Housing regulations: a blow to the poor and to everybody’s living standards

Housing regulations: a blow to the poor and to everybody’s living standards, by Alan Moran.

The average Melbourne lot price of $329,500 is rapidly catching up with the $480,000 cost of a new lot in Sydney. This is in contrast to the costs of new housing blocks in those US cities which have a permissive approach to new development on their outskirts. Thus, in Australian dollars, fully developed lots in Houston and Atlanta sell for $70,000 – $100,000 and average house prices in those two cities are $300,000 and $350,000 respectively.

The difference in prices between Australian cities and those of Houston and Atlanta is solely due to government planning policy. Although high levels of immigration are sometimes blamed for house price escalation in Australia — and demand is certainly important — the fact is that both Houston and Atlanta are cities that are growing faster than Sydney and Melbourne.

In contrast to US cities with permissive planning regimes, Australia has layers of regulation, starting with urban growth boundaries, outside of which no new housing is permitted. Even within the urban growth boundaries new building proposals face multiple hurdles including establishing flora and fauna protection, heritage issues and running the gauntlet of bureaucratic processes demanding specific densities and project features. The upshot is a tortuous process that adds considerable costs, not the least of which is delays — it often takes a decade to clear the intrusive government oversight.

Allowing supply to respond to increased demand prevents the price escalation we are seeing. And that must start with dismantling the highly restrictive planning regime that has evolved in this country.

Too much government. Not that you’d ever hear that on the ABC, or from the PC journalists at the other news outlets who wouldn’t mind a plum ABC job but who know that bucking the PC line would kill those chances.