Queensland has achieved world leadership in housing. But before Queenslanders preen themselves for living in a state that now has worldwide recognition, I hasten to add that the leadership is in the cost of houses.
The Sunshine Coast is estimated to be the least affordable of 265 markets in Australia, Canada, Ireland, New Zealand, Britain and the US. And this is no fluke -- the Gold Coast comes in third (Honolulu is second), and Bundaberg 10th.
This data is revealed in the Fifth Annual Demographia International Housing Affordability Survey released today. It is based on the average house price compared to average family income.
The Demographia study follows a report last week by the Residential Development Council that placed the Gold Coast and the Sunshine Coast as the nation's first and third least affordable housing markets in terms of income required to service mortgages.
High-priced housing is great news for the home-owner. It makes us all feel affluent. But it makes depressing reading for those who do not own their home, including our sons and daughters and the less well-off.
On the Sunshine Coast the average house costs 9.6 times the average family income (8.6 and 6.3 times family income for the Gold Coast and Brisbane respectively). Twenty years ago, throughout Queensland the average house cost only three times average family income.
Getting a toehold on the housing ladder has never been easy for the first-home buyer. It has become much more difficult. The average Sunshine Coast house costs a little under $500,000. Even a modest house is $400,000 and few mortgages would be available to buyers who did not have $80,000 of their own money.
How did this price escalation come about? It was certainly not because we ran out of land -- only 2 per cent of the Sunshine Coast is urbanised and it is nestled in a vast hinterland of farms and bush.
Nor is it because of the costs of building new houses. Despite the impositions governments have loaded on to builders in five-star energy-saving requirements and other features that buyers might not value, house-building costs in Queensland and throughout Australia have remained low. Similarly, the cost of preparing blocks for building -- roads, drainage, water and telecommunications, etc -- has not changed in real terms.
Part of the cost escalation results from government charges -- in Maroochy it costs about $20,000 in infrastructure charges and consultant fees to steer approvals through the bureaucracy.
The infrastructure charges are largely spurious because the land developer pays these; this is recognised in some other jurisdictions, for example Adelaide charges only $1500. Infrastructure charges are really only an additional tax on the new home buyer.
The big killer is the cost of land. This follows not from any intrinsic scarcity (there is plenty of land around Queensland cities) but is a result of regulations creating scarcity of land on which homes are permitted to be built. Land on the edge of existing developments in the Sunshine Coast, Gold Coast and elsewhere in Queensland has a value of less than $1000 a block in its normal usage as farmland.
On the Sunshine Coast, with a stroke of the pen this becomes $50,000 once it is approved as a home-building site. The $50,000 is further escalated by government charges such as land tax, GST and stamp duty, as well as management costs.
All Australian governments have created a regulatory imposed high cost for housing land. The costs of new developments feed into the prices of existing homes and place a gross and unfair burden on people who want to own their home.
We have to unwind these regulatory restraints on building if we want to see a fairer Australia.
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