Costs add up, and keep house prices high

by Robin Christie09 Jul 2012

House prices may be at 'absurd levels' according to one observer, so what is it - aside from rates - that are keeping them afloat in these uncertain times?

According to Peddle Thorp design director and architect Peter Brook, the simple truth is that housing prices will remain high unless infrastructure demands lessen.

Governments at all levels are placing demands on developers for infrastructure, such as electricity substations, roads, and drains – and then imposing huge rates and charges as  well, he claims, and this is pushing up the cost of housing stock.

“Lowering of interest rates was only one part of the equation for returning housing prices to some form of sanity,” he said. “People have concentrated on interest rates, yet the impact of rate decreases pales into insignificance compared to the regulatory demands placed on developers.”

The problem, said Brook, is that these costs have increased greatly over time – and have to be passed onto the property buying public in the end.

“Developers are increasingly being asked to pay for basic infrastructure to get a building even started,” he said. “With planning regulation and costs centered around vague concepts such as neighbourhood character, we find costs escalating and there seems to be no end to this insanity.”

Do you agree that developer costs are adding to the cost of buying a property? Have your say by commenting below, or joining the debate on our online property investment forum.


  • by MMS from Perth 9/07/2012 10:40:21 AM

    Article is accurate. Going through the process right now (with other property oweners)and the the items Council is requesting owners to pay, borders on the ridiculous.

  • by Incognito 9/07/2012 1:29:58 PM

    Everyone screams if governments increase debt.

    So for now it's user pays as budgets are already in the red.

    Developers want the costs made 'public' but the profits private (i.e. theirs).

    Everything costs money so user and profiter should pay.

  • by Garry 9/07/2012 2:20:06 PM

    It has never been the developer who has created these cost blow-outs. The developer understands he needs to build at a low cost to move the property on in a timely manner. This issue sits right in the lap of the greedy councils. Too much red tape, too many absurd "infrastructure" costs make properties very expensive. Its time the councils reigned this back and the state and federal governments need to step in and stop the greed and fix it. If it wasnt for the developers being prepared to create the buildings we would have serious issues. As far as a devloper stating what his profits are - why should they. Does anyone reading this publically advertise what they earn? I doubt it.