Policy isn’t applied in an economic vacuum… Concerns continue to grow every day that the NSW Government is struggling to understand the feasibility of apartment developments in Sydney right now. Land, Construction & Labour Costs, Fees & Taxes and Lender requirements all stack up to make building an apartment in Sydney rather expensive. If that cost to develop exceeds the price people are willing/capable of paying in a particular location then the feasibility of that project becomes high risk for a developer. TODs are a good policy, increasing density close to establish transport hubs, is considered global best practice. However every time the government tries to squeeze something for free out of a development, the price of that something gets passed on to the future buyers in that development. Once the price tips over the feasibility threshold it’s likely the development won’t proceed. In a housing crisis that requires more homes to be built, pricing private developers out of the market when Government needs them to build over 95% of new dwellings is not going to help the crisis. Government should be listening to industry on how to make TODs work. Even then the feasibility will still be challenging for many projects in the near term. A renewed commitment from government to greenfield development is a must or NSW will continue see annual completion rates at levels way below what is required to stabilise housing affordability. https://lnkd.in/g3R9SYAC
Warren Livesey
4mo
Hi Stuart Ayres, could you share your thoughts on the government adopting Rooftop and Airspace Development, which is the fastest growing and most sustainable housing solution in the UK and Europe? By utilising the airspace above our existing strata and shop-top buildings, we can create over 500,000 new rooftop homes. This approach aligns with the principles of the circular economy. These new rooftop homes could fund the repair and rejuvenation of our aging buildings, helping to maintain our communities intact instead of selling out to developers for more density. Airspace is cheaper than land and does not hold costs like traditional developments. #airspace
Emanuel A. Oros
4mo
On point Stuart Ayres, working so closely with an array of developers and being involved in the industry personally, I (and many others) have been trying to raise this concern of feasibility for years now. Until the Government realises they need to take a bigger picture and give some relief to developers and builders, there isn't going to be a big swing in housing delivery. On top of this the proposed new tenancy laws are going to have a further negative impact, just look at what occurred in VIC. So expect housing to get more expensive and rents to steadily rise until Government starts listening to the industry.
Linda Allison
4mo
Great summary of the situation, Stuart. You could copy and paste this into the Victorian context.
Managing Partner at Spartan Partners
4moStuart Ayres it's exactly what I said yesterday in your Post. On TODs, they will work but it will be 3-10yrs before they even start because thats how development pipelines work. It is near impossible to get a development to work if you buy on Monday and try to start on Tuesday. Developments of that size are sat on for years and years so the land appreciates and does most of the "equity" work. The above doesn't help us TODAY. The manufactured housing crisis is TODAY. As such - only pure pure practical initiatives that have immediate effect are all we require. All suggestions to date aren't immediately practical.