01 April 2009
Home approvals in Victoria, the state with the most generous bonus for first home buyers, appear to be turning around, while approvals in NSW and Queensland are still trending downward, according to the Urban Taskforce.
The trend estimate for total new homes approved across Australia fell 2 per cent in February 2009. In NSW the trend estimate fell by 4.3 per cent the trend estimate has fallen for 15 straight months in NSW, with a total fall of 40 per cent over this period.
In Queensland the trend estimate fell by 7.7 per cent the latest in 16 straight months of decline, with a total fall of 56 per cent. In Victoria the trend estimate has turned positive up 1.1 per cent. Victorias positive result follows a 12 per cent decline over six months.
Unlike NSW and Queensland, Victoria is experiencing a relatively shallow dip in new home development.
Victoria has the most generous assistance scheme for first home buyers up to $29,000 for new homes in regional areas and $26,000 for new homes in the metropolitan area.
As a proportion of home prices, Victoria has given a bigger boost to first home buyers than NSW – where the grant is just $24,000 for new homes.
In Queensland the grant is $21,000 for new homes.
Mr Gadiel said that the development of higher density homes in NSW and Queensland has been hit hard by the lack of business credit. In NSW February 2009 house approvals were 34 per cent below last years equivalent figure, while approvals for apartments and town houses are 44 per cent lower. In Queensland new house approvals are down 47 per cent on last years figure, while apartments and town houses are 66 per cent lower.
The more certain planning environment in Victoria, combined with stronger support for first home buyers, is helping that state weather the storm, Mr Gadiel said.
In Victoria February 2009 house approvals were 7 per cent lower than in February 2008, but apartment and town house approvals were 2 per cent higher. Comparing the January and February 2009 figures, on a seasonally adjusted basis, there was an 18.6 per cent jump in the number of new homes in NSW, a 5.3 per cent increase in Victoria and a 5.9 per cent decline in Queensland.
The month-to-month figures should be treated cautiously, Mr Gadiel said.
As the monthly figures are volatile, the trend estimates are more useful.
Mr Gadiel said that there would be no recovery in the Australian economy unless there is a recovery in new home development.
The good news is that the seeds of a strong recovery have already been sown, he said.
Low interest rates and a shortfall in housing supply mean that some developers are keen to get going on new housing development.
However, we need the Federal Government to support residential development by expanding the Australian Business Investment Partnership to include lending for new major residential development projects.
We also need the Federal Government to urgently commit to an extension of the $21,000 federal grant for new homes beyond June this year.
State government and local councils need to swiftly process development applications and give developers as much certainty as possible.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
Please see the attached PDF for illustrative graphs.
