Viability’s Post

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

We should always be cheering more affordable housing being built. But we also need to have a frank discussion about overall affordability—that is, those who make too much to be accepted into formal affordable housing and make too little to afford market rate.

This week I spoke to Gus McCubbing at The Australian Financial Review about how planning delays are impacting upon the supply of housing in Victoria. Whilst planning is only one part of addressing the critical housing shortage, it is important to shine a light on how slow the process can be. In an environment with higher interest rates and construction inflation, delays can be the difference between projects finishing or being abandoned mid way. Tim Gurner of GURNER™ Group who was also interviewed for this piece, estimates that less than half of the 51,000 new dwellings approved in Victoria last year will actually get built. This is despite the Victorian State Government targeting 80,000 new homes a year. We need a reformed planning system that is up to the task of making good decisions, on an increasing number of medium density projects, in much quicker timeframes. #housingcrisis #missingmiddle #betterplanning

Over the last decade, D.C. has set the standard for housing construction. But all of that progress is at risk, one affordable housing expert writes. (Open to all readers.) #dc #washingtondc #housing #realestate

Exploring Solutions to the UK's Housing Crisis: The Role of Residential Construction 🛠️🏡 The UK's housing crisis is deepening, with the dream of homeownership slipping away for many. Our latest blog post, "Tackling the Housing Crisis: The Role of Residential Construction in the UK," offers a glimmer of hope in this challenging landscape. We delve into how the construction of new residential projects is crucial for addressing the home shortage and making affordable housing more accessible. With a stark need for 340,000 homes to be built annually until 2031, the post highlights the efforts to meet this demand through innovative construction methods and the redevelopment of brownfield sites. The government's commitment to affordable housing is underscored, alongside the challenges faced by the industry, including supply chain disruptions and labour shortages. Yet, with modern construction techniques and policy support, there's a pathway to overcoming these hurdles. This post is not just an analysis; it's a call to action for building communities and transforming lives through increased home availability. Join us in discussing how we can make a difference in the UK's housing landscape. #UKHousingCrisis #residentialconstruction #affordablehousing #buildingthefuture #blog https://lnkd.in/ew6V_uNh

This morning's IoD Guernsey Branch breakfast seminar saw Deputy Lindsay de Sausmarez provide an update on the Guernsey Housing Plan, and was well worth an early start. The overarching vision of the Guernsey Housing Plan is that: "All people living in Guernsey will have access to a range of good quality housing that is affordable, secure, energy efficient and adequate for their needs." In the panel discussion that followed, Deputy Victoria Oliver gave a welcome indication that the ongoing IDP review will likely lead to further streamlining of the planning application process, and that Development Frameworks may well be scrapped. Deputy de Sausmarez touched on the importance of providing homes that meet the needs of particular niches, such as first time buyers and second stage movers- something we are failing to do at present and which has contributed to the housing market as a a whole functioning poorly. Charles McHugh, representing the private sector, made the important point that only around 60% of permitted residential development schemes are ever brought forwards, with various factors responsible for the 40% that don't progress. It follows that to achieve our current (and likely future) targets for new housing delivery we need to be approving far more applications than we are doing now. With regard to the issues raised by Charles and Lindsay, I think it's interesting to look back to the 1980's, a period when large numbers of modest, relatively affordable family homes were delivered successfully across the Island, and what has changed since then. This is a point I've laboured before, but the spatial strategy introduced in 1988, which has directed the majority of new development towards the main urban areas of St Peter Port and St Sampson ever since, is arguably one of the root causes of the huge decline in that type of housing being delivered. If the IDP review seeks to allocate only enough land to meet Guernsey's five year requirement for housing, and with the majority of allocated sites in St Peter Port and St Sampson as at present, it will be setting itself up for failure. Instead, the logical approach to boosting the supply of new housing would be to allocate and make provision for the development of more land than is technically needed to meet the 'on paper' requirement, and in a wider range of locations across the Island. A similar approach has been taken in recent years in England, which suffers from similarly poor house building rates, and where a buffer figure of up to 20% is added to housing allocations where councils have historically under-delivered new homes. To reiterate, it is clear that not all such sites would be developed during the lifetime of the revised IDP, but by making increased provision there is a greater chance that more sites would be brought forwards and more new homes developed than has been the case historically. #planning #development #housing #Guernsey

🏘️ Rise of the Mega Builder: How Global Housing Crisis Was Cooked Up! 🏗️ Over the past 70 years, as homes have grown larger and more expensive, Australia has watched its housing crisis unfold, driven by market shifts and economic pressures. 🪵Today, massive builders dominate, pushing out smaller competitors and manipulating supply chains, not necessarily for the betterment of housing but for profit. 🔍 Why This Matters: 1️⃣ Market Domination: Large corporate housebuilders now produce 25% of new homes, shaping the market to their advantage and stifling smaller competition. 2️⃣ Supply Chain Manipulation: These megabuilders control the pace of new housing developments, often slowing down supply to maintain high prices and maximise profits. 3️⃣ Government Disengagement: Reduced government involvement in public housing has further skewed the market, emphasising private profit over public good. 💰 As Roy Boydell, founder of Ecohus, points out, the shift to viewing houses primarily as investment commodities rather than homes to live in has distorted the market. If Australians lived as they did in the 1950s—in much smaller homes—the current housing stock could accommodate twice the nation's population. 🔗 Dive deeper into the implications of this shift and explore potential solutions for a more equitable housing market: https://lnkd.in/g6EaJQW2 🗣️ #questionforgroup: How can we restore balance to the housing market and ensure it serves the community's needs, not just those of large developers? Share your thoughts! #housingcrisis #realestate #construction #sustainability #urbanplanning #builders #wood #timber #steel #housingmarket #woodcentral #futureofhousing #economy #architecture #engineering #woodcentralau1

Delay housing = add cost to that housing. I know lots of people who insist we need more affordable housing, and yet don't care in the slightest about the forces that delay approvals for new housing for months or even years because they don't grasp what those delays and uncertainties will do to spike the cost of housing production. Which, in turn, makes it less likely that the project in question can be competitively priced, or officially affordable, or deeply affordable, or practical as supportive housing, or whatever. Toronto, ON... h/t HousingNowTO

As a follow-up to my point about government fees and charges having a drastic impact on project viability and limiting the number of new homes coming to market, below are some thoughts on how the mechanisms to deliver infrastructure need to change if we truly want to make new housing viable. New home construction in Canada is taxed more heavily than other sectors, with the federal government receiving 39% of these taxes. Yet, it only allocates 7% of these revenues back into public infrastructure in growing communities. For example, in Ontario, a new home generates $112,500 in taxes for the federal government, but only $7,875 is returned to that community for public infrastructure. This imbalance places undue strain on local and provincial governments, hindering their ability to support the necessary infrastructure for housing developments and balancing property tax growth. Economists suggest that to meet best practices, public infrastructure spending should be 4% of GDP, Canada falls 30% short of this. The federal government has the greatest capacity to close this gap and support sustainable growth. Increased federal investment in infrastructure not only supports immediate housing needs but also fosters long-term economic growth. The home building industry is a significant driver of the Canadian economy. The CHBA highlights that the industry employs 6% of the working population. Given all of this, why is it that the housing sector has had next to zero direct support from government to spur homebuilding activity? Federal investment to drive housing construction pales in comparison to other sectors. The Affordable Housing and Low-Cost Housing (ACLP/RCFI) program, while incredibly successful, offers $40 billion in repayable loans rather than direct support. On the other hand, Clean Tech Tax Credits amount to $83 billion, EV battery manufacturing receives over $26 billion, and there are $8 billion in net zero accelerator initiatives in Canada. Yet, the home building industry receives zero direct incentives. I purposefully made the comparison to environmental initiatives because of the policy push to decarbonize new housing construction, without the financial support that other industries receive. We need the federal government being a much larger participant in infrastructure investment in high-growth communities in Canada. Government can borrow at much lower rates than the private sector can to provide long-term stable funding for growing communities. We also need to recognize that setting fees and charges to keep development on the razors edge of viability no longer works – the market is far too dynamic and when there is an imbalance, projects can’t move ahead and housing supply falls rapidly. https://lnkd.in/dQgiMZJd

🏘️ Rise of the Mega Builder: How Global Housing Crisis Was Cooked Up! 🏗️ Over the past 70 years, as homes have grown larger and more expensive, Australia has watched its housing crisis unfold, driven by market shifts and economic pressures. 🪵Today, massive builders dominate, pushing out smaller competitors and manipulating supply chains, not necessarily for the betterment of housing but for profit. 🔍 Why This Matters: 1️⃣ Market Domination: Large corporate housebuilders now produce 25% of new homes, shaping the market to their advantage and stifling smaller competition. 2️⃣ Supply Chain Manipulation: These megabuilders control the pace of new housing developments, often slowing down supply to maintain high prices and maximise profits. 3️⃣ Government Disengagement: Reduced government involvement in public housing has further skewed the market, emphasising private profit over public good. 💰 As Roy Boydell, founder of Ecohus, points out, the shift to viewing houses primarily as investment commodities rather than homes to live in has distorted the market. If Australians lived as they did in the 1950s—in much smaller homes—the current housing stock could accommodate twice the nation's population. 🔗 Dive deeper into the implications of this shift and explore potential solutions for a more equitable housing market: https://lnkd.in/gCKdGhnP 🗣️ #questionforgroup: How can we restore balance to the housing market and ensure it serves the community's needs, not just those of large developers? Share your thoughts! #housingcrisis #realestate #construction #sustainability #urbanplanning #builders #wood #timber #steel #housingmarket #woodcentral #futureofhousing #economy #architecture #engineering #woodcentralau1