16 June 2010
Today’s Australian Bureau of Statistics home figures for the March quarter reveal that seasonally adjusted private sector home construction starts were flat, while there was a 73 per cent increase in public housing starts across Australia.
“The headline increase in home starts of 4.3 per cent simply reflects the surge in public housing under the Federal Government’s economic stimulus program, rather than a nationwide improvement in private sector activity.”
Mr Gadiel said the picture was different on a state-by-state basis.
“Both NSW and Queensland saw an improvement when private sector home starts for the March quarter are compared with the same period last year,” he said.
“Both states saw a 14 per cent improvement although in NSW’s case this merely meant the state experienced the second worst March quarter in the history of ABS record keeping.
“NSW private sector home starts were at about 64 per cent of its long-term average for the March quarter that’s a long way to go before we return to the construction levels necessary to replenish the state’s housing supply.
“On the other hand, private sector home starts in Victoria surged by 37 per cent when compared with the same quarter last year, again highlighting the strength of housing development in that state.”
Mr Gadiel said that 30 per cent of NSW’s residential construction starts in the March quarter were for public housing, while 7 per cent of Queensland’s housing starts were for public housing and 4 per cent of Victoria’s starts were for public housing.
“It’s very clear that the NSW residential construction industry is being kept afloat by the roll-out of public housing.
“That’s why it’s crucial to kick start private sector development before the Federal government’s economic stimulus money runs out.
Mr Gadiel said it was apt that these figures should come out on the same day that the Local Government and Shires Associations of NSW announce that councils are “banding together” to fight state government efforts to limit their taxes on news homes.
“Councils seem to believe that each new levy they impose can be funded from endless ‘developer profits’ without hurting home buyers or renters,” Mr Gadiel said.
“This kind of magic pudding thinking has underscored local governments approach to new home construction for years.
“Thats a key reason why NSW has suffered record low levels of residential development for each of the last four years, while Victoria has boomed.”
Mr Gadiel said that high development levies price new homes out of the reach of buyers.
“When this happens, developers simply dont build and instead invest in Victoria,” he said.
“It is fanciful to suggest that developers will still build in NSW when they cant earn an income.
“The last four years of home building statistics prove this notion to be false.”
Mr Gadiel said that plans by local councils to obstruct new subdivisions in response to caps on development levies were unsurprising.
“Its nothing new to see local government opposing efforts to get new housing subdivisions approved,” he said.
“Local government in NSW already has a strong track record of resisting new home construction.
“In many cases, the overt declaration by some councils that they will not support new subdivisions merely reflects the unstated policy they’ve followed for years.
“The previous strategy, for some councils, has been to proclaim ˜support for new housing, but then effectively kill subdivision efforts by imposing ridiculous and unaffordable development charges.
“At least the NSW governments policy change has driven these councils out into the open.”
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
The construction activity made possible by property developers contributes $78 billion to the national economy each year and creates 849,000 direct jobs.
Please note: Graphs illustrating the current situation across NSW, Victoria and Queensland are in the attached PDF below.