Developers inflating infrastructure levies by up to 400%

DEVELOPERS around the country may be inflating council infrastructure-related charges by as much as 400%, a new study has revealed.

The study was the basis of a PhD by Queensland University of Technology lecturer in property economics, Dr Lyndall Bryant.

It showed the costs councils charged developers to cover headworks for sewage, roads and parks were affecting the prices of all new homes.

Her analysis is based on the study of more than 25,000 Brisbane homes.

Dr Bryant said it was applicable across all markets, but the actual inflation rates could differ.

While she said property developers were not "profiteering" from the increased charges, she said it was one of the key causes affecting housing affordability.

In Queensland, Dr Bryant said many councils charged the full $28,000 price for new subdivisions, which developers were inflating to cover their costs which included bank loans and rising land prices.

She said if a new home faced an extra $10,000 in infrastructure charges, homebuyers could be paying as much as $40,000 extra on their mortgages as a result.

While different markets and regions had different aspects, she said the inflated charges were affecting greenfield developments and were in turn influencing the prices of existing housing stock.

But she said until Australia could reduce the cost of land, and servicing it, all buyers would face a decrease in housing affordability.

"It's really the owners of land that are potentially sitting on a gold mine.

''The developers are really just middle men in the housing supply chain," she said.

Dr Bryant said the charges could also affect the cost of newly subdivided blocks in "brownfield" areas.

Topics:  council developer infrastructure

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