Australia

The impact of planning requirements on housing costs and development

A RECENT study has found that while development contributions and other planning related costs are high and vary greatly amongst Australian states and territories, developers are more concerned about non-financial barriers such as planning system complexity, uncertain time frames and changing requirements.

The research, released by the Australian Housing and Urban Research Institute (AHURI), was carried out by Associate Professor Nicole Gurran, Dr Kristian Ruming and Professor Bill Randolph of the AHURI UNSW-UWS and AHURI Sydney Research Centres. It explored the relationships between urban planning regulation and housing outcomes in Australia, focusing particularly on the cost impact of planning regulations for housing development.

The researchers conducted 26 case studies and over 30 interviews with developers and other industry stakeholders in 15 local areas in NSW, Queensland and Victoria and included inner, middle ring and outer metropolitan locations, plus one regional growth area.

The research found that developers understood planning costs were inevitable to some degree and that these costs were factored into total development costs. However, if costs were too high, some developers reported that they would not build or they would build somewhere else. It was also found that consultancy fees and costs of sustainability requirements could be significant.

Non-financial barriers were also identified as factors that could affect development costs and house prices. These barriers included uncertainty, timeliness and inconsistency; lack of trust and goodwill; and a lack of government resources.

Reference: Australian Housing and Urban Research Institute (2010), AHURI Research & Policy Bulletin, Issue 125, March 2010, 'How do planning requirements impact housing costs and the development process?', based on research by Associate Professor Nicole Gurran, Dr Kristian Ruming and Professor Bill Randolph of the AHURI UNSW-UWS and AHURI Sydney Research Centres.

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