16 November 2008
Sydney could lose 87,000 jobs if a massive drop in building approvals recorded in the September quarter is sustained over a full year, according to new figures released today by the Urban Taskforce.
In the three months to September, the value of approved urban development in Sydney was $800 million lower than in the same period last year, Mr Gadiel said.
The value of approved development fell from $3 billion to $2.2 billion a 27 per cent fall.
Across NSW the value of approved development plummeted from $4.1 billion to $3.5 billion.
If there is no reversal in these dramatic falls there could be 87,000 less jobs in Sydney.
Mr Gadiel said that building approvals are crucial indicators as to how much construction activity will follow in 6-12 months.
This abrupt deterioration in approvals will affect us all, Mr Gadiel said.
The construction of new homes, offices and industrial premises creates jobs for thousands of people in areas as varied as bricklaying, roofing, plumbing, carpentry and earthmoving.
The wages paid to these workers flows into the economy creating jobs across every industry, including retail, hospitality and entertainment.
Many people dont realise how reliant Sydneys economy is on urban development.
Mr Gadiel said these latest falls were coming off a very low base.
Since 2003/2004, the real value of NSW building work has collapsed by 15 per cent; while over the same period in Victoria it has increased by 8 per cent and in Queensland it has shot up by 21 per cent, Mr Gadiel said.
Mr Gadiel said that the NSW residential development sector had been in particular trouble.
In the last financial year work started on just 16,000 houses in NSW near to half the number of Victoria (31,000) and Queensland (30,000).
The number of houses under construction has fallen every year in NSW since 2001/2002.
In Victoria and Queensland, house construction increased in the last financial year by 5 per cent and 6 per cent respectively.
While work started on 14,000 medium and high density homes in NSW last financial year a 36 per cent fall on the 2002/2003 financial years figure of 23,000.
Mr Gadiel said that in recent days the NSW Government had announced key reforms that would help untangle Australias most complicated planning laws.
The recent positive announcements have been undermined by the governments decision to tax people holding large parcels of land for development, Mr Gadiel said.
The governments planned 25 per cent increase in land tax will increase the costs of anyone who is holding a portfolio of land for development in NSW.
A tax increase on a job-creating industry seems crazy when were at risk of a severe recession.
State government and local council development levies can easily add between $70,000 and $90,000 top the cost of a home. This kind of impost is not sustainable.
There should also be strict time limits for planning decisions nothing should take longer than 90 days to be sorted out.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
