4.1 per cent drop in new private sector home starts: No room for complacency

16 March 2011

Australia saw a seasonally adjusted 4.1 per cent drop in new private sector home starts in the December quarter, following a 6 per cent fall in the previous quarter, according to the latest figures from the Australian Bureau of Statistics released today. The Urban Taskforces chief executive, Aaron Gadiel, said last six months of falls suggested that there is no room for complacency on Australias housing supply.


With a national housing shortfall projected to reach 300,000 homes within three years, weve got to be alarmed at these disappointing numbers, Mr Gadiel said.


An 8 per cent drop in new private sector house starts was mitigated by a 4.2 per cent increase in medium and high density home starts.


The seasonally adjusted private sector house starts have been falling for 12 months straight, Mr Gadiel said.


While private sector medium and high density home starts increased in the December quarter, this only reversed half of the previous quarters 8.1 per cent fall.


Mr Gadiel said that every state saw seasonally adjusted falls in new home starts in the December quarter, with the biggest drops in Victoria (15.9 per cent), Tasmania (14.3 per cent) and South Australia (14.1 per cent). In contrast, Western Australia fell by just 0.6 per cent, NSW fell by 2.1 per cent and Queensland fell by 5.9 per cent.


Its important to understand that Victorias large fall in the December quarter follows a 7.2 per cent increase in the September quarter, while NSWs soft decline in the most recent three months followed a big 15.8 per cent drop in the prior quarter, Mr Gadiel said.


Likewise, Queenslands fall followed a 26.1 per cent fall in the previous quarter.


As the market tightened in the second half of 2010, NSW and Queensland were hit harder, first, while Victoria only began to feel the impacts in the last three months of the year.


Mr Gadiel said the release of the December quarter figures gives a full picture of home starts throughout 2010.


Work started on 59,000 homes in Victoria in 2010 – more than ever before in its history, he said.


In contrast, NSW saw work start on only 33,000 homes, its best year since 2005, but well short of the communitys underlying need.


Queensland saw work start on 31,000 homes, better than 2009s appalling number, but the states second worst year since 2001.


In Western Australia work started on 25,000 homes, its best year since 2006.


Mr Gadiel said that Australias national level of housing production – 168,000 homes – returns it to the levels last seen in 2003 and 2004, but still below the peak of 2002.


Australias population has been growing, but planning constraints, high development levies and not-in-my-backyard activists have helped stymie efforts to boost new housing production above historical levels, he said.


Inexcusably, NSW is producing new dwellings well below the historical average, despite the states clear need for extra homes.


NSW accounts for 32 per cent of the nations population, but just 19 per cent of its new home supply, while Victoria accounts for 25 per cent of the population, but 35 per cent of the supply of new homes.


NSW continues to pay the price for having the highest development levies in the country and the worst planning system in the nation.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.


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