Notes on the Bowden Urban Village and Environs Development Plan

Notes on the Bowden Urban Village and Environs Development Plan

Amendment

The Plan seeks to facilitate private-sector infill-housing development in the Charles Sturt Council area.

It is open ended with regards both volume and timing of land supply, since the major development industry players require government assurance on the availability of development opportunities

compatible with their 15 year project development cycles.

For this reason, the Plan foreshadows, and in some aspects, preempts,

principles and objectives for infill development which are City wide in their application.(“As much as it takes, when we need it”)

PRIVATE SECTOR HOUSING DEVELOPMENT.

It is generally accepted by the industry that there is considerable difficulty in predicting and efficiently matching housing supply and demand in any straight forward way. Reasons for this are easy enough to guess at – the variable availability and cost of finance being one, and in the case of the Australian experience, the long term government and social preference for home ownership as the predominant form of tenure being another important factor.

The Bowden and Environs DPA put forward by the Minister, because it aims to implement the SA Governments goal of providing target volumes for housing production from existing urban locations, adds another layer (or “Overlay”) of uncertainty to the fundamental problems the housing industry has in meeting demand. Not only because (in comparison to greenfields development) the meeting of targets via urban infill is far less predictable, but also because infill housing involves -potentially at least- a transfer of value between pre-existing housing users and new-housing developers. This transfer can take the form of the appropriation of public space – the St Clair development is the prime example of this - but as well necessitates relaxed development controls on overlooking, site areas, car parking, rubbish collection and other aspects of housing sustainability - as for example in the Brompton City Edge infill project, which shows fine grained examples of the problems.

The level of expropriation of value depends upon the relative use-value of the existing development and the infill which is inserted into it. In the case of the Bowden Village site, this is largely a positive transfer,flowing from the developer to the surrounding area since the site is presently vacant and contaminated. At the other end of the spectrum, negative transfers of value can be significant.

The crucial factor here is the conflict between the economy wide incentives for housing production, which are primarily not location specific, and the Governments proposed Development Plan Amendments, which are highly locational in their effect.

It has been reported that the various subsidies for home ownership are of the order of $65 billion Australia-wide per year.* These take the form of first home owner grants, negative gearing and capital gains provisions, and exemptions from GST payments. They are available independently of the geographical location of the housing produced with this assistance. (Hence the experience of recent years of housing production being roughly comprised of 30% “second” homes – holiday houses and speculative investments. The 2006 Census for example reports that 10% of housing in South Australia, at any one time, is unoccupied. These houses in aggregate could be regarded as a “Ghost City” in that their economic reality is divorced from any actual human inhabitation.)

China now has an estimated inventory of 64 million vacant homes. It is building up to 20 new ghost cities a year on the country’s “vast swathes of free land.”

What effect will these changes have? While the economic incentives for higher density housing construction are 'in step' with and re-enforce the property value increases of recent years, the resultant expropriations of amenity could be presented as a win win situation, at least for those able to take advantage of Commonwealth Government subsidies to home owners. This seems to be the position of the State MP Mr Atkinson, who is on record as encouraging people to sell their homes to the developers and trade up to a new home on the St Clair site – outside of his electorate.

Should the unthinkable happen, and the $65 billion subsidy is not sufficient to maintain the housing asset bubble, then with the new development controls in place, the housing industry will require more and more density, and less and less amenity, in order to go ahead at all. In short, there are no funds available for Keynesian 'counter cyclical' stimulation of demand.

The Plan establishes a category of infill development (“Affordable Housing”) which is exempt from all or most conditions of development control. The Plan points to Brompton policy area 20 - and the exemptions established by precedent in that area bordering the Bowden site - as an example which should be emulated elsewhere in relation to “affordable” housing.

By resident “d”

* Reply to criticism: The figure of $65b results from an attempt to update the figures presented in the 2009 AHURI Yates Report. I include an estimation of the present day value of superannuation fund housing investment which attracts taxation benefits (contrary to all economic orthodoxy, but in line with the pro cyclical impact this has on the existing housing market)