22 November 2022

Home Truths: The limits of land supply in the ACT

| Lottie Twyford
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housing

Land supply is a contentious and complex topic in the Territory. Photo: File.

Land, land all around but not a block to build on. Where are you? Canberra.

Or so some say.

The ACT is unique. It’s constrained by tight borders and the release of new land to the market is almost 100 per cent government-controlled.

All of this makes land supply a contentious and complex topic.

It’s also an emotive one, especially as the housing affordability crisis continues because land supply is about more than blocks, it’s about homes.

But not only is endless land supply physically impossible – it’s also limited by economic, environmental and political factors.

The ACT Government says it is planning for an increase of about 30,000 dwellings in the ACT over the next five years to increase the total housing supply in Canberra from 180,000 dwellings to around 210,000.

Shane Rattenbury

Chief Minister Andrew Barr and ACT Greens leader Shane Rattenbury have set the 70/30 infill agenda. Photo: Michelle Kroll.

The Government’s agenda

The ACT’s Labor-Greens Government is bound to a 70/30 infill agenda.

So while 30 per cent of all new dwellings can be brought onto the market through new greenfield developments, 70 per cent have to be built (somehow) in the ACT’s existing footprint.

Getting there will mean changing zoning and planning regulations to allow higher-density builds in the ‘burbs.

That doesn’t please everyone.

But Chief Minister Andrew Barr has already flagged that infill split should suffice for at least the next decade.

After that, the balance will likely fall even further towards the infill and away from new suburbs.

The Government argues it’s costly to build new suburbs – especially liveable, green, sustainable ones that are well connected to the rest of the city, for several reasons – including the costs of new infrastructure and new services.

READ ALSO Home Truths: In a year of high demand, SLA fails to hit land release targets

What’s left to explore?

Canberra’s north and west are still growing with the Molonglo Valley (Whitlam), Gungahlin (Taylor, Throsby, Jacka, Moncrieff) and the Ginninderry/Parkwood project near West Belconnen.

The latter should – if everything goes to plan – see the ACT’s border moved to incorporate some of NSW.

But that’s complex and unlikely to be a long-term solution to the Territory’s land woes.

The ACT is also home to various pockets of land owned by the Federal Government. Much discussion this year has centred on redeveloping the Commonwealth’s Australian Institute of Sport (AIS) precinct, while the CSIRO land is also a possible option.

Exploration is also happening along the Western Edge (the section stretching from the back of Western Creek and the Molonglo Valley along to Belconnen).

Getting over the Murrumbidgee River is a deep desire of the Territory’s Opposition, and the Master Builders Association (MBA ACT) and the Housing Industry Association (HIA) support a look.

But that’s been repeatedly slammed down by the Government, which says it’s simply too difficult to get the infrastructure and service delivery over there and there are too many environmental concerns, including fire risk.

Autumn trees

Under proposed new laws currently being considered by the ACT Government, removing a tree could cost you. Photo: Michelle Kroll.

Environment

The Conservation Council has a pretty firm stance on where it thinks the ACT should look to expand next – nowhere at all.

Executive director Elle Lawless says there’s no need for further expansion beyond the existing footprint of the city.

“Instead, we should be focusing on higher-density living and being more creative with our approach to that … such as duplexes or houses going up instead of out,” she said.

“Making sure we have green space in the suburbs is also important for mental wellbeing and family time.

“We understand that everyone has the right to a home … but maybe they could have a smaller back garden.”

Despite the growing pains facing the ACT, Ms Lawless said there were ways to keep the Bush Capital feeling like it – which included keeping mature native trees alive in the suburbs and ensuring active travel pathways and infrastructure supports journeys that don’t need to be taken in the car.

READ ALSO Home Truths: Urban fringes and the untapped ‘missing middle’ in the suburbs

Infill challenges

Those tree laws propose greater protections for trees and fines for removing them, and are drawing the ire of the housing industry, which says they will only make it harder to develop in established suburbs and add to the red tape.

HIA ACT executive director Greg Weller said the current situation was proof the Government wasn’t doing a good enough job at delivering housing in the existing suburbs, and this needed to be improved if that agenda was to succeed at delivering the housing the growing city needs.

“We’re supportive of the 30 per cent tree canopy coverage but the Government needs to accept that it’s going to have to remove some trees to make that 70 per cent infill happen,” Mr Weller said.

“If we are going to constrain land supply and make it harder and harder to subdivide blocks, there has to be an alternative, otherwise the only option is greenfield.”

Land release

The way land in new suburbs is released and sold in the ACT continues to be of concern to Mr Weller, who said it was not delivering the homes wanted by Canberrans, many of whom still wanted to live in detached houses.

“In the last decade, there’s only been one period where there was actually land available to buy over the counter … one of the impacts of not having this is the inflationary impact on the price,” he explained.

Mr Weller said he was also concerned about the way the system could be gamed and land could be speculated for a profit – and often was – when there was a shortage of available land.

Michael Hopkins

MBA ACT CEO Michael Hopkins said the Government had more levers at its disposal than just land. Photo: Region.

Industry constraints

It’s often argued by the Government that it won’t simply release land willy-nilly as it has to get the infrastructure ready first.

But Mr Weller said it was likely the building boom would slow down soon and material supply would return to normal.

Similarly, Master Builders Association ACT CEO Michael Hopkins said even if that were the case, the Government could help increase the capacity of the industry by boosting funding for apprenticeships, for example.

He also believes that the land release program should be set by what Canberra’s population needs and wants today and in the future – not dictated by Treasury.

Heavily oversubscribed land ballots have been witnessed in recent times.

A spokesperson said the Government was working on planning through the new planning bill, a new draft Territory Plan and draft district strategies, and did spend time and resources modelling demand data.

A housing choice survey is also something the Canberra Liberals have urged.

READ ALSO Home Truths: Big houses, bad planning and better design to fix our problems

Like Mr Weller, Mr Hopkins isn’t convinced the Government is moving quickly enough with its infill agenda to keep housing demand sated.

Both rubbish the idea that the ACT has developed all the land it can – but say it’s time to move away from a discussion about expanding out to expanding up.

Mr Weller believed that sort of rhetoric only helped to push the price of new blocks and demand for them even higher.

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James T Kirk9:46 pm 24 Nov 22

I re-read the article a couple of times and couldn’t see the word SOUTH in it.

Why don’t we develop past Banks towards Tharwa. There is heaps of land there. There is also a heap of land on the other side of Isaccs Ridge. Heaps…

This article re-hashes a lot of both real and false issues around land supply limits for Canberra.

The big limit on suitable land missed is…. that there is a huge proportion of development restricted land within a 6km radius of City Hill. Civic development is heavily constrained by the massive Mt Ainslie and Black Mountain reserves, the huge grounds of the ANU, the parliamentary triangle, Weston Park, Stirling Park, the Lake and more recently the Arboretum. A learned colleague tells me that central Canberra has the most spatial restrictions on potential housing development of any city he’s ever analysed.

The old NCDC weren’t idiots, they knew the best location for high population density was in the town centres not in Civic. The two decade push for Civic as the central hub for transport, work and population has created as many problems as it has solved.

HiddenDragon8:38 pm 23 Nov 22

The problems outlined in this series of articles are by no means unique to Canberra, but they are made that much worse when we have a government which is so heavily reliant on property-related revenues and so addicted to living beyond its means.

Add to that the posturing environmentalism, which comes at a real financial cost in the here and now – regardless of claimed (and typically overstated) benefits in the longer term – and it is little wonder that we have so many housing problems, with no real prospect of positive change if the points floated in these articles are a guide to the future.

One small positive for our housing problems may eventuate from concerns expressed about the Canberra-centric nature of the APS in the recently released APS State of the Service report, and illustrated in these two excerpts –

“Public servants of the future do not necessarily have to move to Canberra to have a meaningful and purposeful career with the APS”

“The APS is exploring options to locate staff closer to local communities, for not only better service design and delivery, but also to tap into emerging labour markets outside of Canberra”

These heretical notions may well cause an attack of the vapours in the London Circuit Soviet, but they could reduce some of the demand in the local housing market.

You make some excellent points!

William Newby6:19 pm 23 Nov 22

Housing affordability is as much about the house built on the land as it is about finding somewhere to build it.
Unless Barr has found a way to build free homes there is little to nothing he can do here.
We are surrounded by empty paddocks and hills here in the ACT, if they really wanted to do something about it they could.

With another 1000000 people about to arrive in Australia over the next 5 years the ACT had better build a few more than 30000 homes if they are going to take their fair share.

Stephen Saunders1:59 pm 26 Nov 22

Probably, more like 1,500,000, Dr Lin. But they don’t just fall out of the sky like rain, as this article almost appears to assume.

It is deliberate, regressive, government policy, dictated by “donors” and “stakeholders”, while voters get no say.

Tom Worthington1:50 pm 23 Nov 22

We would all like to live on a big block of land, in walking distance to services, frequent public transport, and a highway straight to the city center. However, this is not possible, as these are contradictory requirements. If you want services and transport, then you have to live close to your neighbours. Government could reduce costs of housing, by building more varieties of community housing, and offering incentives to the private sector to do so.

You may be surprised to know that what you want is not what all of us want at all. Some of us like living close to our neighbours but it is reasonable to expect that in a city we would have frequent public transport, reasonable insulation from sound and weather, as well as safe walking to services. Sadly Canberra fails on housing, transport and safe walking.

Why don’t the developers fund the infrastructure as happens in other places?

The current “RZ1” land release in Whitlam has a median block size of 480 square meters and a price of for $770,000, which works out at an incredible $1,600 per square metre. For comparison, the March 2022 Whitlam “RZ1” median price was $1180/sqm, and the March 2021 Whitlam “RZ1” release was $797/sqm. The Dec 2021 Taylor release had a median price of $898/sqm.

So the ACT Government’s contribution to housing affordability is to increase the cost of land by 36% in 8 months and just over 100% in 20 months. These blocks cant be afforded by first home buyers, and these prices will flow on to all housing, making shelter even more unaffordable for ordinary people and will exacerbate inequality and stress. This profiteering at the expense of the young, the unlucky and those without high incomes will be a lasting stain on this Labor/Greens government.

Yep disgraceful, and completely incompatible with improving housing affordability. When government and established interests conspire to profiteer from young Canberrans and immigrants, we have regressed back to form of feudalism.

devils_advocate11:30 am 23 Nov 22

The ACT “government” has already made infill projects financially infeasible for most areas through the imposition of punitive deadweight loss taxes and regulation.

-punitive LVC
-in practice, around 2 years of regulatory hurdles to get a MUHD though on merit track (with attendant holding costs)
-punitive overlapping ground coverage, plot ratio and tree canopy requirements
-stamp duty on the purchase of the original block, then the LVC, then another lot of stamp duty for the buyer of the subdivided block (triple dipping)

All of these capital costs and regulatory barriers raise the barriers to entry and raise the costs for developers, meaning many otherwise viable projects are rendered unprofitable and those that do go ahead have hundreds of thousands of dollars of deadweight costs added to the sale price.

Without adequate reward for risk and return on capital the level of “infil” will continue to be well below where it could be or needs to be

The government should look at the compulsory acquisition and subdivision of the enormous blocks in suburbs such as Red Hill and Yarralumla. Most of these blocks could be carved up to make at least 2 more places for free standing homes – after all block sizes of less than 350 square metres are very common in the new suburbs.

I’m sure most of these houses have sheet asbestos lining their eves so there is plenty of precedent in the Mr Fluffy debacle for the government to act this way.

harcm, I agree with this, except the compulsory acquisition, as long as solar access is taken into account (this might mean smaller houses) and rules are in place to preserve some garden space (again smaller houses). Not as in many new suburbs with small blocks, where oversized houses almost touch the next one. In the 1950s the average house size was about 100 sq. metres I have read. Houses have grown and grown, and family size on average is smaller now.

To show how houses have changed, my last house here in Canberra (build about 1950) was 80 sq. metres. 3 bedrooms. I bought it from a family of five. It was on a bigger block than the size harcm mentioned, but still not a huge block at 450 sq metres. That gave room for several fruit trees, a large vegetable garden, clothesline, and backyard parking for at least three cars without a car ‘shuffle’. It also didn’t cause overshadowing of neighbours. Some of its two bedroom neighbouring houses were 60 sq metres.

Before someone brings up “slums”, (anything they object to are slums) I say they need to broaden their limited mind by visiting some inner suburbs of Sydney and Melbourne. Some small houses on small blocks are a long way from being slums. Very sort after and expensive because they are inner and near convenances, transport (this will need to improve as more houses replace one house) and cafes. There are things like cafes, because the small houses and more people bring street life.

But Red Hill and Yarralumla, good luck with that. The people living there will put up a big fight., even though it should not be compulsory for them to spit their own block. The market and time would do that, once the opportunity exists. In fact once this opportunity exists, they might get even more for their block, once they sell it.

Although my suburb was not mentioned, I live in another inner suburb, and I have nothing against this, as long as the things I mentioned are put into place. Bring it on.

There is sheet asbestos in the eaves of most older housing in ACT, so to use this as an excuse would be to threaten very very many houseowners. This would not be smart. Sheet asbestos is not the same as Mr Fluffy, which was much more dangerous because it was loose fluff that migrated throughout homes and into the environment.

As people began to get sick from Mr Fluffy asbestos, the ACT government had to act (finally) to get rid of the problem which was going to cost it a fortune in compensation. Sadly, the ACT government treated Mr Fluffy home-owners appallingly, as if they’d created the problem and should be thankful for getting help to move out of their unsafe homes. They were forced to sell their land which was often onsold at much higher prices than the original owners were paid for house and land and fully developed gardens.

Margaret Freemantle2:23 pm 23 Nov 22

Good idea, but can’t see it happening!!

“Compulsory acquisition and subdivision of the enormous blocks in suburbs such as Red Hill and Yarralumla”. Well, size is relative.
You may as well include every suburb in the inner south because most will have blocks substantially larger than the average.

Yes, some blocks in the suburbs nominated are very large, and with that comes huge property values (and Rates revenue).
It would be a very brave and short-lived Government that compulsorily acquired property owned by the rich and influential. Not only would the well-healed be “rather” annoyed, but this type of proposal would undermines property values across the territory. No homeowner would feel safe from having their property values destroyed at the whim of the Government.

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