RADICAL plans are needed to make Sydney property more affordable, experts say, as new data released exclusively to the Sunday Telegraph shows the extent of the housing affordability crisis.
Over the past five years, median dwelling values in Sydney have increased by almost 60 per cent, the CoreLogic figures show, but household incomes were just 18.4 per cent higher.
And even though the Sydney property market has softened recently, despite record low mortgage rates, it still takes almost half (48 per cent) of gross household income to service the loan for an average house.
“Even if values continue to fall in Sydney, we’d need a number of years of ongoing declines to dramatically improve housing affordability,” the Cameron Kusher, the head of research at CoreLogic, said.
“Especially since household income growth is still really sluggish.”
The housing affordability crisis is one of the biggest topics of the #WTFAustralia campaign, which aims to start a conversation about the big issues and encourage problem solvers to share their ideas.
An aerial view of 81 Terry Rd, Eastwood.
Among the suggestions are a dramatic overhaul of planning laws, that would make it easier for the large blocks on Sydney’s north shore and west to be redeveloped for affordable housing.
“We need a rethink on block size, with smaller dwellings on smaller blocks, to suit the needs of people coming up the food chain or down the food chain,” the president of the Real Estate Institute of NSW, John Cunningham said.
The owner of a huge 1,150 sqm block at 81 Terry Rd, Eastwood, Vicki Carlisle said the huge backyard her late father, Peter, used as his veggie patch for 48 years could house three townhouses.
“If you can slice the cost of the land among a greater number of owners, I think it will work towards solving the housing affordability crisis,” Ms Carlisle said.
The property is currently up for sale trying to lure the Chinese market with its lucky $2,088,000 price tag.
Its R2 zoning means the most that can be built on the site is a duplex with granny flats.
“Being able to build three townhouses would certainly make it more viable,” the agent, David Middleton, of Anthony Trees First National Eastwood said.
But for developers to build townhouses that are truly “affordable” they’d need a government incentive, as a tax break, Mr Kusher said.
Vicki Carlisle looks back at the huge block. Picture: Toby Zerna
“You can’t build anything for less than $650,000 … and once you put the developer’s margin on top of that you’re not going to get anything much less than $700,000 in Sydney.”
The chief economist of AMP Capital, Shane Oliver, said the only way to make property more affordable was a “massive injection of supply”.
“We need to continue high levels of housing construction,” he said. He said up to 80,000 a year was needed.
The NSW Planning Minister, Anthony Roberts, said 68,431 homes were approved in the year to August.
“In the next five years, the Department of Planning and Environment forecasts 184,300 new homes will be completed across Sydney,” he said.
He said the government was already making redevelopment of big blocks more feasible through its “complying development” legislation, that encouraged fast-track approval of granny flats.
The Premier, Gladys Berejiklian, had promised to make affordability her number one priority, and Mr Roberts said its July 1 stamp duty exemption for first home buyers of properties up to $650,000, with discounts up to $800,000, was “an important first step”.
Dr Oliver also favoured a decentralisation plan of encouraging first home buyers and large government departments to regional areas. “Whitlam tried that with Albury-Wodonga in the 1970s, but then there was the change of government … if we continued down that path we would be in a better position today,” Dr Oliver said.
Mr Cunningham also liked that plan, along with the often-discussed fast train.
“Infrastructure and transportation are key; we can put fast rail between Sydney, Melbourne and Brisbane and have those regional centres booming along the way,” he added.
Other solutions to housing affordability include cutting stamp duty for retirees, which would lead to more affordable family homes.
“When you get stamp duty reform, you actually stimulate more people to buy and sell, so the government actually ends up with more revenue,” Mr Cunningham said.
reposted from Daily Telegraph