Many of the costs associated with greenfield residential development are apparent and tangible. For example, regulatory fees, government taxes, acquisition costs, selling fees, commissions and others are all relatively easily identified since they represent actual costs incurred at a given point in time. However, identification of holding costs are not always immediately evident since by contrast they characteristically lack visibility. One reason for this is that, for the most part, they are typically assessed over time in an ever-changing environment. In addition, wide variations exist in development pipeline components: they are typically represented from anywhere between a two and over sixteen years time period - even if located within the same geographical region. Determination of the starting and end points, with regards holding cost computation, can also prove problematic. Furthermore, the choice between application of prevailing inflation, or interest rates, or a combination of both over time, adds further complexity. Although research is emerging in these areas, a review of the literature reveals attempts to identify holding cost components are limited. Their quantification (in terms of relative weight or proportionate cost to a development project) is even less apparent; in fact, the computation and methodology behind the calculation of holding costs varies widely and in some instances completely ignored. In addition, it may be demonstrated that ambiguities exists in terms of the inclusion of various elements of holding costs and assessment of their relative contribution. Yet their impact on housing affordability is widely acknowledged to be profound, with their quantification potentially maximising the opportunities for delivering affordable housing. This paper seeks to build on earlier investigations into those elements related to holding costs, providing theoretical modelling of the size of their impact - specifically on the end user. At this point the research is reliant upon quantitative data sets, however additional qualitative analysis (not included here) will be relevant to account for certain variations between expectations and actual outcomes achieved by developers. Although this research stops short of cross-referencing with a regional or international comparison study, an improved understanding of the relationship between holding costs, regulatory charges, and housing affordability results.
