Hume council is calling on the state government to take stop “land banking” by developers amid concerns it is driving up house prices.
Council’s concerns follow the release of a report by economic think tank Prosper Australia which examined 26,000 land sales in nine-master-planned communities across Australia. The report found that over 9.5 years, only 23.8 per cent of sites released by government to developers had been sold to home buyers.
The report found that instead of house and land prices falling as more land is release for development, prices increased by an annual rate of 5.5 per cent above inflation. This meant people buying lots were paying an average of $194,000 more for a typical site than those who bought into a development in its early stages.
While none of the tracked sales were in Hume estates, councillors fear the decision by developers to “drip feed” housing lots onto the market was driving up land prices, which when combined with rising interest rates and cost of living pressures could create financial problems for homeowners in the municipality.
Council is calling on the government to investigate land tax reform, sunset clauses or other measures to address the issue of land banking by developers in growth areas.
Cr Naim Kurt, who raised the issue at a council meeting earlier this month, said the state government’s push to reduce the cost of housing by releases land on Melbourne’s outer fringe for development was being “undermined” by developers.
“We could effectively concrete all over Victoria and land costs still wouldn’t drop for families because the developers have the power to halt supply,” he said.
“Sunset clauses would hold developers to develop land within a timeframe.”
Cr Kurt spoke of his own experience trying to buy a block of land, saying he found developers would release two or three lots at a time in a ballot.
Cr Joseph Haweil echoed Cr Kurt’s experience, saying buying a block of land was “almost like a lottery”.
“We will now have with the rising interest rates, a massive problem in this city and in the growth areas of the north-west of people who have come in at the top of the market expecting that interest rates will remain low forever … I think that defeats the purpose of what successive government’s have said about the release of land in outer suburban areas.”
The government was contacted for comment.
