Strong block sales help slash $100 million from Mr Fluffy bill

Reduced demolition costs and a rising property market have cut the total cost of the Mr Fluffy clean-up by about 25 per cent.

The scheme is now expected to cost ACT taxpayers $307 million – about $100 million less than the initial $400 million-plus estimate.

A total of 1022 Canberra houses were identified as Mr Fluffy homes in 2014 and the ACT government has released 510 remediated blocks for sale.

Of these, 392 have sold and a number are under offer.

“The improvement in net cash cost is due primarily to demolition costs steadily reducing and market-wide increases in land values throughout the territory leading to additional sales revenue,” an asbestos response taskforce spokesman said.

Canberra’s median house price rose $150,000 in three years, from $573,325 to $723,299, according to Domain Group data.

The average price paid for the blocks is just below the average price the ACT government paid to Mr Fluffy homeowners.

Homeowners were paid market value for their home as of October 28, 2014. To date, the government has purchased 936 properties for a total of $669.8 million. Prices for each property ranged from $361,000 to $3 million, an average of $715,598.

Remediated blocks were first offered to former homeowners through a first right of refusal process, however just 33 blocks have been repurchased.

The government guaranteed auction reserve prices would not be below the resale price offered to former owners.

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According to Allhomes sales data, the first 390 blocks sold for an average of $686,783, ranging from $330,000 for a 693-square-metre block in Kambah to $1,902,000 for a 1157-square-metre block in Red Hill.

Independent Property Group has managed the Belconnen and inner suburban sales and project marketing director Wayne Harriden said the strong sales reflected the scarce opportunity to build a new home in an established suburb.

“Real estate value is in the land,” Mr Harriden said.

“A large block in an old suburb is quite appealing, as opposed to going out to a greenfield. Buyers are starting to appreciate the cost of a renovation or knocking a house down and starting from scratch, and that’s resonating in the sales prices.”

Mr Harriden said the demand had increased dramatically in the past few months as the first new builds on remediated blocks have been completed.

“They’re seeing the outcomes and they’re seeming them being built,” Mr Harriden said.

“It’s a tremendous outcome with some really nice properties and people are starting to see the possibilities.”

Despite the strong prices achieved at auction, each block is still expected to cost the government about $275,000, according to 2017-18 ACT budget papers.

Assistance grants and stamp duty concessions have contributed to the overall costs, on top of the demolition process.

The taskforce spokesman said the demolition costs had been reduced “as a result of economies of scale achieved through the demolition program” as well as “improved demolition methodologies and sharing of good practice by the taskforce and its head demolition contractors”.

The taskforce expects 909 properties will be demolished before the end of 2017.

Most of the remaining blocks are scheduled for release in the 2017-18 financial year and the next auction is expected to take place in October.