Forum Replies Created
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…….Developers not main land-banking culprit, says analystBy Bob Wilson, Hotspotting .com 28th October 2009
Blame for any shortage of land for housing development is usually sheeted home to developers, who are supposedly sitting on zoned, approved land awaiting a better market. But according to property analyst Michael Matusik, speculators are the more likely suspects, land banking with the aim of holding large parcels of land and on-selling the land in a stronger market. Matusik says developers have a different goal. They aim to make a profit, creating value by changing the land, not just holding on to it. The real issue with land banking, Matusik says, is the lag-time between buying raw land and then waiting for the development approval process to play out. “It is not unusual for the developer to come out at the other end with an approved project, yet be facing a markedly changed market,” he says. “Research has shown that in just five years, taxes, fees, levies and compliance costs have risen 300% to 400%. “Therefore the developer could emerge at some point with a fully-approved project, but it could cost more to bring the project to the market than the market is willing to pay. This is also known as ‘no market’ and, while developers hate to hear this, they’ve paid too much for the land in the first place.” So yes, land banking does happen, but it frequently happens in circumstances where the developer has no choice but to hold on to the land as there is no point in going ahead with an unprofitable project (or selling the land at a loss). The solution, Matusik says, is lower taxes and regulatory costs. Developers sometimes have to wait years for a development approval to emerge from councils, many of which are struggling to deal with backlogs of 12-18 months before the approval process (which itself usually takes 6-12 months) can proceed. And as real estate agents have found in the past two years, the hardest land to sell in a downturn is land which does not have a development approval.
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……..Here's a silly story.
Consider we have oafey slow thinking do gooder ideologues in the RBA and Fed Govt who finally realize affordability might be an issue.
So the RBA decides it will now consider asset price inflation in setting the cash rate.
Hmmmm……ok, so house prices too high -> raise rates, even if conventional inflation is within the target band.
Hmmmm again…..that decreases the amount buyers can borrow, and increases the cost of building new stock. Population growing at 1.5-2%pa.
Housing supply drops below 30,000 per qtr. Hmmmm indeed.Read the rest on this thread…..
https://www.propertyinvesting.com/forums/property-investing/general-property/4334669
WinstonWolfe wrote:Here's a silly story.
Consider we have oafey slow thinking do gooder ideologues in the RBA and Fed Govt who finally realize affordability might be an issue.
So the RBA decides it will now consider asset price inflation in setting the cash rate.
Hmmmm……ok, so house prices too high -> raise rates, even if conventional inflation is within the target band.
Hmmmm again…..that decreases the amount buyers can borrow, and increases the cost of building new stock.Population growing at 1.5-2%pa.
Housing supply drops below 30,000 per qtr.Hmmmm indeed.
Lol….. Silly story consider we talking reality my friend……
But don’t fret Mr Joe Blow here in Qld we are leading the way with the Bligh government instigating the “ Building Revival Forum” bureaucratic talkfest that’s bound to add more dead weight more regulations and believe it or not more bureaucracy ……
Hmmmm indeed the fairy tale
continues …..WinstonWolfe wrote:Listings are up 50-100% in Brisbane outer and mid ring burbs, though vendors are yet to drop prices significantly. I expect downwards pressure to build in autumn next year. And that's when I might be making low ball offers on development sites. Nevertheless, I'll be following the rates outlook. agree…Banks need to lend money to make money… so maybe we will also see some easing mid next year … perfect receipe
Wander .
……… sounds like you have your head on your shoulders and keeping the emotion out of it….. Its a buyers market and the agents job is to push you up…… has he actually presented a signed contact to the vendor or is it all been verbal???If its in print it has to be true………
From my simpleton
point of view and seeing it suits you, why just not reduce your offer down to the equivalent of the 3-4 months rent and allow them to stay there rent free for the period.Valuers did their thing this week and verbally indicated for what its worth consideration be given to view it as a DA site under "best and highest use"
From their valuers experience government dealings on resumption/ acquisitions cases are very fair and reasonable … even saying he would consider buying property within areas knowing there may be a possibility of future resumption.. ….Go figure…… Maybe that should become another investment strategy………..
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continues …..
agree…
……… sounds like you have your head on your shoulders and keeping the emotion out of it….. Its a buyers market and the agents job is to push you up…… has he actually presented a signed contact to the vendor or is it all been verbal???
point of view and seeing it suits you, why just not reduce your offer down to the equivalent of the 3-4 months rent and allow them to stay there rent free for the period.
….. lol
