I also keep reading about the big lift in new housing approvals & about how lower interest rates are working. And yes, they need to.
Yet many of these approved projects will not eventuate.
Dwelling approvals, nationally, are up 19% on this time last year, yet housing credit has increased by about half that rate.
There’s heaps stacked up against new property – GST; taxes & charges; long & opaque council approval processes and NIMBYism, to name just a few.
Whilst we now have an undersupply of new property, the mismatch between demand for new property & its supply isn’t as straightforward as many commentators would have us believe.
The complication is the shift to more efficient use of our housing space; with more people occupying each home/apartment. Not only are ‘Gen Y’ staying at home or moving out and sharing digs, but older parents are ‘choosing’ to live with their adult children/family. That’s kinda okay when it is your parents, but if it is the outlaws well, let’s just say that home life can be a bit touchy.
In short, the usual drill of underlying demand exceeding supply is unlikely to work, this time around, as well as it has in the past.
Outside of the Sydney property market it is going to be harder to make the new sales (that settle) that many anticipate over the next couple of years.
And it is in the country’s interest that more new homes are actually built.
Here are some facts to ponder:
- Residential construction (not approvals) adds 2 percentage points of GDP growth
- Every $1 spent on residential construction has generated $1.31 worth of spending elsewhere in the economy
- Every $1 million spent on residential construction generates 17 jobs on a full-time basis.
Not doing enough
And yet despite this evidence & the constant reminder about Australia’s need to shift from mining/resource capex to something else, all levels of government – still and despite them mostly now being liberal-based – aren’t doing enough. Lots of talk. Very little action.[sam id=31 codes=’true’]
For mine, the Queensland building industry is broken. When it comes to new housing construction – I stress “new” starts – it is a far cry from recovering. There might be a slight increase in approvals, but getting new homes to start (commenced) is way too hard.
The Newman Government – for mine – needs to start taking housing construction more seriously.
What to do?
Well, here is a shopping list. Like most lists written at this time of year, it would be nice to get everything one wants from Santa; but most – even little kids – don’t expect that much. Just an item or 3 off this list would be a great start.
- Removal all home-related grants – they stuff things up – more cyclical; inflated & less new starts than if they weren’t around at all
- Remove stamp duty from all new property transactions – for the next 3 years
- Increase stamp duty on resales – slightly, to make up the difference from removing stamps on new digs
- Remove form 27c – it’s a joke – not policed, valuation excuse, the cost of distribution has no bearing on market value
- Provide valuation assistance via a tribunal process or similar (fast, inexpensive & quick)
- Have infrastructure charges paid at the end of each new stage/tower – after sales settle & not at the beginning of a project
- Increase land tax (a lot, like 500+%) on foreign site owners who don’t develop within a set time period – say 2/3 years
Of course GST should be removed from new housing or placed on everything, including the resale of established homes/property – but that is a Federal matter & one that takes balls.
Maybe Abbott is up to the challenge.
I have gotten myself in enough hot water this evening, so I had best leave it there.