21 January 2009
Todays September quarter Australian Bureau of Statistics building data reveals NSW has had its lowest ever quarterly new home construction figure.
The construction sector will be crucial for pulling Australia and NSW out of the current economic slowdown, Mr Gadiel said.
But todays figures suggest that this cant happen without Federal Government intervention.
In the three months to September 2008, construction work started on 5,997 new homes in NSW a 26 per cent fall on the equivalent 2007 figure. This is 44 per cent below the average figure recorded for this quarter back to 1984.
Weve never seen a NSW quarterly home construction figure with a ˜5 in front of it, Mr Gadiel said.
On a seasonally adjusted basis, new NSW home construction fell 27 per cent in comparison with the June quarter. Queensland also saw a fall in new home construction in seasonally adjusted terms declining by 23 per cent in comparison with the previous quarter. On the other hand, Victoria saw a 9 per cent increase in new home construction.
Developer-driven building activity has been the hardest hit, Mr Gadiel said.
NSW apartments and town house construction has nearly been cut in half when compared with the same period last year.
Mr Gadiel said the building approval figures were even more significant because they indicated the likely level of construction activity within 6-12 months.
In the three months from September to November 2008 the number of new homes approved for construction in NSW was 30 per cent below the same period in 2007, he said.
If anything, this understates NSW problems because, in 2007, NSW building activity was already at its lowest post-war level.
Home approvals for September to November 2008 were 47 per cent below the average historical level of new home approvals for that time of the year.
In fact, fewer homes were approved in NSW during these three months, than in any previous year since the ABS began recording these figures in 1983.
In the same period, Victoria recorded 6 per cent more new home approvals than its long-term average and Queensland recorded 22 per cent less home approvals than its average.
Mr Gadiel said the construction sector has been jeopardised by evaporation of business credit.
Lenders are telling property developers they will not renew loans for projects with uncertain planning approvals, he said.
When they do lend, the margin taken by the banks has tripled two and a half per cent above the cash rate, when it used to be as low as 0.8 per cent.
Previously, development projects were financed with a loan amount of up to 75 per cent of a propertys value – now this has been cut to around 50 per cent.
The banks tougher stance has magnified the impact of recent falls in property values.
Weve recently seen a $2 billion Federal Government assistance plan for car dealerships deprived of finance by frozen credit markets.
We also saw a £20 billion program of business loans announced by the British government last week.
Its now time for the Federal Government to step in and offer a business loans scheme for the construction industry.
Itll be the quickest way to create jobs and keep the economy moving.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
