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Neil Flanagan's avatar

Good article.

I understand you write these things from an economic perspective, but I tend to view these things from my own town planning perspective.

So for me, the big thing that jumps out for me is this notion that the developer needs a buffer. Sure I get they will always want some spare capacity up their sleeves.

But my query is - how much spare capacity does each developer need? There must come a point where you could have a hundred or more developers (big and small) all operating within the one market who could potential stockpile thousands of approved dwellings and with the way the law is applied by the courts these days, these approvals can and do remain valid for decades.

I think it was in the mid 90's that the Queensland Government radically changed the compensation provision to an approach of "use it or lose it". If Council downgraded your existing zoning to no longer allow a historical DA that it no longer wanted or supported - then you had 4 years to put in an application to do the approval - if not then you no longer have compensation rights for lost "property rights". It was farcical that prior to this, Councils were shit scarred of down zoning areas based on development approvals that related back over 50 years ago, purely because they would have been exposed, under the laws of that time, to compensation claims for a loss of development rights.

The same thing should be applied to DA that have not been enacted within 4 years - use it or lose it. The legislation needs to be amended to make clear to the courts that the current interpretation / rules that it has applied to when a DA is still valid or not is now much narrower.

DA have now evolved to be a tradable commodity that once gained, can be held, traded and on-sold numerous times, without ever lifting a actual finger to commence or progress the actual development. This has all been aided and abetted by legislation.

It is not the silver bullet, but it will force developers to stop speculation / stockpiling and bring more dwellings onto the market, or at least on-sell the property so someone else can actually do it.

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The Emergent City's avatar

Great article - also worth mentioning the way developers calculate demand for multi-res projects (Highest and Best Use Analyses) is **incredibly** conservative in order to take on as little risk as possible. Basically these use the following information to determine whether a project has sufficient demand:

- A detailed review of settled market transtions to provide trend analysis with rates of sales

- A high level review of the active supply of apartments and townhouses within the catchment with a focus on price points and total volume of sales

- A review of the future pipeline supply of apartments

- Population demand assessment

This in no way factors in the quality of building, any views it might or might not have or the desirability of the specific site within its context - it's incredibly abstract.

Makes you think about what all the developers did before all this economic data was available - they just put their finger in the air and took a risk. This also speaks to something that is really pervasive across heavily financialised countries like Australia - risk aversion is everything and everywhere.

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