We simply need more medium-density and high-rise housing, experts say, (Source: Supplied/Getty)
Australian authorities are being urged to focus on building more medium-to-high density housing across the country to prevent property prices from severely outpacing inflation and rising further. The federal government dramatically expanded its 5 per cent deposit scheme for first-home buyers this month and there are concerns the move will push up prices from already record highs in much of the country.
NAB boss Andrew Irvine is one of many who holds that particular fear and says we need to be building more family friendly apartments and town houses, rather than detached homes, to address the supply issue and get more Aussies onto the property ladder. This view is the backbone of the pro-development YIMBY movement (Yes In My BackYard), and YIMBY Sydney deputy chair Melissa Neighbour told Yahoo Finance it’s been frustratingly hard to get these types of homes built in many communities.
“In the planning system, when you want to get something approved, it has to go on notification, which means the surrounding neighbours get notified,” she explained.
RELATED:
“If they don’t want it, they write an objection through the formal process. The council often doesn’t want to approve it because they want to stay in power, and they can get sued as well.
“So they bow to these NIMBYs (Not In My BackYard). These are people who already own their own home, and they have all the power. They’re privileged. They know how to engage with the system, and they just shut down any new development.”
The government has set an ambitious goal of building 1.2 million new homes by 2029. But according to the latest figures, the country is 40,000 new home approvals short of the annual targets this year alone.
If that trend continues, there won’t be nearly enough homes to accommodate everyone, especially when you include ongoing immigration into the mix.
Do you have a story? Email stew.perrie@yahooinc.com
A diverse range of dwellings is needed to support the nation’s demand for housing. While many might want the ‘Australian dream’ of the house with the white-picket fence, not everyone will be able to afford a standalone dwelling.
NAB CEO Andrew Irvine told The Australian that increasing supply was vitally important to prevent the rapid price growth seen in recent years, but said that it has to be done in the right way.
“Some of our housing stock is the wrong stock,” he argued. “We’ve got lots of detached homes in Australia, and we need more medium-density housing. That’s one area we need to push on with.
“We need more dwellings and that’s the cold, hard truth.”
Andrew Irvine, chief executive officer of National Australia Bank, says Australia has made a mistake with its housing builds. (Source: Getty) · Bloomberg via Getty Images
However not everyone in the community is on board with more apartment blocks and medium density housing.
Earlier this year, there was a push to create 10,000 new homes in Edgecliff and Woollahra, two already-densely packed Sydney suburbs, and the only room to move is up. But the idea faced backlash from residents, some of whom were concerned about how it would impact the look and feel of their local area.
The same thing happened in Melbourne’s pricey suburb of Brighton, which faced major pushback from residents over the council’s desire to see more high-rise development.
Neighbour told Yahoo Finance it’s this type of NIMBY thinking that will only make the housing supply situation worse. She noted that the NSW government has been relaxing planning laws to make medium-to-high density easier to approve, but hopes to see things go even further.
“Density is important, and at the end of the day, we just have to realise that these suburbs close to the CBD, they’re going to change,” she said.
“That’s what cities do. They actually are supposed to evolve over time. But for some reason in Australia, we’ve got it in our heads that they should stay exactly as they are.”
On October 1, the government expanded the scheme that allows first-home buyers to purchase a property with just a 5 per cent deposit.
Income caps have been abolished, meaning high-income earners can now use it, and the property price caps have also been increased, some by as much as $600,000.
This will mean more buyers could enter the market at a time when supply isn’t keeping up with demand. If there isn’t an increase in supply, prices will likely go up.
Domain chief of research and economics Dr Nicola Powell told Yahoo Finance she expected the scheme’s expansion will “supercharge” certain sub-sectors of the market.
“We could be staring down the barrel of market dynamics that is reminiscent of what we saw back in 2009 – this massive wave of first-home buyers coming to market, taking advantage of, at the time, a doubling of first-home buyers grants,” she said.
While you could build standalone dwellings in fringe areas of major cities, some might prefer an apartment closer to the CBD to enable them to be near their friends, family, and work.
Neighbour told Yahoo Finance that’s why state governments and councils need to be building up just as much as we’re building out.
She pointed to Auckland, which changed its zoning rules back in 2016 to allow for more medium-to-high density developments. It led to an explosion of new developments, and saw rent prices and house prices slow and decline because buyers and tenants had more options.
Research economist Matthew Maltman told the ABC he hasn’t seen “economic phenomena” like the New Zealand example, but it revealed what was possible closer to home.
“The new plan came into place and just absolutely skyrocketed these dwelling consents,” he said.
“We have all these debates about how can we increase housing supply. How can we improve affordability? And there’s this place that’s not far away from us that’s actually done it and implemented these reforms that people have been talking about for years.”
Get the latest Yahoo Finance news – follow us on Facebook, LinkedIn and Instagram.