This post refers to 'zoning' to maintain international relevancy, but for the purposes of Victoria's planning system it includes zoning and overlays (including heritage overlays!)
Great discussion Jonathan, thank you. I particularly appreciate your point about how limited upzoning allows developers to hold a monopoly on future development, whereas broad upzoning creates competition that makes it less practical to landbank.
This analysis also hints at a duality in housing pricing: People are familiar with the the shortage of supply causing increased rental prices-the minimum cost of renting in a city is artificially higher. On the other hand, this phenomenon also leads to artificially lower prices for a single family home in prime location - the cost of a single family home are made cheap by preventing demand from apartment developers.
Would this analysis be suitable to drive a government land acquisition programme aimed at building public housing? Would government want to buy the less profitable lots, or the most profitable?
Government doesn't have to get a developer profit margin, doesn't have to pre-sell to get finance and has no financing costs. There is plenty of argumentation about whether merely increasing supply will bring prices down, but not much discussion about the need for public housing, perhaps reflecting the middle-class bias of those who engage in these discussions.
If (big if) the government wants to build public housing in the most efficient way possible it should just build it on the cheapest land possible. However public housing tenants get many of the same agglomeration benefits that private tenants get, and so land price shouldn't be the only consideration.
Planning reform more generally makes it easier for everyone to build housing - public, community and private. While the processes are different, public housing providers are still obstructed by the community expectation that we shouldn't build apartments on most of our high-quality land.
This post refers to 'zoning' to maintain international relevancy, but for the purposes of Victoria's planning system it includes zoning and overlays (including heritage overlays!)
Great discussion Jonathan, thank you. I particularly appreciate your point about how limited upzoning allows developers to hold a monopoly on future development, whereas broad upzoning creates competition that makes it less practical to landbank.
This analysis also hints at a duality in housing pricing: People are familiar with the the shortage of supply causing increased rental prices-the minimum cost of renting in a city is artificially higher. On the other hand, this phenomenon also leads to artificially lower prices for a single family home in prime location - the cost of a single family home are made cheap by preventing demand from apartment developers.
Yes! It's very regressive.
Would this analysis be suitable to drive a government land acquisition programme aimed at building public housing? Would government want to buy the less profitable lots, or the most profitable?
Government doesn't have to get a developer profit margin, doesn't have to pre-sell to get finance and has no financing costs. There is plenty of argumentation about whether merely increasing supply will bring prices down, but not much discussion about the need for public housing, perhaps reflecting the middle-class bias of those who engage in these discussions.
I wrote about the need for social housing here:
https://www.blog.jonathannolan.net/p/tackling-homelessness-in-australia
If (big if) the government wants to build public housing in the most efficient way possible it should just build it on the cheapest land possible. However public housing tenants get many of the same agglomeration benefits that private tenants get, and so land price shouldn't be the only consideration.
Planning reform more generally makes it easier for everyone to build housing - public, community and private. While the processes are different, public housing providers are still obstructed by the community expectation that we shouldn't build apartments on most of our high-quality land.