Bureaucratic revamps, redesigns and rethinks driving up cost of stand alone homes

New research reveals a key problem that is pushing the price of stand-alone houses in Sydney 75 per cent higher than in Melbourne or Brisbane.

The cost of stand-alone houses in Sydney significantly higher when compared to other major cities. Picture: Sam Ruttyn

Red tape is killing the Australian dream of home ownership in Sydney with new research showing the cost of building delays are pushing the price of stand-alone houses in Sydney 75 per cent higher than in Melbourne or Brisbane.

The cost of delays brought on by council and government department redesigns, rethinks and revamps on a new apartment are more than 10 times greater in Sydney than the other capitals, the Urban Taskforce’s housing report has found.

Taskforce chief executive Tom Forrest said the research showed “that planning rules and regulations are worse in NSW than for other states” and called for a shake up of the Planning Act, building regulations and taxes.

“NSW is addicted to taxing new home buyers and it’s got to stop because Sydney homes are the most taxed in the country and it’s forcing new home buyers away,” he said.

“The Planning Act does not even mention housing supply as one of its core objectives,” he said. “The NSW Government has a target of 76,000 new homes a year and is on target to deliver less than 50,000.”

Mr Forrest said the increased costs made buying a home the second most expensive in the world after Hong Kong. The research found that the cost of infrastructure, building materials and labour, government taxes and delays were all greater in Sydney pushing up the cost of a new greenfield home $1.2 million compared to around $850,000 in Melbourne and Brisbane.

Mr Forrest said the cost of delays imposed by design and planning bureaucrats on a new apartment are $116,000 in Sydney compared to just $10,000 in Melbourne.

Those costs coupled with higher building costs push the price of a new apartment in Sydney to $918,000 compared to just under $750,000 in Melbourne.

Mr Forrest said the cost of delays mounted up as the construction went on. Delay on a $100 million project before building began could cost $10,000 a day. But once the building was finished any delay in receiving the Occupation Certificate could cost $46,000 a day.

Aras Labutis from Coronation Property, the largest build to rent builder in NSW, said Premier Chris Minns was “leading from the front” with the new Housing Delivery Authority but more needed to be done.

Red tape is killing the Australian dream of home ownership in Sydney. Picture: NewsWire / Gaye Gerard

“On the one hand you have got this really good policy move but then there is a disconnect between it and the agencies and councils operating below it,” he said.

“The tangled mess of fees, contributions and charges continually add to the cost of developing new housing and get passed on to the end buyer.”

The housing crisis has seen the average price of a house in Sydney climb to $1.4 million – 75 per cent higher than the other capitals and out of the reach of many young families.

Deloitte analyst Lamisa Islam, 24, and her partner Sam Seewan, 27, feel they are priced out of the market for a home of their own.

Lamisa Islam (left) and Sam Seewan are struggling to enter the housing market in Sydney. Picture: Sam Ruttyn

“Even one and a half hours out of Sydney where we are in Campbelltown houses start at $1.3 million and to afford that it means goodbye holidays, eating out, hobbies and life is just paying a mortgage.

“The longer we wait the faster we are priced out of the market,” Ms Islam said. “I would love to see some sort of Government intervention to help increase housing supply.”

Planning Minister Paul Scully vowed to continue to fix the planning system and build on reforms that developer members of the Urban Taskforce “are actively using” to get people into new homes.

Lamisa Islam and Sam Seewan fear they are being priced out of the market. Picture: Sam Ruttyn

“Since January, the Housing Delivery Authority has already led to 64 projects with an estimated 27,800 homes being declared State Significant Development,” he said.

“The Minns Government has led the boldest planning reform agenda that NSW has seen in decades, the Housing Delivery Authority, the Low and Mid-Rise reforms and the Transport Oriented Development program are all pathways that will deliver more homes for young people, families and downsizers.”

Adam Leto, chief executive of the Western Sydney Leadership Dialogue said “through the roof construction costs” combined with increases in land value meant many developers were not going ahead with projects.

“The State Government is working overtime and pulling every lever it can, but the biggest handbrake on housing supply, especially in Western Sydney, is the cost of development,” he said.

Planning Minister Paul Scully vowed to continue to reform the planning system and build on reforms that developer members of the Urban Taskforce “are actively using” to get people into new homes.

“Since January, the Housing Delivery Authority has already led to 64 projects with an estimated 27,800 homes being declared State Significant Development,” he said.

“The Minns Government has led the boldest planning reform agenda that NSW has seen in decades, the Housing Delivery Authority, the Low and Mid-Rise reforms and the Transport Oriented Development program are all pathways that will deliver more homes for young people, families and downsizers.”

Originally published as Bureaucratic revamps, redesigns and rethinks driving up cost of stand alone homes