New scapegoat revealed
A new report from OECD (Organisation for Economic Co-operation and Development) points a fresh finger at State and local council regulations for the rising house price bubble in Australia. The article describing this in Business Insider stated this was an ‘unexamined factor behind the failure of housing supply to keep pace with demand’.
The article notes that Australian house prices are the fourth highest in the OECD world, behind only New Zealand, Canada, and Sweden. Whilst low interest rates were acknowledged as a significant contributor to the current price escalation globally, not so obvious in Australia was that regulation was stopping the building industry from keeping up with demand. While owners of units in the Opal Tower, or Mascot Towers might raise an eyebrow over any suggestions of deregulating the building industry to achieve faster outcomes, Luiz de Mello, director of policy studies from OECD is quoted as saying, “Greater flexibility in land use regulations and zoning such as height caps in cities, and the speed of administrative processes for construction, would make supply more responsive to the increase in demand.”
The article also notes that a number of Australian bodies such as The Reserve Bank of Australia, Commonwealth Productivity Commission and NSW Productivity Commission have all brought attention to restrictive regulations affecting the housing market – in NSW especially, which is stated as taking twice as long as other states.
This is not contradicted by other news. For example in a recent article in Domain, in response to a lottery to randomly allocate 31 lots between 379 interested buyers at a new subdivision in Menangle, the new southern point of what can be considered part of ‘Sydney’, Toby Long, general manager of Mirvac is quoted as saying “The demand is there, but supply simply isn’t keeping up with it.”