Broadband network could push up property development costs

Property experts are divided about whether the Federal Government’s national broadband network will push up property development costs and affect home affordability.

While some believe the cost of building a new home may rise by as much as $4000 to $5000, other experts says fibre-to-the-home requirements could create opportunities for developers.

The new requirements dictate that property developers must lay fibre optic cable infrastructure up to homes and offices for greenfield developments to obtain planning approvals after 1 July 2010.

Caryn Kakas, executive director of the Residential Development Council, has told The Australian Financial Review that the new requirements will send push costs higher.

“It’s a huge issue. In 18 months from now the market may be getting back on its feet,” she said. “All of a sudden you have to add $5000 to that. It’s pushing the boundaries of affordability again.”

Rory Costelloe, executive director of residential land developer Villawood Properties, also said that the extra cost of about $4000 would turn away prospective home buyers.

But other property experts have said that there is little reason to speculate that property prices will increase due to the Government’s plans.

Noel Dyett, president of the Real Estate Institute of Australia, says while affordability has become a real problem over the past two years, no one can speculate on how the NBN will affect prices.

“There are all sorts of people who are going to come out with speculations, to what extent anyone knows how this is going to pan out when it eventually gets moving is a guess,” he said.

David Green-Morgan, research director for analysis firm DTZ Research, says that the NBN will not likely affect commercial property prices, and residential owners should have nothing to worry about.

“I’m not sure that it would affect commercial property prices. I’m not sure how its going to effect new residential projects either, because to build this network it’s not as if they’re having to provide anything they weren’t providing before.”

Green-Morgan says that as developers will have already made provisions for electricity and gas lines, extending those provisions for another line of cabling shouldn’t be difficult.

“Maybe developers will use it as a way to increase their margins, but I don’t see where that extra cost is coming from,” he says. “In terms of commercial property, I don’t see that affecting property prices hugely.”

Related articles:

• Property prices will fall across the board; report
• A broadband revolution