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Wright blocks going under the hammer

By johnboy - 27 July 2011 21

map of wright

Molonglo Valley have put out a flyer on a large number of sites up for tender.

Interested parties have until 2 August to get in.

What’s Your opinion?


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21 Responses to
Wright blocks going under the hammer
JC 6:57 pm 27 Jul 11

EvanJames said :

arescarti42 said :

I’m going to go out on a limb here and suggest that its not population growth but economics and restrictive government planning artificially inflating land prices.

It’s economics, restrictive government planning, and population growth. we have always had population growth, but what’s changed is the massive size and speed of population growth in recent years.

Land and housing in the ACT is crazy-overpriced, but now the government is trapped by this. if it allows housing prices to drop too much, all those instant millionaires and the poor buggers who borrowed to the hilt to buy overpriced housing will scream blue murder, and if you get people owing more than their homes are worth, you get a US-style economic disaster.

The good question is, why did the federal and state governments allow this to happen in the first place.

Because none of the parties have the balls to run the country properly. I personally blame John Howard and his bribe to taxpayers (read tax cuts) for driving the cost of housing and living up in the first place. When what he should have done is invested the windfall he gained by the growing economy into renewing the national infrastructure and investing in new infrastructure.

We now have the situation where people used the tax cuts to borrow more, which lead us to pay more, which has lead to massive pay claims, which has driven the costs up, which has lead to degrading infrastructure that will cost us more in the future to maintain and new infrastructure is now so bloody expensive. The tax cuts are long gone and many are living on the line, so cannot afford any tax rises and many risk loosing equity in the houses they paid over the top for.

What we need is another Paul Keating in the top job. Whilst many hated him and hated the recession of the early 1990’s, he was 100% right at the time that it was “the recession we had to have”. We need another one now.

dtc 4:38 pm 27 Jul 11

Admittedly, though, in Texas you now have cities of enormous geographic spread (ie you need a car to anything whatsoever); and limited public infrastructure. You also have to live near or next to whatever anyone wants to build or put there, little in the way of planning regulations.

But it is cheap.

Mumbai, on the other hand, is rumoured to have quite a few poor people, but because until recently it limited both land availability and height of buildings, is a very very expensive city.

Anyone interested in this should read “Triumph of the City” by economist Edward Glaeser. Its pretty US focused but v interesting. His solution is, essentially, if land is scarce then you need density – otherwise its environmentally disasterous.

luther_bendross 3:13 pm 27 Jul 11

EvanJames said :

It’s economics, restrictive government planning, and population growth. we have always had population growth, but what’s changed is the massive size and speed of population growth in recent years.

Land and housing in the ACT is crazy-overpriced, but now the government is trapped by this. if it allows housing prices to drop too much, all those instant millionaires and the poor buggers who borrowed to the hilt to buy overpriced housing will scream blue murder, and if you get people owing more than their homes are worth, you get a US-style economic disaster.

The good question is, why did the federal and state governments allow this to happen in the first place.

There’s the nail and it’s head being hit. ACT prices are seriously artificially overpriced considering the amount of empty space (meow meow meow bush capital meow) and subsequent high density living (I cite Crace here). However the ACT legislative idiots can’t backtrack now because if we did, all homeowners in ACT would be broke.

arescarti42 3:04 pm 27 Jul 11

yellowsnow said :

re: Texas house prices – have you heard of the GFC? House and land prices are dirt cheap everywhere in the US at the moment due to the state of the economy and prior lending practices

I’m glad you brought that up. In the states where supply was constricted, e.g. California and Florida, there was a massive run up in prices prior to the GFC, and it is those cities where the massive 40% declines happened. In Texas, there never was this huge run up in prices and as such there wasn’t a huge crash. Don’t believe me? Here is average home price history of Houston from 2005-2010. It wasn’t the GFC that made homes in Houston cheap, the ability of supply to respond to demand meant they were always cheap.

yellowsnow said :

Another factor is that, unlike well-to-do Canberra Texas cities have a lot of people on very low incomes, esp Hispanics and African Americans. This leads to things: (1) people can’t afford to pay too much for houses, limiting via the laws of supply & demand vendors’ ability to charge more for lower-end properties;

It is true that most cities in Texas are probably poorer than Canberra. The assertion that people on low incomes can’t afford to pay too much for houses I believe is false though. People on low incomes taking out huge loans that they couldn’t afford to repay to buy overvalued housing was one of the things that caused the GFC. The distinction with Texan cities is that houses were never expensive to begin with and prices never crashed, so people weren’t left in negative equity with big incentives to default on their loans.

yellowsnow said :

(2) an endless army of cheap, reliable labour, incl illegal immigrants, which acts to keep building costs low. In Canberra builders are in high demand but but low supply, leading to high prices for their services.

This may well be true. The cost of a home isn’t just the cost of constructing the house though, it is the cost of the land as well, and my point is that it is the ridiculous cost of land in Australia that makes it ridiculously expensive compared to somewhere like Houston.

yellowsnow said :

It’s true that Texas cities are expanding very rapidly and continuously bring lots of vacant land to the market — but, even if it brings land prices down a tad, is that what we really want in Canberra? Have you seen what the outskirts of Texas cities look like? Western Sydney on steroids, with minimal planning and totally reliant on the car. No thanks

Well let’s be clear here, the difference in land prices isn’t a “tad”, it is in the realm of maybe 5-10x cheaper. What you say about city planning is a very good point though, I personally don’t think we want uncontrolled urban sprawl.

But having responsive supply doesn’t mean we can’t have good city planning, it just means the objective of the government in releasing land should be to meet demand for land, not to maximise the price of land in order to maximise land sales revenues and land associated taxes.

EvanJames 2:24 pm 27 Jul 11

arescarti42 said :

I’m going to go out on a limb here and suggest that its not population growth but economics and restrictive government planning artificially inflating land prices.

It’s economics, restrictive government planning, and population growth. we have always had population growth, but what’s changed is the massive size and speed of population growth in recent years.

Land and housing in the ACT is crazy-overpriced, but now the government is trapped by this. if it allows housing prices to drop too much, all those instant millionaires and the poor buggers who borrowed to the hilt to buy overpriced housing will scream blue murder, and if you get people owing more than their homes are worth, you get a US-style economic disaster.

The good question is, why did the federal and state governments allow this to happen in the first place.

yellowsnow 2:06 pm 27 Jul 11

re: Texas house prices – have you heard of the GFC? House and land prices are dirt cheap everywhere in the US at the moment due to the state of the economy and prior lending practices

Another factor is that, unlike well-to-do Canberra Texas cities have a lot of people on very low incomes, esp Hispanics and African Americans. This leads to things: (1) people can’t afford to pay too much for houses, limiting via the laws of supply & demand vendors’ ability to charge more for lower-end properties; (2) an endless army of cheap, reliable labour, incl illegal immigrants, which acts to keep building costs low. In Canberra builders are in high demand but but low supply, leading to high prices for their services.

It’s true that Texas cities are expanding very rapidly and continuously bring lots of vacant land to the market — but, even if it brings land prices down a tad, is that what we really want in Canberra? Have you seen what the outskirts of Texas cities look like? Western Sydney on steroids, with minimal planning and totally reliant on the car. No thanks

arescarti42 1:33 pm 27 Jul 11

johnboy said :

We went from being a country of 5million to a country of 30 million.

That’s what happened.

I’m going to go out on a limb here and suggest that its not population growth but economics and restrictive government planning artificially inflating land prices.

Take Texas for example. The state of Texas has a population larger than Australia, faster population growth than Australia, higher incomes than Australia, more of its population concentrated in its major cities than Australia, less arable land than Australia etc. etc. etc. In Houston, the largest city in Texas, with a population of 6 million, you can buy a large residential block of land for about $30k, or a brand new 3 bedroom house for less than $150k.

Why is this? In Texas, the supply of land isn’t artificially restricted by government drip feeding the market in order to push up land prices. That a block of land that costs $30k in a city as large as Houston should cost $300k+ in a city as small as Canberra is a joke, and has nothing to do with population or demand.

It’s easy to see why blocks are becoming so small, a quick check on allhomes shows that outer suburban land in Canberra sells for $500-$600 a square metre, a 800-1000 square metre block would sell for $400k-$600k. Blocks have to be tiny so that the people who want to build a house (first home buyers and new families) can actually afford them.

aidan 1:00 pm 27 Jul 11

They’ve really got that solar access stuff licked … just ignore it!

Criminal.

yellowsnow 12:04 pm 27 Jul 11

There are plenty of big blocks (800 – 1200sq m) available around Canberra at reasonable prices, you just have to look at older suburbs. I just don’t understand why this is an issue for the community.

If you want a big backyard – easy, just don’t live in new suburbs, where blocks are small and overpriced, and that’s even before you build a house. Buy an existing house on a big block in a fairly central location. Way cheaper than buying vacant block and building something in most cases. With some properties, if you have a little more money or builder mates you also have the option of extending or a knock down rebuild. Still cheaper than buying an equivalent size house on a small block in Forde

If you put a premium on living in a brandspanking new house you built yourself (well, that you paid overpriced builders to build), then you just have to put up with small block size, knowing your neighbours bowel habits, and other cons of living in a new area. Many people love the smell and look of new houses so much they don’t mind limited or no backyard space. Nothing wrong with that, not everyone wants or prioritises external space. There’s also the apartment of townhouse option — a quite affordable option, though for some reason many people in canberra are fixated on standalone houses.

If you want both size and newness and don’t mind distance — buy a block in rural area or regional town.

It’s all about compromise. You can’t have everything. Well, you can if you have the money. So, if you really want space, newness and proximity — if you play your cards right maybe one day you’ll be able to afford a property that meets all criteria.

I guess the only issue I have with small blocks is that they lead to traffic nightmares. Exhibit number one — Gungahlin, your honour. Case closed. But that’s not a problem to do with small block size per se, but incompetent planning and inability of Roads ACT to put together even remotely accurate traffic projections, which currently seemed to be based on tea leaf reading methodologies. Judging by past experience — doesn’t bode well for traffic in Molonglo

EvanJames 11:18 am 27 Jul 11

I’m waiting for someone to show how big, fast population growth benefits anyone other than developers and money-men.

Looks like a festering mess to me. Importing 300,000 people a year plus a baby boom = this delightful situation.

johnboy 11:02 am 27 Jul 11

well, 22 million right now (estimated) but it won’t be long.

Classified 11:00 am 27 Jul 11

30 million what? People?

kezzafezza 10:44 am 27 Jul 11

I might have to move out to the sticks when I’m ready to buy if I want a backyard I think

johnboy 10:42 am 27 Jul 11

We went from being a country of 5million to a country of 30 million.

That’s what happened.

kezzafezza 10:39 am 27 Jul 11

Over 200 townhouses and apartments, and only 7 house blocks?. What happened to the Aussie dream of a house with a backyard??

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