An Analysis of Victorian Premier Dan Andrews’ Housing Plan

⚡️ Highlights:

1. Victorian Premier Dan Andrews has announced plans to build 80,000 homes per year for 10 years, but experts doubt this target can be achieved.

2. The state’s record for dwelling construction was 69,972 in the year to September 2017, and achieving 80,000 homes per year is considered unrealistic due to rising materials costs and a shortage of construction workers.

3. The government’s large infrastructure projects, such as the Suburban Rail Loop, have diverted construction workers away from the housing industry, further exacerbating the labor shortage.

4. The idea that removing red tape and speeding up approval times will solve the housing crisis is seen as absurd, as there are already many approved projects that have not yet begun construction.

5. Rather than focusing on increasing immigration to drive demand for housing, experts argue that reducing immigration to a sustainable level and addressing supply-side bottlenecks would be a more effective solution to the housing shortage.

Executive Summary

Victorian Premier Dan Andrews recently unveiled an ambitious housing strategy aimed at constructing 80,000 homes annually over a ten-year period. The comprehensive 40-page policy document delineates measures to expedite approval processes, renovate existing social housing structures, and allocate land in well-established suburbs for the development of 800,000 new residences within a decade. However, this article argues that the plan is fundamentally flawed and unlikely to achieve its stated objectives.

Unrealistic Targets

The plan’s goal of constructing 80,000 homes per year appears overly optimistic, especially when considering Victoria’s historical performance. The state’s record for annual dwelling construction stands at 69,972 units, achieved in the year leading up to September 2017. This was during a period of significantly lower interest rates and before the recent surge in material costs and widespread failures in the construction industry.

Labor and Resource Constraints

The Victorian Government’s ongoing large-scale infrastructure projects, such as the $200 billion Suburban Rail Loop, have diverted construction labor away from the housing sector. Consultancy firm RLB estimates that an additional 50,000 construction workers would be required to meet the housing target, putting Victoria in direct competition with other states like New South Wales and Queensland.

Ineffectiveness of Reducing Red Tape

The article also questions the efficacy of simply expediting approval processes to accelerate construction. Data from the Municipal Association of Victoria indicates that nearly 120,000 housing units have already received planning approval but construction has yet to commence. This suggests that the issue is not bureaucratic red tape, but rather supply-side bottlenecks such as material costs and labor shortages.

Developer Behavior and Supply Constraints

Prosper Australia’s study reveals that developers are retaining a significant portion of their land banks, even after receiving council approvals. This behavior limits supply and artificially inflates property prices.

The Immigration Factor

The article concludes by suggesting that the root cause of the housing crisis may lie in Australia’s high levels of immigration. Reducing immigration rates to more sustainable levels could alleviate the housing shortage without the need for radical changes to existing suburbs.

Recommendations and Conclusion

Given the multiple challenges outlined above, it is imperative for policymakers to reevaluate the feasibility and effectiveness of the current housing plan. A more balanced approach that addresses both demand and supply-side factors is essential for resolving Victoria’s housing crisis.

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