Housing scorecard: Industry experts rank Jacinta Allan’s new reforms
Four property industry experts have had their say on each of the eight housing reforms announced by the Premier this week. See how they rate them.
Victoria
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Property experts warn the devil will be in the detail of the Allan government’s bold new housing reforms.
Developers, builders and planners have graded each of the state’s eight new reforms – unveiled day by day over the past week – which are aimed at stimulating the housing market.
Many say the changes don’t go far enough, prompting growing calls for the government to offer more tax relief, while others have raised doubts about the feasibility of filling suburbs with high-rise apartment buildings.
But they have applauded some measures taken by the government, including a pledge to wipe stamp duty on all apartments, townhouses and units bought off the plan.
Jacinta Allan this week boldly stated that she wanted to be “the Premier who got millennials into homes”.
“I feel like we’re finally ready to have a real conversation about how our biggest city can build more homes to fix the housing crisis,” she said this week.
“I know a thing or two about getting things done. I delivered Skyrail. Removed the level crossings. Built the Metro Tunnel. We transformed the transport system. Now, I’m ready to build the homes around it.
“I want to be the Premier who got millennials into homes.
“I consider that to be the fight of my life.”
WHAT INDUSTRY EXPERTS HAD TO SAY
Illan Samuel: The apartment developer
ACTIVITY CENTRES: D
Positive: Shows government is serious about more density around existing amenity.
Negative: Suburban Rail Loop isn’t fully funded, sites aren’t amalgamated, windfall gains tax will apply and more density won’t make developments feasible. Doesn’t achieve any supply in the short to medium term.
STAMP DUTY: B+
Positive: Instant impact for the Off The Plan market to have a competitive advantage over established property, without costing the purchaser or developer.
Negative: Missed opportunity to include recently completed (but yet to be transacted) property within the saving.
DEVELOPER CONTRIBUTIONS: F
Positive: Contributions would only commence in 2027, after the next state election, which may see a change in government and this concept abandoned, and therefore never actually be implemented.
Negative: Developments are already not feasible due to increased borrowing and construction costs against stagnant selling prices. Increased yield won’t offset this enough when factoring in additional developer contributions and associated taxes (land and windfall gains tax).
GREENFIELDS: UNLOCKING LAND ON MELBOURNE’S FRINGES: D
Positive: Government further acknowledges 70/30 is the answer and while it is releasing more greenfield land, development in the inner to middle ring suburbs is vital to coral Melbourne’s sprawl and reliance on new infrastructure.
Negative: Complete PR spin. Releasing long mooted land after essentially releasing nothing for four years. Huge missed opportunity to look at significant reform to authority and CHMP processes, engagement and timelines.
VBA OVERHAUL: F
Positive: More resourcing for the VBA to manage the industry, which in itself should reduce any compliance issues (then you don’t need bonds!).
Negative: More red tape and costs (money has a value) for developers that will need to be passed on to the end user, only disensentiving the private market from participating in creating more supply.
SUBDIVISION REVIEW: C
Positive: Makes it easier to unlock land for more straightforward development I.e. side-by-side townhouses in inner to middle ring whereby the zoning doesn’t provide for more intensive development.
Negative: Barely moves the needle in terms of supply. Doesn’t make this type of development more feasible or attractive to buyers, just improves the planning process.
REGIONAL HOUSING: F
Positive: Government understands regional Victoria requires more investment and infrastructure in the form of roads, schools, community facilities.
Negative: Government believes the private sector should carry the cost burden of not only providing much needed housing, but also essential amenity, which only increases the associated costs with delivering this much needed housing in regional Victoria. This policy will only slow any supply, increase prices and disincentive any private investment in regional Victoria.
RENTAL REFORM: C
Positive: Amendment to bond process is welcomed, together with streamlining dispute process.
Negative: Another announcement with negative connotations framing property investors as “dodgy landlords”. This announcement does nothing to encourage the same property investors into Victoria’s market – which remains the highest taxed and the fastest shrinking market in all of Australia. This is the real issue and another opportunity missed.
John Goris: The builder
ACTIVITY CENTRES: D
Positive: Trying to provide more housing options near existing infrastructure and amenities.
Negative: Cost of developing most of these apartments is currently unfeasible. Also, a lot of Melbourne families want to live in a house, and we still have a lot of undeveloped land in the urban growth areas of Melbourne.
STAMP DUTY: C
Positive: Good for purchasers looking to buy apartments, townhouses, or units.
Negative: Missed opportunity to help families buying a new block of land to build a house on. Anyone buying a block of land will still need to pay stamp duty on the land.
DEVELOPER CONTRIBUTIONS: B
Positive: I hope this means that the Growth Areas Infrastructure Contributions (GAIC) and other developer contributions, which all add to the price customers pay when buying new land, is invested in local infrastructure projects.
Negative: GAIC and other contributions are paid by the developer and then subsequently passed onto the customer. GAIC was introduced in Victoria around 20 years ago. There has not been enough clarity on whether GAIC was spent on local infrastructure or if it was just allocated to general revenue.
GREENFIELDS: UNLOCKING LAND ON MELBOURNE’S FRINGES: A
Positive: Good. We need to provide developers and builders with more confidence regarding new land being released in the growth areas.
Negative: We need to ensure infrastructure is built around these greenfield sites and growth areas to support the people and families that live there.
VBA OVERHAUL: C
Positive: Hopefully combining multiple government agencies into one agency will provide benefits to consumers and the industry.
Negative: Not a lot of detail around how this will be better than the current system, and what benefits there will be for consumers and the industry. I hope that the introduction of this new agency does not add to the cost of building a new home.
SUBDIVISION REVIEW: A
Positive: Makes a lot of sense to streamline the current system and make it easier to build two homes on one block. The current system needs to be improved.
Negative: This is only a review, and the government has previously suggested that it will make changes. However, it looks like the government is serious about improving the current system, which is very positive.
REGIONAL HOUSING: B
Positive: Many regional areas need more homes.
Negative: Not a lot of detail around how these new homes were going to be funded and how long they will take to be built.
RENTAL REFORM: E
Positive: The concern is this won’t do anything to fix the current issues and may even make things worse long term. We need more homes built, which creates more competition, provides renters with more choices and creates better outcomes for people renting.
Negative: The main reason renters are having issues is due to the lack homes available for rent. This announcement might scare off investors, who already must contend with high land tax and other costs in relation to holding an investment property.
Max Shifman: The greenfields developer
ACTIVITY CENTRES: D
Positive: Delivers updated structure plans in 50 areas capable of higher-density development. Streamlines planning approvals with reduced appeal rights which will save time in planning and increase certainty.
Negative: Construction costs mean mid to high-rise development is not currently able to deliver dwellings which are priced right for most buyers, especially on the affordable end. Overall demand for apartments still remains low compared to other housing types.
STAMP DUTY: C
Positive: Potentially increases off-the-plan sales for some projects and helps get them started.
Negative: Limited to 12 months. Penalises developers which progressed projects and took risk despite difficult times and now hold residual stock.
DEVELOPER CONTRIBUTIONS: D
Positive: Finally spending some GAIC money. Aims to create a simpler system for property developers to contribute to local infrastructure and services.
Negative: Statewide and “streamlined” developer contributions is code for increased development contributions. Will further raise end costs across all types of housing.
GREENFIELDS: UNLOCKING LAND ON MELBOURNE’S FRINGES: D
Positive: Aims to provide more certainty about greenfield release time frames with an 18k p.a. target.
Negative: Simply restates the existing VPA PSP program, with only two actual new release areas. Slows down and further sequences the PSP release program, reducing future greenfield supply.
VBA OVERHAUL: D
Positive: Potentially help buyer confidence.
Negative: Watchdog must be balanced. Overly consumer-biased approach will create more disputes, reduce builder and subcontractor capacity to build.
SUBDIVISION REVIEW: B
Positive: Reviews rules to allow faster dual-occupancy development approvals, including deemed to comply. Could provide incremental supply improvement.
Negative: Not scalable and not necessarily affordable in many parts of Melbourne.
REGIONAL HOUSING: D
Positive: Provides more town planner support for regional areas where resources are lacking.
Negative: “Simpler, fairer” system most likely means more expensive infrastructure contributions and costs, especially in areas where they don’t currently exist. This will lead to higher prices and reduce feasibility.
RENTAL REFORM: E
Positive: It will speed up and reduce cost of dispute resolutions for tenants.
Negative: Current dispute resolution rules have already been skewed to tenant’s favour – why do we only ever hear about “dodgy landlords”, never “dodgy tenants”. If RDRV isn’t well-balanced, this will push even more investors and landlords out of Victoria and further reduce rental supply. Not sure how this fits under the category of creating more housing.
Bret Fleming: The town planner
ACTIVITY CENTRES: B+
Positive: More housing in accessible locations just make sense. It allows people to live close to shops, jobs, and services.
Negative: Challenge will be to ensure that changes are measured and we have additional physical and social infrastructure to support the higher densities. Rushed density will come at a cost. Unlikely to see significant yield from this until well after the next state election.
STAMP DUTY: A-
Positive: Stamp duty is a key impediment to housing affordability – particularly at the entry level where its most cost sensitive.
Negative: Greater effect if they were to be rolled out to include none strata townhouses and the 12 month period should be closely monitored for impact and extended if its working.
DEVELOPER CONTRIBUTIONS: A
Positive: Current system is overly complex and in need of reform. Any new system should recognise the very different demands of development typologies and the new system should be transparent and fair. Detail yet to come but a positive change.
Negative: Care needs to be taken to ensure results are visible, e.g. new open space, expanded services.
GREENFIELDS: UNLOCKING LAND ON MELBOURNE’S FRINGES: C
Positive: Visable plan.
Negative: Simply provides a pipeline for areas that had already been announced. Needs to be responsive to supply issues for employment uses and not set in stone. More clarity needed on PSPs, reform required to reduce preparation time frames and minimise delays related to technical studies.
VBA OVERHAUL: B
Positive: More consumer confidence when undertaking renovations or building new dwellings.
Negative: Little solace for those impacted in the past as it won’t have retrospective powers.
SUBDIVISION REVIEW: B
Positive: Red tape reform and a review welcomed.
Negative: Detail yet to come and again – liveability and issues such as the urban heat island need to be considered.
REGIONAL HOUSING: B
Positive: Step in the right direction for increasing regional supply and decreasing approval time. A focus on regional towns, in particular the bigger ‘commuter’ towns, is needed with more housing, jobs and better regional transport options being key.
Negative: Further work needed – including reconsideration of the windfall gains tax for the regions – which increases house prices.
RENTAL REFORM: B+
Positive: Should weed out poor quality practices and landlords
Negative: Care must be taken not to increase rents through additional rental burden. Like most announcements, key will be how it is applied in practice.
Originally published as Housing scorecard: Industry experts rank Jacinta Allan’s new reforms
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