13 October 2008
Todays building figures from the Australian Bureau of Statistics should concern anyone who cares about housing affordability and employment in NSW, according to the Urban Taskforce.
Mr Gadiel said the picture was quite different on a state-by-state basis.
In NSW, the seasonally adjusted June quarter estimate of building work value fell by 3.7 per cent and in Queensland it fell by 2.1 per cent, Mr Gadiel said.
However, Victoria performed strongly in the June quarter, with a corresponding increase of 3.8 per cent.
In the 2007/2008 financial year, the total value of building work in NSW fell in real terms by 1 per cent in comparison with the previous year. In Victoria the value rose by 8.2 per cent and in Queensland it rose by 0.5 per cent.
Unlike Queensland and Victoria, the value of NSW building work has been in freefall for four years straight.
Since 2003/2004, the real value of NSW building work has collapsed by 14.9 per cent; while over the same period in Victoria it has increased by 8.2 per cent in Queensland it has shot up by 21.2 per cent.
Mr Gadiel said that the NSW residential development sector was in particular trouble.
Over the last seven years in NSW, on average, work has started on 20,007 houses a year, Mr Gadiel said.
However, in the 2007/2008 period, work started on just 15,641 houses in NSW near to half the number of Victoria (30,974) and Queensland (29,983).
Victoria is only 787 houses below its seven year average and Queensland is 2,833 houses above its seven year average.
The number of houses under construction has fallen every year in NSW since 2001/2002 falling again last year by 0.5 per cent. In Victoria and Queensland, house construction increased in the last financial year by 4.9 per cent and 6.2 per cent respectively.
The best spin that can be given to the NSW figures is to focus on the construction of higher density homes.
After four years of decline, the number of apartments and town houses where construction work commenced in NSW increased by 5.8 per cent.
However this shouldnt be cause for too much excitement.
While work started on 14,441 medium and high density homes in NSW last financial year, compared with 13,616 in the previous year, this is still 36 per cent down on the 2002/2003 financial years figure of 22,523.
In the last financial year, apartment and town house construction has shot up by 21.3 per cent in Victoria (to 10,327) and 9 per cent in Queensland (13,944).
Mr Gadiel said that the lack of supply of new housing was hurting people across Sydney and Newcastle.
In August, the NSW Government Rent and Sales Report revealed a massive jump in Sydney rents for the last financial year.
Sydneys seen an 18 per cent increase in rents for three bedroom homes and a 15 per cent increase for two bedroom apartments in the last financial year.
Mr Gadiel said local councils were also blocking the construction of new homes that would take the pressure off rents in the inner suburbs.
Even the traditionally more stable areas in the middle ring suburbs of Sydney have been hit hard with a 17 per cent hit in increased rentals for two bedroom apartments.
The rents for homes in the outer suburbs of Sydney have shot-up too – by 13 per cent.
Mr Gadiel said that its time to take the brakes off urban development.
Without a strong supply of new housing, rents will continue to sky rocket and first home buyers will struggle even more to save a deposit for a home of their own.
Local councils need to help get new development approved rather than fighting development in the name of existing land owners.
Punitive development levies of between $70,000 and $90,000 a home are unsustainable.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
