Sydney is the epicentre of Australia’s housing supply crisis where many experts are blaming state government hurdles in releasing land and nit-picking councils for holding back the supply of homes.
Mr Jones is agnostic on the state of the planning system and the reasons behind the complexity – he reasons it’s a natural consequence of a growing city – but says to get projects approved developers must be sophisticated, full of patience and be cashed up. In general, he said, developers are having to allocate a greater proportion of the total build cost to planning matters, than they did five years ago.
In some cases, it’s affecting the viability of projects.
Planning costs are “overall significantly higher given the process is more complex than years ago [and] a greater number of consultants are required,” he told The Australian Financial Review.
“Smaller projects are impacted greater as they can’t absorb additional costs, combined with the possibility of going to the Land and Environment Court,” he said. “At the same time, we need to consider interest rate rises, building cost increases and market shifts … which all need to be factored in.”
On the group’s most recent Land and Environment Court approved projects, the total planning cost varied between 2 and 8 per cent of the total development cost. But court action often added another 40 per cent to the planning costs.
Approval times haven’t changed much in the past five years, but are still trying, he said, noting that the average duplex approval will take between six and 12 months, depending on the town planning controls.
For a block of fewer than 10 apartments, Dallad is allowing anywhere between one and two years – which is the same timeframe it allows for projects of up to 100 units. If the project goes to the Land and Environment Court, the timeline stretches out further.
To ease the delays, he says the firm is investing more during the design process to make sure it keeps with the general look and feel of the street from the outset. It’s not just time but also more resources into drafting plans which help the council and neighbours develop a better understanding of what the project looks like, rather than traditional two-dimensional plans.
It’s an approach that usually yields results, but Mr Jones said he still feels like he’s rolling the dice each time he submits an application.
“Unfortunately, there is a misconception about developers combined with a lack of understanding of the process and the product we are trying to deliver,” he said.
Read more about the housing crisis
- 70 years of failure? From Cumberland Plan to Greater Sydney Commission The need for more housing is desperate in NSW, a state that underperforms its eastern seaboard counterparts in the number of new homes built.
- RBA boss blames housing costs on ‘vested interests’ A failure to build enough homes is “one of the biggest challenges” facing the nation, according to RBA governor Philip Lowe.
- Councils and NIMBYs make the housing squeeze harder Australia’s housing availability will get worse for buyers and renters, as hundreds of thousands of immigrants arrive and a home-building downturn deepens.
- How Auckland took on the NIMBYs and won If there was any ever doubt that building more homes makes them cheaper, the experience in New Zealand’s largest city should dispel it.
- Councils, NIMBYs to blame for 1.3m missing homes The homes were not built over the past 20 years chiefly due to costly zoning, planning and building red tape imposed by local councils who are worsening the nation’s housing shortage, according to new research by former RBA economist.
- No more homes, no cafe, no fun. Meet Sydney kill-joy suburb For almost a decade, Charlie Colosi has tried to turn an abandoned colonial-era asylum into a thriving restaurant that would breathe life into a dull corner of privileged Sydney. For much of the time, Hunters Hill Council has resisted him.
- We can’t just tax our way to the Australian dream More efficient and greater taxation of land needs to be part of fair dinkum tax reform. It can’t be seen as just trying to tax Australians into living in flats.
- The mortgage cliff is about to crash into rising house prices There’s been so much said and written about the fact that billions of home loans will switch from low fixed rates to higher floating rates, we may be forgiven for believing the threat had passed.