Purchasers of government dwellings have had a number of advantages available to them. Government homes were sold at discounted prices under favourable financial conditions. Both factors enhanced the relative attractiveness of home ownership. An estimate can be made of the value of these forms of assistance by comparing the benefits received with those that would have accrued had other arrangements been in place.
Approximately 1,4CX) occupancies studied here were initiated by the sale of a publicly-owned dwelling to sitting tenants. Roughly 500 of those owners resold their dwelling during the period of this study. The capital position for ex-govemment dwellings was very favourable. The median result was a capital gain of S7,000, twice that received typically across the market. Total benefits were calculated and identified. The median outcome, under government finance was a benefit of S30,000. A figure very close to the overall median. There was, however, a substantial difference in the calculated benefit for completed and incomplete occupancies. Completed occupancies received a median benefit of 541,500, while the notional benefit for dwellings not yet resold was 529,000. The completion of an occupancy, and the associated collection of a capital gain or loss, had a large impact on the financial position of persons who purchased a dwelling from the Commonwealth.
An alternative position for the owners of ex-govemment dwellings was investigated using two assumptions. Firstly, it was assumed that the purchase price was 20 per cent greater. There was a difference of approximately 20 per cent in the prices received for Commonwealth- constructed stock by the Commissioner of Housing and private owners of ex-govemment dwellings. That new price was used to calculate interest charges under existing bank conditions as opposed to govemment loans. The original material outcomes varied significantly from those realised under die new conditions. Completed occupancies would have resulted in a benefit of 528,000 if exposed to private sector pricing and finance conditions while uncapitalised benefits would have been reduced to 519,000. If we compare the benefits that were received with these alternative figures we find that the Commonwealth's encouragement of owner occupation through the sale of its stock provided a subsidy worth between 510,000 and 513,500 to the household. Extreme caution must be used in extrapolating the results of any study that does not use a sampling methodology. It is interestiing, however, to speculate. If aU 14,000 purchasers of ex-govemment dwellings between 1962 and 1981 received a comparable subsidy the aggregate benefit would total 5150 million.
189 1A2. The Sale of Land
The sale of residential land at reduced prices was an important part of the NCDC's platform for developing Canberra. The Commission strove to ensure adequate supplies of serviced land in order to avoid an overheated market. The Department of the Interior, and later the Department of the Capital Territory, introduced restricted and group auctions to ease entry into home ownership. Land sold at restricted auctions at prices well below those charged at open sales. Reduced land costs were an important subsidy to owner occupation in Canberra.
The value to the residents of the Commonwealth Government's programs to reduce land costs was calculated by comparing received benefits with those accrued had other conditions prevailed. Households which purchased land from the Commonwealth received a median capital gain of S6,500. Once again, roughly twice that available generally. The 1,800 households which purchased land received a median average benefit of 539,000 from their ownership of residential property. Median realised benefits stood at S43,600 while median potential benefits amounted to S34,000.
Dummy land prices were substituted for those paid and combined with construction costs to create a new price. All land prices below (S1981) 510,000 were raised to that level to match the median price of land at unrestricted auctions. Finance costs were recalculated using the modified price.
The attractiveness of home ownership was diminished profoundly under the revised pricing regime. The median result was a benefit of 514,000 in two distinct parts. The position of the one third of land purchasers who had not yet sold their house and block of land was reduced by only 54,000 to 530,000. Completed occupancies presented a different picture. The computations showed that owners would have lost 56,000 typically had they purchased land at the new value and sold at the prices they received. The sale of government land at reduced prices was worth 551,000 to these householders. The median result for potential and realised benefits was an additional subsidy worth 525,000. It is interesting to speculate how consumer behaviour would have changed had land been priced differently. Housing consumption, as expressed in the quality of the dwellings erected and therefore construction costs, may have fallen. Alternatively, some dwellings may have been withheld from the market which have boosted prices across the market.
Twenty-eight thousand residential blocks were sold throughout Canberra during the period of this study. If, for the sake of conservatism, we assume that the median benefit of 525,000 for the study areas is slightly high because of the nature of the suburbs chosen, and the real advantage stands at 520,000, it suggests a subsidy of 5560 million across Canberra.