Former chief minister Jon Stanhope and a former top-ranking Treasury official have called for a wide-ranging review of the Land Development Agency, accusing the agency of focusing on maximising land prices and pricing Canberrans out of the housing market.
Mr Stanhope and Khalid Ahmed said the agency had made a "clear departure" from the 2007 affordable housing plan which was designed to ensure an adequate supply of land and competition in the market.
"It will be disingenuous to suggest that LDA is only selling land at market price; being a monopoly, it is the price setter," the pair write.
They make the comments in an opinion piece published today, where they point to a 2010 auction of land in Molonglo as compelling evidence of the way prices are pushed up. Just 100 blocks were offered to 1600 bidders in an initial auction, setting an artificially high price as the benchmark for the suburb.
Mr Stanhope was chief minister at the time and said he had been so "disturbed" by the auction that he had sought detailed economic analysis from the public service about the price of land, its implications for affordability and its impact on the ACT economy. The advice had not been delivered by the time he retired in 2011, he said.
Now citing housing affordability as his single biggest regret, he said by the time a high price had been set, "it's virtually impossible to turn back. The best you can do is seek to stabilise and we haven't even been able to achieve that. Not only has no progress been made in relation to affordability, but I believe we're probably going backwards."
A spokesperson for Mr Barr said every year the Government released sufficient land for predicted demand.
Last year it had delivered a record number of housing blocks to the market, making Canberra the the most affordable jurisdiction to buy or rent, he said. Over four years another 17,000 sites would be released, with 20 per cent for affordable housing.
"The government recognises there are Canberrans who feel housing pressure, and you'll see more from us during the election to help those in the bottom half of the income scale to afford the decent home every Canberran deserves," he said.
Stamp duty cuts were removing the biggest barriers to getting into the ACT housing market.
Echoing Mr Stanhope's criticisms, the Master Builders Association said this week it was not the cost of homes that had increased, but the cost of land.
In 2011, a first-home buyer could buy a house and land package in Franklin for about $370,000 – made up of $150,000 for the land and $220,000 for the house, he said. In 2016, a similar house and land package in Throsby could easily cost $620,000 – $370,000 for the land and $250,000 for the house, according to the group.
The Land Development Agency is the subject of two reviews at the moment – one by Auditor-General Maxine Cooper who is investigating its purchase of land in Glebe Park and properties in West Basin last year, and another from former national auditor-general Ian McPhee, who has been appointed by the government to review governance arrangements covering land purchases.
Mr Stanhope and Dr Ahmed said a much wider review was essential.
"Households on close to median incomes have been priced out of the market, and a generation of young people entering the labour market have no hope of ever owning a home," they write.
"Neither the government, nor the LDA as the delivery arm of its land supply system, can be absolved of their responsibility."
Their comments were endorsed by Canberra's housing industry, with long-time developer, Bob Winnel, now retired, saying, "Their concerns are legitimate. The issue of housing affordability needs a lot more attention from the government."
Real Estate Institute ACT chief Ron Bell said the land agency had "manipulated" prices by not getting land on to the market.
It was "well within the means of the ACT government" to make land more affordable, he said, pointing to a project he worked on before self-government when a percentage of land was means tested for first-home buyers and low-income earners, who were not allowed to sell for five years. It had worked successfully in Latham and Florey, where shovel-ready land had been always available, Mr Bell said.
"I suggested to Stanhope [a] long time ago that it could be reintroduced, I think he might have been talked out of it," Mr Bell said.
"When they do it this way [under current policies] there's pent-up demand all the time and it just creates an artificial pricing structure with an artificial demand."
Mr Bell said he had been trying to persuade Chief Minister Andrew Barr to open the first home buyer's grant to established properties, rather than only for new properties, which would open the large number of sub-$400,000 apartments and townhouses to first home buyers.
"That would help an awful lot of people but no one wants to listen about that one," Mr Bell said.
Master Builders ACT executive director Kirk Coningham said he was "in strong agreement" with criticisms of the Land Development Agency's monopoly. Land development should be left to the private sector, which could do it much more efficiently, he said.
"The private sector tends to be able to deliver land more steadily to the market to meet market demand whereas the Land Development Agency has restricted supply of land to the point where the prices have just gone through the roof and now to the point where they can't sell some of them because it's no longer economic to develop at the price of the land," he said.