Why the national settlement plan won't solve affordability woes

By Gerv Tacadena

Developing regional areas won't solve housing affordability in capital cities.

Housing affordability continues to worsen in capital cities and other metropolitan areas across Australia.

As the quest to find ways to make the housing market accessible continues, the House of Representatives’ Standing Committee on Infrastructure, Transport and Cities recently laid out plan for creating more sustainable cities in its Building Up & Moving Out report.

The report enumerated several factors which play a key role in housing unaffordability: rapid population growth, insufficient and slow land supply, onerous planning regulations, and taxation policies. It also outlined a national settlement plan that would encourage the development of cities and regions outside metropolitan centres.

RiskWise Property Research CEO Doron Peleg argued that by reducing the population of major cities and encouraging people to move out to regional areas, the dynamics between supply and demand will change, resulting in an improvement in affordability.

“The solution is to encourage the development of larger regional areas and ensure they are well serviced by infrastructure and jobs to attract people away from the traditional employment hubs," Peleg said.

He added: "While part of the solution also lies in developing the middle rings of these cities – with family suitable accommodation that is close to transport hubs and schools – this is only really a short to a medium-term response due to the explosion in population."

However, Piyush Tiwari from the University of Melbourne does not see the plan ever working to solve affordability woes. In an interview with 9News, he said that the settlement plan would only hinder the "natural development of cities".

He added: "It is a very unnatural way of redistributing employment growth,” and that it would only bring the cities' problems to regional areas.

“If we can’t fix our cities we are looking for a cure elsewhere… We need to find the cure in the city," he said.

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