LEAD if you don’t mind.

  21. BoyfromTottenham

    John A – and I think that a hyphen between planning and led would be even better.

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