October home approval surge welcome, but trend is still negative

31 November 2010

New private sector home approvals soared by 8.4 per cent in October across Australia, according to the latest Australian Bureau of Statistics figures released today. The Urban Taskforces chief executive, Aaron Gadiel said the private sector numbers are encouraging, although this is not yet the sustained recovery that the industry has been hoping for.


The 23.6 per cent surge in private sector higher density home approvals is very welcome, even if this is partly a reversal of Septembers 14.8 per cent fall, Mr Gadiel said.


Private sector detached housing numbers are still low with just a 1.5 per cent increase in October.


The improvements were concentrated in NSW and Western Australia with an 11 per cent and 7.9 per cent jump in private sector home approvals respectively.


These two states are coming off a very low base. Victorias increase was more modest 3.9 per cent.


Records continue to be broken by Victoria it enjoyed its best October ever.


In contrast, NSW merely experienced the best October since 2006, while Western Australia had its worst October since 2002.


Queensland on the other hand suffered a 7.2 per cent fall with its worst October figure since the year 2000.


Mr Gadiel said the trend figures – which smooth out the volatile monthly data make it clear that there was no room for complacency about Australias housing supply.


Australia-wide, private sector detached housing approvals have been trending down for 10 months, he said.


NSW and Victoria are trending positively, while Queensland and Western Australia are trending negatively.


Private sector apartment and townhouse approvals have been trending down across Australia for five straight months theyre in positive territory in Victoria and Western Australia, but in negative territory in NSW and Queensland, Mr Gadiel said.


Proposals to reform the housing supply – promised at the April meeting of the Council of Australian Governments – are now five months overdue.


The federal and state governments cannot afford any more delays on the reform of Australias housing supply.


Earlier this month, the Organisation for Economic Co-operation and Development (OECD) slammed Australias system of town planning laws.


The OECD highlighted the serious medium term risk our economy faced as a result of restrictive planning laws and inefficient infrastructure charges on new homes, Mr Gadiel said.


This credible international organisation has given us an early warning that Australias inadequate housing supply needs to be fixed.

Reform is crucial if we want to see non-inflationary growth and a sensible allocation of resources.


The OECD report says that a rising share of the population is being priced out of the [housing] market.


Measures should be adopted to stimulate supply and more efficient use of the existing housing stock, the OECD said.


The supply constraints need to be lifted by streamlining the planning and zoning regulations, the report said.


More transparent, harmonized and less restrictive zoning and planning regulations across jurisdictions are needed.


Rationalizing infrastructure charges with nationally consistent principles would encourage more efficient land use and reduce delays and cost of negotiation between developers and local governments.


Lower conveyance [stamp] duties would reduce transaction costs and improve the use of the existing housing stock.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.


Note: Further illustrative graphs are in the PDF below.

Download PDF Document