Preliminary findings related to the conceptualisation, sensitivity and measurement of holding costs and impact on housing affordability

Abstract

Housing affordability issues are widely acknowledged as a major consideration for any new greenfield development. Its importance has captured the attention of the wider population, with the issue ranking highly across the broader political agenda. Aside from playing a major role in fostering industry and employment, it is central to meeting the expectations of burgeoning populations, particularly young people, first home owners and the socially disadvantaged - all of whom can be relatively easily pushed into housing stress.----

The growing body of literature on the subject has identified a number of multi-dimensional factors including macro structural / micro-behavioural variables such as interest rates, construction cost, income levels, buyer’s decision, intentions, land supply, housing prices, and a range of other factors.----

One factor that has been widely held to impact housing affordability is that of holding costs: typically passed on by the developer, and reflected in purchase prices paid. There are also other significant costs associated with “holding” that inevitably act to drive up prices, and therefore impact housing affordability. A preliminary model indicates that the financial impacts might be of greater significance than current analysis like that undertaken for the Queensland Housing Affordability Strategy might otherwise suggest, especially where time taken for regulatory assessment is excessive. These findings indicate that even small shifts in assessment period can significantly affect housing affordability. Ultimately, there are significant policy implications for changing the framework used in Australian jurisdictions that might result in promoting, retaining, or otherwise maximising the opportunities for affordable housing.