New home buyers are suffering longer delays at the hands of council planning, industry data shows, worsening the national shortage of homes that's helping to drive prices skyward.
The average delay between the sale of a home by a vendor and the start of building has lengthened from 14 weeks in January 2008 to 17.3 weeks by December, according to data compiled by the Australian Bureau of Statistics and Housing Industry Association.
New loans jumped 58 per cent nationwide from December 2008 to December 2009 while approvals increased by only 40 per cent in that time, said the HIA, a lobby group representing builders and developers.
Have planning delays been an issue for you? Email Chris Zappone
The bottleneck affects new home buyers who typically sign a contract with a developer for a new house rather than purchase completed homes.
Last year, a shortage of homes, exacerbated by the slow pace of building for a swelling population, combined with a reviving economy, unusually low interest rates and investment from overseas buyers to push average property prices up 13.6 per cent.
This year has got off to a slow start as well, with January building approvals dropping 7 per cent, the most in eight months, according to figures out earlier this week. Approvals for houses eked out a 0.3 per cent gain in the month, while multi-unit dwelling approvals slumped 29.1 per cent in the month.
Subdivision stalled
Melbourne-based Sam Agelis said he has been trying to get approval for a subdivision of a Fairfield block for two and a half years.
“I have never seen a worse process in my life with inconsistent information (and) incapable town planners not knowing what they want or (what they) will allow me to put on the property.”
While recognising the importance of planning, Mr Agelis says the high turnover of inexperienced, overly idealistic council staff has exacerbated the problem.
“I would never go through this process again.”
Developers blamed
Local governments, though, say they are not blame, and also challenge the HIA finding as "skewed."
Australian Local Government Association president Geoff Lake blamed developers for slowing the approvals process by turning in sloppy applications.
"After significant reform over the past decade, council planning departments have never been more efficient," said Mr Lake.
However, the standard of applications submitted by developers is slipping, doubling the amount of time required to assess them, he said.
"If these sloppy applications were improved, significant further improvement in application processing times is possible."
Shortfall
HIA chief economist Harley Dale doesn't lay all the blame for delays on the planning approvals but says the process has grown more cumbersome, citing more inspections, more environmental considerations and community input.
"In terms of the whole process, it is a widely held belief within the builder community... that we've actually gone backwards in the last 10 years and the system is worse in 2010 than it was in 2000."
Although the disparity between lending and approvals growth is partly attributable to a surge in first-time buyers last year, Mr Dale said, that change doesn't explain how the pace has slowed over the decade.
When the grant to first-time buyers was introduced in 2000, it was also aimed towards new homes. At that time, the rate of growth for finance and approvals was effectively the same - 65 per cent for finance and 66 per cent for approvals over a ten-month period.
Since then, additional regulations to include more community input in development decision has created what industry sources say is an "acute" shortage of planners.
Nationwide, the housing shortfall is about 56,000 units - and rising.
Speeding up
ALGA, the local government group, said it's encouraging councils to adopt reforms aimed at speeding the procedures.
The group is pushing for electronic development assessment and the roll out of a fast-track "tick and flick" code assessment for single dwellings, Mr Lake said.
"I encourage the HIA to show a similar reformist zeal by encouraging their members to play their part in improving application processes as well," he said.
While internal procedures can be improved, sometime broader changes in policy can arise to de-rail develop plans on a big scale.
Last week, Victorian Premier John Brumby predicted Melbourne house prices would jump by tens of thousands of dollars after the upper house of the state's parliament voted down a proposal to extend the city's fringe by 43,000 hectares.
The plan would have taxed developers to fund part of the Melbourne's expanded infrastructure needs.
The real estate industry, including HIA, fought against the passage of the bill.
czappone@fairfax.com.au
BusinessDay
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