‘Headworks’ costs imposed by governments were out of control and should be reduced if housing affordability is to improve, said First National Real Estate chief executive, Ray Ellis.
“Where once local councils’ headworks charges paid mostly for water and sewerage, they now include a host of other charges, including infrastructure costs for roads and in some cases recreational and community facilities, electricity charges, footpath networks and more,” he said.
In a statement, Mr Ellis outlined the costs now being imposed in each state. In Western Australia, he estimated a simple two-lot subdivision could cost at least $25,000 to $30,000 depending on location and local council charges.
He continued that in Queensland, the industry is looking at setting building charges at $27,000 for houses and capping one-bedroom apartment charges at $13,500. These charges do not include state government infrastructure charges such as roads, when these are added, the development costs start creeping into ‘unviable’ territory.
Commercial development fees on the Gold Coast are up to 10 times higher than other states, according to recent investigations.
In New South Wales, Victoria and Western Australia, he said headworks charges varied between $58,000 and $404,000 but on the Gold Coast a similar development was charged $2.5 million.
He added that in Tasmania, a developer was recently charged $44,428 in ‘headworks’ charges, equating to around 1 per cent of the cost of a $50 million development.
A 155-lot subdivision in Tasmania was recently put onto the back burner because of an $810,000 headworks charge.
And, in South Australia, he said the different infrastructure requirements plus internal infrastructure including roads, parks, common service trenches, stormwater basins, service connections and public lighting, could well see a rough cost per allotment in excess of $60,000, plus legal costs.
According to Mr Ellis, councils and governments, especially those in regional areas, need to change their attitude if they want their regions to prosper.
“Regional areas are in desperate need of growth and, if the bureaucrats and policy makers really want to attract people to these areas, these headworks costs defy logic as they stand in the way of development,” Mr Ellis said.