Research by leading RMIT planning professor Michael Buxton shows increases in the price of land following the introduction of an urban growth boundary in 2002 were not excessive compared to previous years.
Professor Buxton said the yet-to-be-published research found other factors such as the first home buyer grants, low interest rates and flexible lending policies were responsible for land price rises.
In 2002 the former Brumby government introduced an urban growth boundary under its Melbourne 2030 policy to restrict the city’s expansion into surrounding farmland and encourage greater urban density in existing suburbs.
The policy was designed to strike a sensible balance between managing growth, protecting the environment and ensuring the building industry provided competitively priced and affordable housing, the government said at the time.
The boundary was subsequently expanded in 2005 to include 11,000 hectares on the city’s fringe and again early this year to include 46,000 hectares, making Melbourne one of the world’s largest cities, stretching 100 kilometres from east to west.
The Urban Development Institute’s Tony De Domenico said there was no doubt the urban boundary affected land supply, causing prices to rise substantially.
Mr De Domenico said supply of new land was not meeting demand.
Recent data from Oliver Hume Real Estate group shows land prices in Melbourne’s growth corridors increased by between 50 to 85 per cent over the five years from 2006 to 2010.
However, Professor Buxton said his research showed the urban growth boundary stabilised the value of rural land while not unduly increasing the price of urban land.
The new Baillieu state government has promised to review the urban growth boundary every two years and conduct a biennial audit of land supply in Melbourne’s and Geelong’s growth areas to ensure adequate supply.
Planning Minister Matthew Guy said the facts showed that after 2003 there was a spike in prices.
”Constricting supply at a time of great demand has an obvious price impact. That is the case in every city around the world and I fail to see how Melbourne could be any different.”
Simon Johanson December 06, 2010
Source: The Age, http://theage.domain.com.au/real-estate-news/land-shortage-price-hike-link-a-myth-claims-academic-20101205-18lc6.html