There are plenty of challenges facing us in our day-to-day business and these are well documented throughout this report. We are also mindful of the broader challenges facing our business and the industry as a whole, and how best to respond over the longer term.
Achieving the government’s dwelling targets
In April, the New South Wales Government asked Landcom to deliver 10,000 home sites in western Sydney over the next four years. This represents a 25% increase on our previous targets. We have prepared a plan to deliver on the government’s objective, but the task ahead is considerable, with little margin for error.
Our main challenge will be securing resources, both staff and land. We are bringing forward current projects and reviewing contingencies for new supplies of land. We will also work closely with our government partners, exploring options to streamline the approval and development process.
Increased uncertainty in the development industry
At a time when we face ambitious dwelling targets, a variety of external factors are also increasing potential risk and uncertainty, both for us and for the rest of the industry.
A significant overhaul of the development approval framework in New South Wales is imminent and likely to be wide-ranging. At the same time, the national impact of a future emissions trading scheme on the cost of development remains largely unknown. Finally, while the development industry is still recovering from the effects of the recent global financial crisis, worldwide fears of a second round of crises and defaults continue to persist.
Responding to moderate income housing needs
Our ability to meet our moderate income housing target remains an ongoing challenge. Australia’s recent emergence from a record low interest rate environment has highlighted the challenges we face. We have been unable to get traction for some of our initiatives, such as our shared equity loan scheme and our attempts to attract institutional investors to the low cost rental housing market (see case study page 48). Since the problem is both ingrained and structural, we gear most of our efforts towards achieving incremental and sustainable improvements.
We are responding by promoting housing diversity in our projects, since this enables us to offer a range of differently priced products. Our Housing Diversity and Density Guides were launched this year and are successfully influencing policy makers and regulators in the industry. We also aim to influence a shift in consumer preferences towards smaller housing through our 21st Century Terrace demonstration project. Next year, we will seek closer alliances with small to medium sized home builders and developers, who tend to produce the majority of Sydney’s affordable housing. More information on our moderate income housing performance is on pages 51-52.
Maintaining our industry leadership and relevance
Sustainability innovation is gaining momentum in the development industry, with the greatest advances being made in the building sector. Landcom outsources building and construction to third parties, and this limits our ability to participate directly in these advances. The challenge ahead for Landcom lies in our ability to remain relevant and maintain a leadership position in sustainability innovation, while not being a builder.