Understanding how policy settings affect developer decisions

Abstract

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From mixed tenure development to mixed tenure neighbourhoods

“…To examine the financial feasibility of neighbourhood-level MT development, a scenario was developed based on the design for the suburb of Broadmeadows in the City of Hume, Victoria. Using prevailing dwelling prices and industry-standard cost assumptions (see Rowley, Leishman et al 2022), a feasibility model (Argus EstateMaster DF) was used to generate revenues and costs for a number of development scenarios based on the design shown in Figure 27.…”

The new normal: changed patterns of dwelling demand and supply

“…There are proponents that argue the most effective way to increase supply is by reforming the planning system, making it less restrictive, and that will result in the private sector delivering more housing (Commonwealth of Australia 2022). Others argue that planning reform on its own will not automatically result in a significant increase in supply as there are many other factors that determine whether the private sector will deliver housing on a particular site (Rowley, Leishman et al 2022).…”

“…Australia is almost totally reliant on the private sector to deliver housing supply, with the key driver of supply being market conditions, which are largely outside government control (Rowley, Leishman et al 2022). While increasing the availability of sites, particularly if they are well located, will almost certainly result in new housing as new areas are opened up to profitable development, not all sites will be profitable-the key condition for development.…”

“…While this is a very simplistic description, basic economics determines that if there is less supply, prices will rise. What determines the level of new supply is complex and is discussed in detail by Rowley, Leishman et al (2022).…”

“…This uneven shift in new supply was exacerbated by increasing construction costs leading to many multi-residential projects becoming unprofitable and, therefore, not proceeding (Rowley, Leishman et al 2022). Of course, not all the change can be attributed to stimulus measures, as very low interest rates stimulated demand which, in turn, also drove new housing supply.…”