Leave your answer to my question in the comments
The case study controls for demand, as each dwelling is built after one is sold, at a rate of 1 per month per site. If demand increased then the build out rate of the 40,000 approved dwellings would increase. It makes no difference if 40,000 are approved or 80,000 are approved. The rate of new housing supply is already responsive to demand, so no change.
I’m going to go for ‘stays the same’.
If I put myself in the shoes of a developer the additional upzoning is a gift, in that it has increased the size of my land portfolio, but I’m not going to squander that gift by selling each property for less than the maximum I can get for it. That is - I don’t want to release so many in a given month that I exceed the number of buyers in the market, and thus giving buyers more bidding power, thus causing a temporary dip in prices. So the rate I’m going to build out and sell at is still determined by how many potential buyers there are each month (ie the diameter of the pipeline, not the length of jt).
Possible exceptions might be:
- if for some reason (eg increased net migration into the city or a new demand-side subsidy) there is a sudden increase in the size of the number of households looking to (and able to) buy at my top market price in a given month. So I can release more, faster, without prices going down.
- if there’s a bubble on, and speculators and landlords are in gold rush mode. Prices are rocketing but I don’t think it’s sustainable. I think there’s a crash coming so I want to cash-in quick before the music stops.
- I’ve got a cashflow problem so I need to release them faster, even if it means selling them for less.
Maybe it slows down, as if they’re now higher density buildings, wouldn’t they have to wait till most of all properties in a block are sold before building?
Off track slightly but we need to consider alternative types of housing eg. tiny house communities which would be very suitable for oldies (me), homeless people and folks looking to downsize. They can be built in a factory and create efficiencies & lower costs with "mass" production techniques. Better for the environment with lower carbon footprints. Won't happen, of course. Vested interests will kill it.
I’m trying to think of some devil’s advocate position I can take that would justify an answer other than ‘no change’.
Developers will control the rate of release to maintain a desired price, so there will be no change unless there are time limits on developments.
It depends on the demand. If demand increases, the rate will increase. If demand remains the same, and this is the perception of developers, the rate will remain the same
The key point here is that council's decision to increase the potential number of dwellings does not affect the rate they are developed as they are only built once sold ... "each project is selling 1 new dwelling per month from its currently released stage. So that’s a rate of new housing supply of 100 dwellings a month, or 1,200 per year". Given no change in the rate of sales, council's decision reduces the share of total estimated stock that comes to market from 0.25% to 0.125% per month. If council wanted to increase the rate at which properties came to market, they would need to affect the rate of sales.
Nothing within your conditions as developers only build when sold at the predetermined rate.
But it will change completely if you legislatively force the developers to realise the zoning potential within certain timeframe, ie zoning will stop being a opportunity but will become an obligation (PPR exempted).
Given the substantial competitive supply that already existed prior to the upzoning, I would expect there to be no change in the rate of supply to the market, everything else being equal.
Its up to the buyers now - if the rate of purchases remains at 1 per month....nothing changes. The question then needs to be "what encourages more purchases to buy the increased amount of supply mandated by the councils?
One scenario: Materials and labour squeeze. Builders collapse. Prices rise.
The developers have no incentive to increase supply so unless either there is an increase in demand or something happens to the developers to cause them to lose confidence in the market and attempt to sell, there would be no change.
Given there is already more potential availability than demand, sales (1 per month) are determined by price and availability to the pool of buyers.
Assuming demand is greater than 1 per month but finished price is the limit on available buyers, if the up zoning from 400 to 800 allows the the developer to make greater margin on each block (eg 800 sq metres reduced to 400 sq meters) the developer has the choice to reduce the price of each dwelling to make the same or increased margins or to land bank the additional lots and plod along at the currently acceptable (for them) rate..
The Council needs to put a 5 year "use it or loose it" condition on the new zoning so that developers have an incentive to produce more from less in the short term.
Dwellings are only built after they are sold. No change unless new ways of getting to “sold” are explored. Maybe qualify more buyers than the market would previously approve, think subprime loans. Oh wait, we already did that…
No change, all else being equal...