The NSW government has slashed developer levies in a bid to stimulate the economy by making new homes more affordable. But artificially lowering the price of land on a per lot basis will simply “perpetuate urban sprawl” and leave less money for infrastructure, architect Paul Berkemeier told Architecture & Design.
“It gives city-fringe low-density [housing] a price advantage over denser areas closer to the city centre,” Berkemeier told Architecture & Design. “Notionally you reduce the sale price of the land.”
By cutting levies by up to $64,000 a property, the government hopes to stimulate a severely depressed housing market that has contributed to NSW’s budget deficit of $712 million this year.
However cutting developer levies does not guarantee a saving will be passed on to home buyers, Berkemeier said. Cutting down levies also means that there is less money to spend on infrastructure in a “Catch-22” situation. It could be argued, Berkemeier said, that city-edge sub division gets hidden subsidies from the fact that the land is being sold cheaply. This means that others have to pick up the cost of the services, such as infrastructure, schools and public transport, he said.
“Well, the money’s got to come from somewhere and we have had a history of building whole urban areas without appropriate infrastructure and that becomes a problem,” Berkemeier said.
A cabinet committee decided yesterday to abolish levies for water utilities payable to Sydney Water and Hunter Water, which average $15,000 a house. It will also limit levies paid to councils to $20,000 a lot (which can reach as high as $57,000), do away with the $6,000 transport levy and reduce government charges by a further $6,000 a lot.
Infrastructure charges, which will already benefit from the $6,000 reduction in transport levies, will be further reduced by $11,000 a building by 2011.
The changes mean that developers who have been paying up to $94,000 to develop a lot may pay as little as $30,000, reports The Sydney Morning Herald.