30th April 2021
Property prices are set on supply and demand. Everyone from all corners of NSW can tell you that “The property market is crazy” right now. But why?
LAND SHORTAGE
Since the start of 2021 there has been a shortage of land and a very high demand for it. Traditionally, measures would be used to curb this appetite for land, however Covid-19 has changed the rules in this case resulting in significant price swings.
The land shortage issue has occurred due to 3 main factors
1. Minimal rezoning of residential land
2. A lack of servicing infrastructure to rezoned land
3. Slow DA approval times
The demand is led by:
· Confidence in the Australian property market
· Media frenzy causing fear of missing out (FOMO)
With interest rates set to remain low, we now have a perfect storm for property prices to go through the roof (Literally).
WILL IT END?
The Reserve Bank has limited ability to increase interest rates and curb demand as it would impact investment necessary for a Covid-19 economic recovery across other sectors. Just think about the impacts if the cost of borrowing money increased for major Australian industries such as Healthcare, Retail, Business etc, the effect would be devastating. The best way to keep property prices affordable, without impacting other critical segments is to release more land for development, service this land and shorten DA approval timeframes. This would create an influx of supply which would lead to more competitive pricing and would aid in the stabilisation fo the property market.
SEEMS EASY RIGHT?
But wait there’s more, the Western Sydney Aerotropolis is having an impact on residential re-zonings and servicing. Being one of the biggest planning and infrastructure projects to be delivered in recent times, resources are being directed from State Government Planning Teams and Service Authorities to the project. This is leaving large resource gaps in the ability to re-zone and service residential land supply. With the airport intrinsically linked to trade ties strained by political relations, the entire airport project is at risk of being a ghost town. One has to ask, is our eye on the prize or are we focused on the wrong thing?