Feasibility issues must be taken seriously

SIGNIFICANT changes are needed to make new housing projects stack up, according to a feasibility forum hosted by the Housing Industry Australia’s NSW branch.

Brad Armitage, HIA NSW executive director, said while planning reforms have been a good first step, if NSW is going to truly combat housing supply shortages, then the focus must turn to tackling the feasibility challenges.

“HIA Members stated that less than two per cent of potential land development sites are actually feasible at present,” Armitage said.

“It is a similar situation in the multi-unit sector where development costs often exceed the market price of an apartment. The forum heard that around 75 per cent of approved apartment projects never get out off the ground.”

In his address, the NSW shadow treasurer Scott Farlow acknowledged that in the areas where housing is needed most, it is just not feasible to build. 

HIA senior economist Maurice Tapang told the forum that while housing starts in NSW are increasing marginally, supply is well below the numbers needed to meet demand. 

“Taxes, fees and charges continue to be a major barrier to new housing,” Armitage said.

“In Western Sydney, the local council infrastructure contributions, Sydney Water development servicing charges and the Housing and Productivity Contribution alone add over $120,000 to the cost of building a new home.

“The limited supply of available land was also identified as a contributing factor with the cost of land rising six times faster than construction costs. 

“In the 1970s, Gough Whitlam talked about land supply being a major barrier to new housing. Here we are more than 50 years later still facing the same issues.”