16 February 2023

'Unlock the suburbs': Master Builders' plea to government to fix housing target shortfalls

| Claire Fenwicke
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suburban building site

The MBA has argued the Territory’s low-density planning laws need to be changed to allow for more homes in the suburbs. Photo: File.

“The combination of high interest rates, stagnated land release and 1960s-style planning rules have combined to create a housing shortage in Canberra like we’ve never experienced before.”

That’s Master Builders Australia (MBA) ACT CEO Michael Hopkins – and he warns the situation will only get worse.

New analysis by the MBA has predicted the ACT will fall up to 7100 dwellings short of the National Housing Accord target set by the Federal Government and agreed to by all states and territories.

According to this month’s MBA building and construction industry forecast, while the Territory saw a 12.7 per cent increase in new home building starts in 2021-22, it’s also the only jurisdiction where detached houses accounted for less than one-half of new home starts.

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This spells trouble for the capital erecting its share of the target of ‘one million homes in five years’ set by the Accord.

“MBA analysis reveals that between 5800 and 6380 dwellings must be built every year for the next five years [to reach the target]; however, MBA Australia forecasts reveal the ACT will fall 3720 dwellings short in the current financial year,” Mr Hopkins said.

“In total, that’s a shortfall of up to 7100 over five years.”

building activity chart from the MBA

MBA modelling shows the ACT could fall up to 7100 dwellings short of meeting its National Housing Accord target. Photo: MBA ACT.

While the report stated demand was expected to be added to the market with the post-pandemic recovery of overseas migration, Mr Hopkins said a lot needed to be changed to meet it.

“A shortage of housing leads to rapidly escalating house and rental prices, strain on our public and social housing system, and makes it harder to attract skilled workers to meet Canberra’s workforce shortages,” he said.

“The ACT Government’s planning reform project is an opportunity to turn around our housing crisis and put in place housing policies which will meet the need of current and future Canberrans.”

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The current government has a housing target of 70/30, which means it wants 70 per cent of new housing to be built in existing urban areas.

But Mr Hopkins said current planning rules don’t allow this to happen, and they needed to be changed to allow for more residential development in low-density areas.

“People could build an additional house or granny flat in their backyard, or it could involve a developer knocking down an established home and building two, three or four units on that site,” he said.

“It would allow people to retire and downsize homes in the same suburb, accommodate multiple families on the one block.

“Unlock the suburbs. Take this opportunity of planning reform that’s been presented to us.”

The MBA also wants third-party appeal rights tightened as it says the current system was “very generous” to the appellant in the ACT.

“Currently, anyone can appeal and hold up a project for more than 12 months … if people have that risk hanging over them, we won’t have developers or builders trying to build these houses,” Mr Hopkins said.

“It both discourages people from innovative building and clogs up the ACAT system.”

The MBA added that the Territory planning bill should allow increased height and medium-density limits around centres and public transport nodes.

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Planning Minister Mick Gentleman said increasing density around local shops, along public transport routes and inner suburbs by building more dual occupancies on single blocks were all part of the discussion around the new Territory planning bill.

“The ACT Government first set out its intention to contain urban sprawl in 2018 through the Planning Strategy, through the goal of 70 per cent of all new development being within the city’s existing urban footprint,” he said.

“Controlling urban sprawl is essential to managing environmental impacts and ensuring all Canberrans have access to the services and infrastructure they need.

“Increasing the number of dual occupancy blocks in established suburbs may become part of this approach if the community indicate their interest.”

Land release from greenfield developments continued to be a government commitment.

Mr Gentleman said community well-being and environmental protections also needed to form part of considerations, and consultation with community and industry representatives would continue.

“The feedback shared with us now will help inform any future changes to zoning that would allow more homes to be built in existing suburbs,” he said.

“We want to hear from Canberrans about where and how they want to live into the future.”

However, Mr Gentleman also took aim at developers, urging them to “uphold their side of the bargain” and build homes they’d committed to.

“It’s time for industry to walk the walk as well as talk the talk when it comes to getting homes built,” he said.

This follows reports some buyers of off-the-plan developments have been asked to pay more due to increased construction costs or cancel their contracts.

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While the Canberra Liberals will release their housing policy in the lead-up to next year’s election, Shadow Housing and Planning Minister Mark Parton urged the government to reconsider its stance on low-density zoning.

“The government has the option to take up that option now, they don’t have to wait for an election, so the ball’s in their court,” he said.

“[But] there’s no point in making a target if you can’t possibly achieve it.”

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Michael Cuddihy2:28 pm 18 Feb 23

If there is a shortage of housing in an area and urban infill helps to alleviate that shortage, then property prices can still rise because there is still high demand for housing , particularly in areas where there is limited space for new development. ie established areas.

I dont really think RZ2 rules changes housing affordability.

The ACT government has utterly failed and is in complete denial when it comes to housing supply and housing affordability. The damage they have done primarily to younger Canberrans and future generations of Canberrans to come is unforgivable.

More housing needs to happen and quickly for the ACT’s sake – my family of 5 head north next week. Lower rent and a better remuneration package means that my 3 students will be living, playing sport and learning in NSW. They will most likely stay there and Canberra will have lost their skills and spending. I’m sure we aren’t the only family being forced out by increasing rents and the impossibility of purchasing somewhere permanent to live. In a recent land ballot we were over 1,000 down the list so not a hope.

HiddenDragon7:03 pm 17 Feb 23

With good reason, many Canberrans see the planning and development system here as a shonky, incestuous, game of mates where “rules” are too often bent and broken – not fertile grounds for arguments to “unlock” the suburbs or to accept a new planning system which would allow the government’s hand-picked planners basically to approve whatever seems like a good idea to them at the time.

Michael Cuddihy11:09 am 18 Feb 23

I am not at all sure that the community wants “outcomes” based planning rather than clear rules that are enforced. Developers are experts at bending the planning system to their own ends and have professionals who can work the planning system. Existing residents are often playing catchup and are amateurs who struggle to understand the planning system, and are often left bewildered and angry at the changes being wrought on their community.

I wonder how many existing community members in the Inner North will want just over half the district’s housing to be more than three storeys high by 2063. Or can concieve that the ACT Govt is planning a near doubling in the number of dwellings in the already developed and built suburbs of the Inner North (from 27,982 existing dwellings to 50,382 dwellings) involving an additional 13,664 apartments, and an additional 8,736 semi-detached dwellings (Source ACT Govt District Strategy for Inner North).

Clearly, there is some scope of infill in the RaceCourse, possibly AIS campus, maybe some horse paddocks (which should be replaced with other horse paddocks on the edge of Canberra like East Canberra, Kowen and out closer to the Brindabellas) but the scale of the proposed infill is staggering. Even the term infill implies filling gaps, but there are very “gaps” or greenfield sites that have not developed.

A similar story in the inner south which is being planned for 83% increase in apartments and a 17% increase in semi-detached townhouses.

The only place where the ACT government is planning houses is in Molonglo, and limited parts of Gunghalin.

We do not all want to live or need to live in 4 bedroom homes. The ACT Government needs to look at implementing missing middle housing in all suburbs, in particular for in-fill developments.https://en.wikipedia.org/wiki/Missing_middle_housing

lol tell that to the millenials

Addressing the ’Missing middle’ would be great for Canberra, but we just don’t seem to have the run down, cheap inner city blocks that other cities have where this concept works.

An old $1.4 million dollar house and land closer to Civic, gets knocked down for two missing middle style houses that sell for $1.8 million each.

I just can’t see enough residents on the suitable blocks of Turner,

Agree Proth, addressing the’Missing middle’ would be great for Canberra, but we just don’t seem to have the run down, cheap inner city blocks that other cities have where this concept works.

An old $1.4 million dollar house and land closer to Civic, gets knocked down for three missing middle style houses that each sell for $1.8 million.

I just can’t see enough residents on the suitable blocks of Turner, O’Connor, Braddon, Reid and Turner knocking down their houses to replace them with missing middle style housing.

I also can’t see the ACT government being brave enough to allow builders to expand structures onto the huge nature strips of inner Canberra blocks, replace inner north green space with apartments or allow building high density on the foothills of Mt Ainslie and Black Mountain despite these mountain reserves being within 2km of the city centre.

Michael Cuddihy9:49 am 18 Feb 23

The pattern that I see very regularly (nearly all the time) is when a house is sold in an RZ2 zone for 1.2M-1.4M , it is knocked down and replaced with a 2-3 more expensive townhouses (1.8-2M each). It does not help affordability at all, and is really about profit making for the developers and builders. It is not a win for sustainability as a reasonable house is turned into rubble, trees removed and a new much bigger townhouses are constructed.

When I think of the “missing middle”, I want more land developed like in Swinger Hill, Aranda, parts of Phillip that are medium density. There are some limited opportunities to do infill in existing suburbs (eg the rare undeveloped land or where there is a changed purpose eg AIS, Race Course, horse paddocks, edges of some golf courses) but is is massively unrealistic to think that 70% of new dwellings will be built on top of the existing dwellings inside the existing urban footprint.

I suggest many communities should have a close look at their draft District Strstegy and look at the vast areas shaded yellow as a Future Investigation Area cause that it where the Government and Developers are planning to change.

It’s a fair point Michael. A million dollar family place in Campbell was turned into three multi million dwellings and filled by three single men.

devils_advocate1:02 am 19 Feb 23

Nope. Adding any supply at all to the market always helps affordability. The supply is always increased as a result of redevelopment due to the “dwelling replacement” rules (but also economics). Even if the house is expensive, it removes a buyer from the pool who would otherwise be bidding up the price of a cheaper home.

“Unlock the suburbs“ more like destroy the suburbs. Removal of all vegetation to maximise density and profit. How sustainable are these check by jowl heat Island replacements? The very fabric of old Canberra’s garden suburbs is unjustifiably under attack by developers utilising the sustainability argument. The designs are not sustainable or affordable with eroded set backs so no plantings are capable to shade or preferably hide some very poor designs. Time to create long term industry jobs rather than the Barr Ponton housing and consumption economics. Where is the social housing provided by the sell off of Northbourne, ABC flats or Red Hill flats? Why is a two bedroom so called Paddington terrace without garden space $1.3m? The ACT needs to provide housing at one quarter of that price and not leave it to developers.

devils_advocate2:17 pm 19 Feb 23

Nope. Urban infill developments are subject to much stricter development controls than green fields development, including plot ratios, setbacks and permeable (planting) areas.

Andrew Cooke2:32 pm 22 Feb 23

Urban infill at the moment might be about the stricter development controls but that’s not what the article is about – the MBA wants more suburbs opened up to allow additional houses to be built in current backyards, granny flats and units where current planning does not allow it.

Urban infill works well in inner suburbs with easy access to mass transit (light rail) and the infrastructure in place to allow for the easy movement of the increase in population.

devils_advocate4:07 pm 23 Feb 23

Even if they allow multi-unit development on more blocks (eg RZ1) the fact that setbacks are required, solar envelopes enforced and plot ratios restricted means that such developments would not impact adversely on the amenity of surrounding blocks. By contrast, “small” blocks in new suburbs (which almost all of them are) have virtually no setbacks and no plot ratio restrictions so they are jam packed next to each other. Single dwelling blocks in new suburbs are regulated much less than even medium density in the older suburbs.

devils_advocate11:54 am 17 Feb 23

Infill development will not increase as long as:
-punitive Lease Variation Charges remain in place, even where the block is already zoned for subdivision
-merit track proposals are held up for years at a time, with developers having to negotiate separately with all stakeholders and infrastructure owners free to set their own demands
-punitive stamp duties that apply on the acquisition of the block then again on sale of the unit, adding tens of thousands of dollars to the cost base of even a small unit or townhouse
-ambiguous “notices of decision” that impose “conditions” that are actually changes to the design

The biggest issue is Canberra is the most expensive place to build a house averaging over $600k. The ACT government should seriously consider subsidising the construction sector to help bring in tradies from NSW.

I’ve worked in construction for quite some time.

“The biggest issue is Canberra is the most expensive place to build a house averaging over $600k. “

“subsidising the construction sector to help bring in tradies from NSW.”

You think this will lead to cheaper building?

Michael Cuddihy11:15 am 18 Feb 23

I suspect that part of the reason why we have high costs to build a home is because the ACT has the highest average income in the country, which flows down to the market’s capacity to pay but also to the incomes of the workers who build the homes.

devils_advocate1:04 am 19 Feb 23

We also have the most inefficient planning approval system, punitive stamp duties and punitive lease variation charges. By the time an urban infill project gets to market there are hundreds of thousands of dollars in deadweight losses (taxes, unnecessary interest/holding costs etc) incorporated into the sale price.

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