Achieving Transport Oriented Development (TOD) medium-density targets on the Central Coast is not feasible, says the NSW Urban Development Institute of Australia (UDIA).
The oganisation has issued a report on the NSW Government plan to provide housing around railway stations, including those at Tuggerah, Wyong, Gosford and Woy Woy.
“Development is currently not feasible under the TOD State Environment Planning Policy (SEPP) for any of these station areas, with an average feasibility gap of 101 per cent,” the report says.
“Feasibility in all cases was directly impacted by the current high cost to construct, and a limited capacity for consumers’ ability and willingness to pay.
“High construction and financing costs and increased development contributions mean an average new unit around the Central Coast stations will need to sell for about $1.1M to secure project financing – a price that is out of reach for many local buyers and a massive premium to the median apartment price in those markets.”
The report, Making TODs Work, concluded that while the Government’s TOD SEPP is a sound policy intervention that has the potential to deliver much needed housing to the market, many projects in the TODs will face serious feasibility issues in the current economic climate, including those on the Central Coast, meaning the policy is unlikely to deliver at the volumes expected by policy makers unless changes are made.
“While TODs are a welcomed attempt to increase housing supply, our research shows without other interventions from Government they will struggle to get started,” UDIA NSW CEO Stuart Ayres said.
UDIA engaged Astrolabe Group to undertake a feasibility assessment of the 37 TOD sites, with detailed analysis in 11 sub-markets, including the northern and southern sub-markets on the Central Coast.
Only the North Shore and Inner West Sydney sub-regions showed financial feasibility for build-to-sell models without any additional policy interventions.
The report makes seven recommendations to improve feasibility in the short to medium term and set the TOD policy up for success in delivering housing at scale when economic conditions improve.
Key recommendations include reducing and capping fees and charges to improve development feasibility.
“Part 2 TOD SEPP developments should be subject to a standard 7.12 contribution rate of one per cent to provide certainty and consistency across the broader geographies,” the report says.
“The State Government should place a freeze on state contribution levies for TOD developments that commence construction within four years from the implementation of the TOD SEPP.”
The report recommends that the Government should create a circuit breaker to de-risk investment and project financing.
“The Government should consider acting as a guarantor to development resulting in a reduced LVR (loan to value ratio) required to gain finance,” it says.
Development assessment timeframes in the TOD areas should also be improved, the report recommends.
“Tier 2 TOD SEPP developments that meet the standards specified within the SEPP should be eligible for deemed approval within a 90-day period,” it says.
“Tier 2 TOD SEPP developments should have standardised controls to improve viability and consistency across all identified TOD sites and reduce assessment and approval delays.
“Simplifying and consolidating all controls into a single TOD development control plan, including key outcomes of the ADG (apartment design guide) and councils’ control plans, would provide simplicity and clarity to all stakeholders and the community.”
Chair of UDIA’s Central Coast Chapter Allison Basford said while the medium-density TODs faced serious feasibility challenges in the short term, UDIA recommended a greater focus on greenfield housing precincts, higher-density precincts around transport nodes and working with the development sector to unlock housing through infrastructure delivery and more streamlined approvals.
“Our industry is committed to build homes for the people of NSW and the recommendations outlined in our Making TODs Work report, if implemented, would go a long way toward easing the housing crisis in NSW,” she said.
“UDIA urges government to work closely with the industry to implement the key interventions identified in our research that will assist in bridging the feasibility gap.”
The full report can be found at https://www.udiansw.com.au/wp-content/uploads/2024/06/Making-TODs-Work-June-2024.pdf
How about also having a stamp duty reduction should aTOD or DWLH Sepp project gain approval.