Recent statements from the Reserve Bank of Australia about a potential oversupply of apartments in Sydney will act as a brake on bank loans for new housing when much more supply is needed, says the Urban Taskforce.
“The NSW Department of Planning says that 33,200 new homes are needed each year for 20 years in Sydney but last financial year only 27,348 new homes were completed,” says Urban Taskforce CEO, Chris Johnson. “With a shortfall of nearly 6,000 new homes during the boom times it is essential that more homes are built across Sydney. Our concern is that the RBAs warnings will encourage banks to tighten up on lending for new homes particularly for apartments. Sydney already has housing approvals slowing down due to the council amalgamation process. The amalgamations mean that developers must obtain approval from two councils for planning agreements, a situation which slows down approvals.’
“Our members believe the market is still strong for new apartments in key parts of Sydney where cosmopolitan living is becoming the norm. They are concerned however that the market could be destabilised by a series of negative actions that combine to lower confidence in the industry. As well as banks being tighter on lending there is a slow-down in investment from China due to local issues, the local government amalgamations are making approvals more difficult, statements from federal and state governments that hefty value capture taxes will be added to residential development in the near future, all will lessen confidence in the housing industry despite the clear need for more supply.