Households in Molonglo and Lawson paid prices at least $100,000 higher than they should have for their land, new figures suggest.
Former senior ACT Treasury official Dr Khalid Ahmed said the economic value of the first blocks sold at Wright in 2010 was $510 a square metre. Households had paid $740 a square metre in the first auction, which had set the prices to follow for the entire suburb.
The 530-square-metre blocks were worth $280,000 on Dr Ahmed's analysis. People paid $380,000.
He has similar stark figures for the 2014 sale of land in Belconnen's newest suburb, Lawson. The price paid asquare metre in Lawson was $900, against an economic value of about $610. With average block sizes of 463 square metres, Lawson households paid about $130,000 more than they should have.
Dr Ahmed, who was director of policy development in Treasury from 2001 till 2013, said the Molonglo prices had been inflated by the decision to release just 100 blocks at Wright. With 1600 bidders, the small release and limited land supply had pushed prices up. People had paid more than they would if the auction had been designed properly and land hadn't been released in "dribs and drabs", he said.
The government's monopoly on land, owning all the land and controlling its release, meant people paid more than in a normal competitive markets.
Asked whether they had paid more than their land was now worth, given a high market price had now been set for the suburb, he said, "Wherever have property prices in excess of real economic values you run the risk of the bubble bursting."
Dr Ahmed revealed his explosive figures at a seminar on housing affordability on Thursday, organised by former chief minister Jon Stanhope in his role as University of Canberra professorial fellow.
Master Builders ACT executive director Kirk Coningham also pointed to land supply, as well as planning and development red tape, as driving costs up. He had two children in their late 20s for whom buying their own home in Canberra looked to remain only a pipe dream, he said, accusing the Land Development Agency, which he described as a "cash cow", of deliberately constraining land supply.
But University of Canberra economist Ben Phillips rejected the idea that Canberra was under-supplied, saying there had been a big increase in the number of new homes on the market, from about 2500 a year 15 years ago to 5000 a year more recently. The underlying demand was for about 3000 new dwellings a year, so there was still a surplus, with supply outpacing demand, he said, although he identified a shift to units rather than houses.
Mr Phillips said the people struggling most were those on benefits and low incomes looking for somewhere to rent. Median rent had jumped dramatically from $165 a week in 2001 to $380 in 2011, now the highest in the country outstripping Melbourne and Sydney. The per cent of rental homes affordable on the minimum wage had fallen significantly, from 31 per cent in 2001, to 21 per cent in 2011. But the picture was improving, with rents now coming down.
Land Development Agency deputy chief executive Dan Stewart rejected the suggestion the agency was constraining supply, saying 19,500 sites had been released over the past five years compared with 11,000 in the previous five years. The underlying demand was 15,000 homes over five years.
Asked about the Lawson and Wright prices, he said they had both been "highly anticipated releases in very desirable locations and commanded an unexpected premium on first release".
Since then, single residential blocks in Harrison, Moncrieff and Coombs had been for lot parcels of between 200 and 300 sites, with lower prices. The government had also released 447 blocks in Moncrieff exclusively to builders. The government had accelerated Moncrieff to bolster supply, he said.
Land release should be seen "in the context of a substantial increase in risks to the delivery of detached blocks ... over the past decade", he said, pointing to site investigations, community consultations and environmental surveys and clearances.
Release had been affected by the timing of Commonwealth environmental approvals, with 8700 sites needing clearance in the past four years, ACT environmental assessments, community consultation and infrastructure development.