New home buyers could be offered free blocks of land for ten years, if a novel approach to housing affordability were to be adopted.
The proposed program, which is estimated to reduce first home buyer entry prices by half and cut the total cost of the dwelling over an average 25-year mortgage period by around 20 per cent was put forward in a key note address at the Urban Development Institute of Australia (UDIA) National Congress in Melbourne this week.
The suggestion comes just days after the Federal Government’s independent adviser the National Housing Supply Council warned that poor planning, high costs and red tape mainly in the development approval arena could see Australia become a ‘nation of renters’ because of the lack of housing affordability.
Brian Haratsis, Chairman of economics and strategic planning company MacroPlan Dimasi, told the National Congress that research identified land prices as the root cause of the affordable housing problem.
"Australia now has the highest housing prices in the world because of government inaction, chaotic town planning regulations and kilometres of red and green tape which has killed the Australian Dream for an increasing number of Australians", Haratsis said.
"In 2010 first home buyers and people building a new home were carrying the major burden of infrastructure costs.
Mr Haratsis quoted figures produced by property consultants Charter Keck Cramer show that in 2011, taxes and charges across the three levels of Government on an average block of land in Victoria costing $199,000, was $46,200.
“The largest part of the Tax $23,500 is taken by the Federal Government, $16,800 State charges and levies and $5,900 by local councils."
The key to the proposed program is to offer free land for ten years for first homebuyers. After ten years, homeowners would be given the choice of buying the land (at the original price, having by that point broken the back of their housing construction mortgage), selling the house and land package or renting the land.
"The scheme envisages the Federal Government initiating a rolling fund of $3 billion over three years to purchase bulk land from the private sector helping smooth out the high and low demands of the property cycle providing the industry with more financial certainty", Mr Haratsis concluded.