The Victorian Government is on a hiding to nothing – there is just nothing they can do to bring house prices down.
How desperately chronic is the housing shortage in Australia?
This chronic – chronic enough that this fluff from the Victorian government about streamlining the energy connection process can get passed off as an ‘affordability solution’:
Power companies AusNet Services, Jemena and CitiPower, Powercor and United Energy have agreed to a series of commitments to speed up the rollout of power in the areas where they provide electricity, state Treasurer Tim Pallas said on Tuesday.
“We’re acting to make sure new homes are connected to electricity faster, cutting costs, and making it easier for Victorians to access new housing,” Mr Pallas told an Urban Development Institute of Australia audience…
UDIA Victorian executive director Danni Addison said the changes would help speed up housing production.
“The urban development industry is working hard to meet the demands of population growth, but people can’t live in a home without power,” Ms Addison said.
How is this about helping boost “affordable supply”? I mean sure, it helps at the margin, and it’s definitely better than not doing it, but still I can’t see millennials priced out of a home organising a ticker-tape parade over this one.
“Yay, this will shave at least $1500 off the purchase price. Finally the dream of owning my home is within reach. Honey, pack your bags.”
But seriously, this probably is the best that any government can muster.
Because, meanwhile, prices in Victoria continue to march onwards to all sorts of crazy.
Land prices are the real flash point. HIA-Corelogic reckon that Melbourne’s median lot price per square metre surged a massive 30% in the past year. That takes the typical median lot price per square metre to $359,000.
Remember, these are Greenfield sites, many of them located so far from the CBD of Melbourne that they have West Australian post codes.
And even then, it’s going to cost you $360K for the land, even before you start looking at landing a caravan on it, or whatever you can still afford.
And this is all despite the fact that median lot sizes in Victoria are actually shrinking!
A few weeks ago, Satterly Property Group announced they would start offering lots in Melbourne as small as 80sqm – less than a fifth of the size of a traditional lot – in an attempt to boost profits.
Sorry, I mean, in an attempt to offer anything that could reasonably be considered ‘affordable’.
And so in Melbourne, if you don’t have at least half a million, there’s no chance of securing a new house and land package, no matter how far you are willing to commute.
How has this happened? How is it still happening?
This is the chronic undersupply in action. When there’s too many people and not enough homes, then prices will rise. It really is as simple as that.
And while supply has continued to come on-line at its usual dribble in Victoria, the population has actually boomed.
Melbourne is now adding a full MCG worth of people every year.
That’s a million people every ten years:
There is just no planning response that the Victorian government can come up with that can deliver the housing that is needed to stop the market getting tighter and tighter and tighter.
Which in turn means, prices will just go higher and higher and higher.
You know, except streamlining power-supply regulations…
That’s going to have a big impact.