Red, green tape hit affordability

Despite the state government’s best efforts, developers say bureaucracy is the main barrier to getting land to market in a timely fashion.

It can take anywhere from two to four years after land is purchased to get a subdivision to market – a timeframe Perth developers say is constraining the industry’s efforts to boost housing affordability.

The state government launched a comprehensive review of the residential approvals system in August last year, after it emerged that up to 28 agencies can be involved in the planning approval process.

These agencies can include, but are not limited to: the Western Australian Planning Commission; the Department for Planning and Infrastructure; LandCorp; the Metropolitan Redevelopment Authority; Main Roads Western Australia; the Water Corporation; Western Power; the Public Transport Authority; local government authorities; and state and federal environmental agencies.

Peet managing director Brendan Gore told Business News the approvals process was a perennial issue for developers, which had become more prevalent as the market became more active.

“Land supply is a continual issue; we’ve been saying for some time that we’re still not ahead of the curve, despite what some say,” Mr Gore said.

 “That’s part of the affordability issue as well, making sure there is adequate supply to feed the market.

“The market picked up quite quickly last calendar year; it absorbed pretty much all of the stock, so now you find you’re chasing the demand.”

Satterley Property Group chief executive Nigel Satterley urged all tiers of government to work together to reduce the approvals timeframe to around 12 months by changing the process to free-up land.

“We would like to see more funding given to the WA Planning Commission, so it can deal with issues quicker,” Mr Satterley told Business News.

“Once long-term planning strategies identify an area for residential housing, it should be supported by approvals that allow it to happen as quickly as possible.

“We need an approvals process that provides fast go-ahead with appropriate environmental safeguards.”

Mirvac chief executive of residential development – apartments and master planned communities, John Carfi, said one of the key challenges with the environmental approvals process was the balance between site protection and a strongly growing population.

Mr Carfi said Mirvac was committed to minimising the environmental impacts of its subdivisions, but the assessment process nonetheless added significant delays – from land acquisition through to home-site delivery.

“As a consequence, these delays impact the industry’s ability to provide a consistent supply of land,” Mr Carfi said.

Urban Development Institute of Australia WA president Paul Lakey, however, said the approvals process was just one issue out of many currently causing concerns for developers.

Mr Lakey told Business News among the most pressing problems for industry in 2014 as the market ramped-up was the availability of sand for fill for residential lots.

“Last year when the market started moving again, developers all started building again, and it has put a squeeze on that limited resource,” Mr Lakey said.

“We need to look at industry generally and see if there is a way of using alternative materials.

“But it is the trucking costs which are a killer. If you have a development in the north and the supply is in Pinjarra, it is the trucking costs that are going to be a problem.

“And we all want the supply at the same time; that’s the way the property cycle goes, that’s the challenge.”

Mr Lakey said the availability of water, especially along the northern corridor, was also hampering developers’ efforts to provide good quality open space, including parklands and sporting facilities.

Another key issue for the industry, according to Cedar Woods Properties WA state manager Stuart Duplock, was the developer contributions scheme.

The state government’s developer contributions plan was rolled-out in 2009, and requires firms to contribute to the cost of developing community infrastructure in new residential areas.

Mr Duplock said variations in schemes across local governments, including how they are costed and differences in costs per lot, meant the plan was not working in an ideal manner.

“I don’t think that any developer would argue that we shouldn’t be contributing to community infrastructure in some way, but the effectiveness of the scheme deteriorates when there is a lot of effort going into administering something,” he said.

“We’d rather see a flat fee, perhaps some simple criteria that determines the fee, which is then reviewed periodically every three years or five years.

“The problem that we have now is that if you are buying land to develop in an area that doesn’t currently have a scheme, you are always wondering what it is going to be, so it just introduces more uncertainty to development.”