The ’head in the oven/feet in the freezer’ situation of high interest rates but low housing supply has resulted in property prices continuing to rise in NSW over the last twelve months (Sydney experienced 0.8 per cent growth in October alone). Because of the lack of supply, the National Housing Accord has tasked the State Government with delivering 314,000 new homes over the next five years.
To achieve this, policy surrounding infrastructure and development needs to catch up. The initiatives currently on the table have the potential to lead to fantastic new property development opportunities, but it’s a waiting game to see what the final decisions will be.
The introduction of new housing and development policies may affect the direction your next project takes. Here’s a look at what has been on the table for discussion this year.
Building ‘up’, not ‘out’: Housing density policy in Sydney
As recently reported in the Sydney Morning Herald, the NSW Government is working on a reform package that is designed to improve housing supply.
If plans go ahead, a series of priority development zones located near public transport across Sydney will be established. The Government has indicated it is even willing to override council opposition in key areas near train stations so more people can have a place to live.
The reform package will also allow developers who met capital threshold requirements to progress with simultaneous rezoning proposals and stage one development applications instead of having to go through the rezoning process before submitting a DA.
The push for so-called ‘snap rezoning’ in certain parts of Sydney and high-density housing in the form of “infill developments” is backed by the NSW Productivity Commissioner, who reported that infrastructure cost is significantly less when building ‘up’ rather than ‘out’.
While the government says it is committed to “density done well”, it’s a waiting game for developers, who need an official green light before stepping up and creating plans to help deliver new homes.
Transit-oriented developments
As part of the push for higher density housing, the Government also has its sights on a “transit oriented state environmental planning policy”, or SEPP. This would apply to land surrounding train stations and allow higher density housing to be developed in these areas.
Affordable housing
Affordable housing gives essential workers who do not earn a high wage an opportunity to live in communities close to transport and close to their workplace.
To encourage the development of affordable housing, the NSW Government is pushing to offer incentives to residential housing developers that include at least 15 per cent affordable housing in their plans.
- Housing developments with a capital investment value over $75 million, which allocate a minimum of 15% of the total gross floor area to affordable housing, will gain access to the State Significant Development (SSD) planning approval pathway.
- These developments will also gain access to a 30% floor space ratio boost, and a height bonus of 30% above local environment plans.
The announcement of this proposal was reportedly welcomed by developers and social housing advocates, but councils have been quick to point out that this may not reflect the best interests of existing communities.
Seniors housing
The Housing SEPP made changes to planning rules for seniors housing. It ensures that seniors housing meets industry standards and community expectations. The key changes for seniors housing include a new list of areas where seniors housing is/isn’t permitted. In addition, there are now bonus floor space and increased height-of-building incentives in place to encourage seniors housing developments.
Clause 4.6
Meanwhile, the NSW Government published changes to the ‘Clause 4.6’ provision in September. This clause is a procedural tool that allows developers to contravene development standards, and changing it is a bid to make the planning system faster, simpler and more transparent.
As Planning NSW explained, “Confusion over how the clause has been applied has contributed to delays and cost burdens for applicants and councils. This has had resourcing implications for local councils and the courts.
The changes to clause 4.6 clarify the requirements for variations to development standards and improve transparency and accountability in the planning system by introducing a monitoring and performance framework.”
Creating certainty for your property development project
Policy is in flux at the moment and it can be challenging to know what is possible now, and what will be possible in the future.
Many developers are wondering if they should wait to see which decisions are final and work towards higher density (and potentially more profitable) projects, or go ahead with existing plans.
Either way, if you have land to develop, you have the opportunity to be part of the housing shortage solution.
The decision on what to do next will come down to a fair number of factors. This is why you need end-to-end support throughout your project from a team of experts who have an in-depth understanding of the latest policies and can help you with forecasting and long-term planning.
Contact Impact Group to get more value from every project. Speak with Alyssa Lanning on alyssal@impactgroup.com.au or phone 1300 630 063 for a no-obligation discussion.