Delivered by global real estate firm Savills on behalf of the Property Council,the 68-pageRelease the Pressure report argued two property taxes – new Sydney Water Development Servicing Plan (DSP) and Housing and Productivity Contribution (HPC) — were working against the government’s housing agenda.
Premier Chris Minns wants to fast-track higher-density development in Sydney.Supplied
Premier Chris Minns has committed NSW to delivering 377,000 new homes by July 2029 as part of the National Housing Accord,announcing a suite of housing reforms aimed at boosting anaemic housing supply across Sydney.
However,the Property Council report claimed government red tape was inhibiting delivery of housing in western Sydney. The council represents all property sectors,from design and construction to asset investment,management and development.
The suspension of new charges throughout the housing accord period and expediting planning assessment times could deliver around 16,000 new homes in Sydney’s suburbs west of Campbelltown and Penrith,known as the Western Parkland City,the report found. In the sliver between Sydney’s west and Parramatta,known as the Central River City,delaying the new taxes would contribute around 33,500 new homes.
More than a third of housing costs in the Western Parkland City and 27 per cent in Central River City were made up of government taxes and charges,which included developer contributions and GST.
The report found the typical 250-unit apartment development,and a 115-lot greenfield development,would no longer be financially feasible in 2024,with the DSP and HPC charges increasing from a discounted 25 per cent rate this year to 100 per cent by 2026.
“There is no capacity to absorb new taxes and charges,with many new residential developments already unfeasible,” the report said.
An 18 per cent internal rate of return on infill development and 15 per cent for greenfield is considered the benchmark for feasibility in the analysis.
A reduction in planning approval times by at least six months was also imperative to delivering housing in Sydney’s west,the report said,saying it is “often taking longer to get a new apartment or greenfield project approved than it takes to build it”.
Planning Minister Paul Scully said property industry advocates were calling for infrastructure contributions when the government was elected last year.Dion Georgopoulos
Property Council NSW executive director Katie Stevenson said without changes to the tax imposition on new deliveries,the state would fail to reach the 377,000 dwelling targets under the accord.
“The NSW government’s ever-increasing tax agenda is crippling our industry’s ability to build new homes,” she said.
“At the same time the government is rightly declaring a housing crisis,it’s also introduced massive additional costs on building new homes,tipping those projects into the ‘way too hard’ basket for banks and industry to deliver. In fact,it’s best described as an own goal.”
Planning Minister Paul Scully said property industry advocates were calling for “planning reform and infrastructure contributions” when the government was elected in March last year.
“The NSW government believes enabling infrastructure is necessary for housing as communities want houses that are connected by roads,have a local school kids can attend,a toilet that flushes and lights that turn on,” he said.
“The first piece of planning reform introduced was infrastructure contributions to consistently fund the infrastructure growth needed to support housing growth,a policy reform recommended by the NSW Productivity Commission.”
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