As new home sales decline to levels last seen in December 2000 (according to the Housing Industry Association) and residential construction remains in the doldrums, Australia’s biggest property developers are pointing the finger of blame at councils for halting the approval of new developments.

In the last few months developers’ displeasure in dealing with councils appears to be growing faster than weeds in an abandoned development site.

It’s not surprising the issue is such a hot topic (ranking alongside concerns about housing affordability and interest rates) since council planning committees are a major barrier to developers transforming their master-planned communities and apartments from architect plans into bricks-and-mortar reality.

At its November investor road show in Queensland at the end of November, Stockland residential CEO Mark Hunter highlighted overcoming “high [development] approval hurdles” as one of the key challenges facing the company. According to Hunter, the hurdles are increasing, as are the “horror stories” about local council nimbyism (not in my backyard)” campaigns.

“In Sydney, councils are dictating the type of product they want. They are saying they want three-bedroom units. The fact market cannot afford them does not seem matter,” Hunter says.

Hunter’s complaints are echoed by Stockland CEO Matthew Quinn, who recently described the process of dealing with small councils in Sydney as something akin to a “nightmare”.

Two weeks later at a property lunch in Sydney, Meriton boss Harry Triguboff was beating a similar drum when talking about getting his new projects off the ground. Asked what had changed most about the market in his many years in the business, Triguboff quipped: “The fact that it takes so long to get approval from council.”

According to these same developers, the solution to the problem lies in amalgamating councils into regional “super councils” as occurred with the formation of the Sunshine Coast Regional Council in 2008 and the much older Brisbane City Council, which dates back to 1925 and is Australia’s largest metro council.

In October, following a legal challenge, Stockland won approval from the Sunshine Coast Regional Council for its enormous Caloundra South community project, which will be home to 50,000 residents over the next 20 years. Quinn noted that Stockland had “improved relations with super councils such as on the Sunshine Coast”.

Speaking alongside Triguboff at the same Sydney lunch, Dexus boss Victor Hoog Antink remarked that he had been “fortunate to grow up in Brisbane, which has the largest metro council in the country”.

“It’s a very efficient way to go,” Antlink said, backing “super councils” as the best opportunity to administer for economies of scale and to deliver “better professionalism”.

Calls for super councils have the support of lobbying groups such as the Urban Development Taskforce, which has lamented the inability of Australia to build enough new houses to meet the needs of the population.

In September, then CEO of the Urban Development Taskforce Aaron Gadiel blamed local councils and the state government for Sydney’s failure to build enough houses to meet the needs of the community. “Sydney is simply not producing enough new homes to accommodate even this low level of population growth. “In fact, no capital city produces less new homes per capita than Sydney,” he said at the time.

“The NSW government and local councils need to tackle the systematic problems in our planning system which is preventing our housing supply from meeting the community’s clear need.”

Gadiel’s replacement Chris Johnson says “larger planning units servicing various councils could ensure sufficient skill levels”.

Of course councils, planning authorities and residents may not quite see the value in having decisions about the look and feel of their communities made by a larger body, which may not have same degree of empathy or understanding of local issues or concerns.

And of course many may agree with this assessment made by the Planning Institute of Australia NSW in its submission to the state’s planning system review, where it called the system both “complex and dysfunctional”, but also one that rewards proponents “with the deepest pockets as opposed to those that propose change of the greatest merit”.

*This article first appeared on Property Observer

Peter Fray

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