The aggressiveness of changes to planning instruments to allow for greater heights and densities, and allow fringe areas into the urban footprint, provided opportunities to profit simply from speculation on the next change to the planning scheme. For landowners it became more profitable to wait three years for the local government to update the planning scheme to allow greater density of development, than to actually develop the site.
One example, South Brisbane, epitomises this situation.
At this prime location, within a stone's throw of the CBD, the previous limits of 12 and eight storeys were already conservative.The planning scheme for this precinct has changed from allowing four storeys, to seven storeys, then proposing eight storeys, then twelve storeys in the latest draft plan, and now the UDIA is calling to increase the heights much further. With the approval of a 30-storey tower adjacent to Milton railway station, one could assume there is a long way to go in this saga.
Expectations were for this pattern to continue. A landholder in this area recently mentioned they have no reason to sell or develop when the council keeps increasing the value of their land by changing the planning scheme. Landholders are gaming the Council, waiting for a signal that the gifts will soon expire before selling up to developers.
Maybe that signal is here.
The State government has intervened in the latest round of planning scheme changes to request the proposed height limits be cut back – where 12 storeys was proposed, they will allow seven.
For anyone aware of the standoff taking place the flood of development sites onto the market in the month since the State government decision would come as no surprise. Who would have thought reducing height limits would promote so much development activity?
The moral of this story is that certainty (or lack thereof) can greatly change real outcomes. Economists often foolishly assume that all government decisions are taken at face value by the marketplace. Few realise the time element and that parties affected will already be anticipating the next decision, or gambling on a political backflip.
UPDATE: More evidence of rewarding land banking rather than productive land use, from the Local Government Association of Queensland -