05 May 2009
NSW and Queensland home approvals are still declining at a slower pace while Victoria is showing a sustained turnaround, according to the Urban Taskforce.
Australia-wide the trend estimate for home approvals rose 0.4 per cent in March 2009, the first rise since November 2007. This is on the back Victorias 3.7 per cent trend estimate increase in March. The trend estimate for Victorian home approvals has increased by 11 per cent since it stopped falling in November 2008.
Home approvals in NSW and Queensland continue to decline, albeit at a slower rate, Mr Gadiel said.
In NSW the trend estimate fell by 3.4 per cent the trend estimate has fallen for 16 straight months in NSW, with a total fall of 41.6 per cent over this period.
In Queensland the trend estimate fell by 3.1 per cent the latest in 17 straight months of decline, with a total fall of 55.4 per cent. Mr Gadiel said that Victorias superior position was partly attributable to a more certain planning system.
Developers of large residential projects have had difficulty in securing bank finance in every state, Mr Gadiel said.
However many developers are still pursuing development approvals in anticipation of credit markets thawing, particularly in Victoria.
The higher costs of obtaining development approvals in NSW makes it less worthwhile to obtain a development approval when bank finance is so uncertain.
Victoria may end up leading Australia in a private sector residential construction recovery in part because developers have been able to forge ahead and secure approvals in anticipation of better times, Mr Gadiel said.
Approvals were issued for 460 apartments and townhouses in NSW in March 2009 thats 57 per cent below the same figure last year (1,081).
Approvals for detached housing have already been at historic lows in NSW for several years so when the consistently low rate of house approvals is factored in, home approvals for March in NSW are 30 per cent below the same period last year.
Based on the last six months figures, for every 10 houses built in NSW, we can anticipate that 24 houses will be built in Victoria, Mr Gadiel said.
For every ten apartments or town houses built in NSW, 12 could be built in Victoria.
Mr Gadiel said that there would be no recovery in the Australian economy unless there is a recovery in new home development.
NSW needs to swiftly implement planning reforms in a way that rebuilds investment confidence.
This means fully implementing the $20,000 per home cap on local council levies.
Its also crucial that those who make the decision to invest in NSW are protected from arbitrary government or council action.
Developers have been reluctant to invest in NSW because their land value could easily be deflated by unanticipated planning decisions.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
Please see attached PDF (below) for illustrative graphs.