The 60 year Shortage of Land for Housing..

International Rating Agencies are extremely concerned about a highly possible crash in Australian Housing prices, and the impact that will have on any lending institutions that are exposed to it..
There are many reasons for their concern. But the most compelling reason is the many surveys of 20-30 year olds where over 80% affirm that they do not intend to ever commit to paying off a million dollars for the average Australian house! (with bank interest, that is what it will cost you over 25 years!) Lets face it - That sad looking 3 bedroom house in Sydney is not really worth a million dollars lost from your modest wage.
Twenty years ago, 80% of young workers intended to 'buy a home'.. Today, 80% don't believe they ever will.
This attitude of this critical age group is common to most countries and is alarming policy makers worldwide..
This attitude - and unaffordable rents - is becoming a huge political issue! Governments will have to address this issue or loose office!
The biggest area where government policy can make a difference is the price and availability of land for housing.

The high price for a house is mostly due to the extreme price of the Land..
And that extreme price is the result of a 60 year shortfall in the availability of land for housing..
A recent article in Fairfaxs 'The Age' newspaper states..
"Land price appreciation is a key cause of Australia's housing affordability problem, with higher prices cascading through the residential market to push up the price of both new and existing houses," said HIA Senior Economist Andrew Harvey.
[These spiraling prices have been] driven by tax policies..  and the slow release of land by real estate developers and governments.. Australia faces a roughly 200,000-unit housing shortage!"

It's a well known market place 'trick' that just a few percent shortfall in Supply can quickly double the Price of any commodity.
For the last 60 years there has been a carefully maintained 5% shortfall in the supply of land for housing which has seen the price of housing land rise to 10 times the price it would be if it had just followed inflation.
This shortfall has forced people to out-bid each other and encouraged speculation. (Speculation is pointless if supply always matches demand.)
In a normal market place, any prolonged shortfall in the supply will be filled by competitors, a prolonged shortfall can only be maintained by collusion and a monopoly situation.
In the Housing Estate business, that monopoly is maintained by corruption and collusion between Council Approval officials and Land Developers.
These methods are infamously practiced in most Council Re-zoning departments. They are the subject of the majority of all council corruption investigations. Whole Councils have been sacked or publicly condemned by State judiciary.

A publicly-owned, Nation-wide Housing Estate developer..

If ever there was an area of potential corruption that needed to be circumvented, it is the cozy relationship between council re-zoning departments and housing estate developers.
A Google search on the phrase ["council sacked" for corruption - "housing estate" developers] will return over 30,000 results..
Nothing can be done to legislate against collusion & corruption.. A Council Re-zoning official has to be a real fool to get caught. The mere coincidence of a thousand "gifts received" coinciding with a thousand favorable leaks revealing which farm lots are about to be re-zoned is just a thousand coincidences in the eyes of the law. (Suspicious? Yes.. Chargeable? No - case dismissed.)

The only way to eliminate this cancer is..
1. Ban the giving or receiving of significant gifts to individual politicians or council officials..
2. Subject all politicians and council officials in sensitive areas to random scrutiny of their financial accounts.
3. Take Housing Estate development out of private hands.. The logic of this third point is made clear by the following facts..
The average price of a housing block is $200,000.. The price of that 1/5th acre piece of farm land was only was only $300 the day before it was re-zoned as residential.. If the developer can 'find out' which farms are about to be re-zoned - his wife can buy that farm for about $900 an acre and sell it to her husband two days later for 30 times that price! She (he) can make 10 million dollars overnight! Totally legal.. 
In return, a one million dollar "gift" to a council official is comparatively small change.

In reality, only a not for profit, publicly owned (POEMd) corporation could be trusted to develop that $900 farm acre into housing blocks without obscenely marking-up the purchase price.
The price of new housing estate blocks will take an astronomical dive. New home price in these estates will suddenly become affordable.

Note.. Our 90+ policy articles are all in the 'peer review' stage.. [more..]