I was watching the news this evening and one of the headlines was about the gov't lowering levies on property developers/builders by around 25K and that this should be passed onto to buyers. Was searching for an article about this and found one in smh.com.au (see below). What does it really mean? Does it really mean cheaper new houses in the future? What does this mean to prices of new houses already built? I'm going to buy a new house+land in a new development area (new suburb) in Northwest Sydney in two weeks time and would want to know if I'd proceed or not. Images of the New Rouse Hill area were being shown in Ch10 news.
Levy cuts 'may lead to cheaper housing'
October 12, 2007 – 6:44PM
New homes in growth centres on Sydney's western fringes could cost $25,000 less after the NSW government on Friday announced it will cut developers' council and state levies.
Premier Morris Iemma said the reduction in property development and housing contribution levies would help young families into new homes.
Under the plan, the building industry will no longer contribute to the construction of parks, libraries, schools, hospitals and police stations needed in new suburbs.
The cuts will initially apply to developers in Sydney's western growth areas, who will see their costs reduced by about $25,000 per lot.
It will eventually be applied to new land releases statewide.
"It's a win for young families and a win for the housing industry, giving it a kick along," Mr Iemma told reporters in the growth area of Rouse Hill, in Sydney's north-west.
A state government inquiry into Sydney's local governments holding around $750 million in unspent infrastructure levies is currently underway.
The money traditionally raised from developers' levies will be replaced by a state government trust expected to cost about $2 billion over the next 25 years.
NSW Treasurer Mr Michael Costa said this would ensure the money was spent on the necessary community projects.
"Latest figures show that local governments in the greater Sydney metropolitan area hold around $750 million in unspent infrastructure (money)," Mr Costa said.
But the move, which the premier said was designed to improve housing affordability in the state, prompted mixed reaction.
The NSW opposition claimed it was a "revenue raiser" while the Local Government Association said the state government couldn't guarantee developers would pass on the savings.
Mr O'Farrell and opposition planning spokesman Brad Hazzard said the Iemma government's new levy regime would actually increase housing costs across Sydney and the Central Coast.
"Infrastructure levies are about to be imposed for the first time on all areas or 'brownfield' sites, (they are) existing suburbs that already have the infrastructure existing for many years.
"It's a rip off dressed as a tax cut," Mr O'Farrell told reporters.
Shires Association president Bruce Miller said the decision did not guarantee more land availability.
"Unless the government guarantees it will pick up the funding shortfall, and puts in place strict guidelines requiring developers to pass on savings, we'll be faced with a situation where communities wait 20 or 30 years for basic infrastructure," he said.
The Sydney Chamber of Commerce and the Housing Industry Association both welcomed the levy reductions.
Unless there are checks and rules put in place to ensure the developer's do actually pass on the discount, then I reckon the developers will simply make $25k more per house.
The other scenario will be similar to what happened with the FHOG; more people suddenly came into the market than there were previously, driving up the prices to cancel ou the the benefit of the FHOG.
If all goes well, and the newer houses are cheaper, it will mean in the short-term that all those recently completed new houses will drop in value to be comparable to the new discounted ones. If you don't need to sell there is no problem. But I don't see this happening.
It is purely a vote getter at best. Elections.
I actually don't think it will have much affect at all unless it means that developers will be putting more property on the market,
property works on the old rule of supply and demand ,… to lower the prices you have to increse the demand,…
Hi, like everyone else, I was concerned about the impact & meaning of such news. Here in SA, we have 'No deposit', 'No interest loans', & I've out some details.
Such schemes are offered by some councils to 'help' people build new homes.
THE BASE PRICE IS $265000.
The median price in Adelaide recently flew up to $360000 [according to API] & $340000+ according to valuer general last quarter.
Wudina is the location for $1 blocks, Smithfield Plains is where there's a scheme for home buyers to put in 300 hours to build the house. The Wudina project is the $265000 houses. These houses are likely to be brick boxes similar to the housing trust 50s & 60s homes. those who don't know Adelaide, thes suburbs are "out in the sticks" according to my manager]
Everwhere else, even in outer suburbs like Seaford [recently caught up in pricing] Noarlunga & Christies Beach, new houses 3BR 1 or 2 bathroom are priced around $340000. blair Athol is around $320000 now, the last one I know of was auctioned for $291000 just after last Christmas [the price in Blair Athol is now around $330000 for old houses]
New houses will cost less only if it costs less to build.
Anyone knows a builder who can build a house for $50000? I will pay you $5000 if you can bring him to me.
Cheers,
Kum YinTysonboss1 wrote:I actually don't think it will have much affect at all unless it means that developers will be putting more property on the market,property works on the old rule of supply and demand ,… to lower the prices you have to increse the demand,…
I mean't to lower prices you have to increse the supply,….. I should really proof read my answers
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