Recently I spoke to a young woman who has just bought her first block of land and went to see a builder about building a house on it. The land is on the edge of town adjoining undeveloped rural land. The builder said she would need to submit a DA, a development application.
Before the build can be approved this will require:
- A Complying Development Certificate.
- An Aboriginal Heritage Due Diligence Assessment.
- A Heritage Report.
- A Bushfire Report.
- A Bushfire Attack Level Rating.
- An Excavated Natural Material Test.
- A BASIX Rating – Building Sustainability Index.
- A NatHERS rating – Nationwide House Energy Rating Scheme.
- And a Construction Certificate.
This appears a rather intimidating list for a young person. Yet when I asked Council staff about it, they didn’t seem to think it would be terribly difficult to satisfy.
At best it will provide a considerable delay before the build can start and raise the costs substantially. At worst it may put the young lady off building altogether, so she instead competes with other people to buy an existing home.
We need many more homes in Australia. We do not have enough to house our population. This long list of requirements is part of the reason. It is a failure of older generations that they have put in place a system that makes building homes for young people so difficult and expensive.
The problem won’t be fixed any time soon. The Federal Government is doing little about it. The NSW Government is at least trying to speed up residential development. Young people can only take steps to try to get ahead of their peers in competing for a home.
The first step is to open a dedicated bank savings account and make regular contributions that increase over time. The regular savings will demonstrate to a lender that they have the capacity and discipline to service a future home loan.
If it will take more than two years to save enough for a deposit, young people can instead save regularly into a managed growth fund, or buy blue chip shares for growth. These are likely to earn higher returns than bank accounts longer term.
The All Ordinaries Index shows Australian shares have earned an average of 9.5 per cent including dividends per annum for the last ten years. International shares have returned 13.2 per cent per annum average. Managed funds give easy access to these investments.
In addition to building a savings record and deposit, young people should complete their education and seek promotions and pay rises, and be focused and determined to achieve their own home.