Six months of declining detached housing starts: Time for a hard look at policies

15 September 2010

The June quarter saw the biggest fall in new detached housing starts since December 2008, according to Australian Bureau of Statics figures released today. The Urban Taskforces chief executive, Aaron Gadiel, said that, in seasonally adjusted terms, there was a 3.9 per cent fall in construction starts for new houses, while construction starts for apartments and townhouses increased by 9.8 per cent.

Weve now seen two quarters of declining construction starts for detached housing, in sharp contrast with the robust four quarters of growth in apartment and townhouse construction, Mr Gadiel said.


Detached housing construction is heavily impact by restrictive land release policies and high development levies.


The difficulties this sector is facing should trigger a re-think by policy-makers.


Mr Gadiel said that, despite the national figures, seasonally adjusted construction starts for new homes fell in key states in the June quarter.


In NSW we saw a fall of 1 per cent, in Victoria there was a fall of 1.6 per cent and Western Australia saw a fall of 5.2 per cent, he said.


These falls were offset by a 9.8 per cent increase in Queensland and 5.6 per cent increase in South Australia. leading to a national increase of 0.8 per cent for the quarter.


Mr Gadiel said these state figures did not necessarily present a true picture of private sector residential development activity, because of the distorting impact of the public housing stimulus program. The Australian Bureau of Statics does not produce seasonally adjusted figures for private sector home construction on a state-by-state basis.


In terms of private sector activity, work started on 7,000 NSW homes in the three months to June which was 26 per cent below the long-term average of 9,500 homes for the June quarter.


Work started on 13,400 Victorian private sector homes, which is 49 per cent above that states long-term June quarter average of 9,000 homes.


In Queensland, work started on 7,800 homes, which is 11 per cent down on the long term average of 8,800 homes.


Clearly, NSW and Queensland are still grossly underperforming in comparison to Victoria.


State governments and local councils in those two states need to take a hard look at their policies.


They should start by fixing cumbersome and uncertain planning processes and reducing high development levies. Mr Gadiel said that across Australia, work started on an extra 13,400 homes in the 2010 June quarter, when compared with the same quarter in 2009.


However, nearly a third of the extra homes was made up of a surge in public housing construction, Mr Gadiel said.


In NSW and Queensland, public housing made up 43 and 42 per cent of the extra housing starts respectively, while in Victoria public housing only accounted for 13 per cent of the additional new housing starts.


Now is not the time for policy-makers to relax about our nations housing shortfall.


The public housing construction program has been great for creating jobs and providing new homes for the most destitute in our community.


But private sector residential development is not yet recovering to anywhere near the level required to reduce the housing shortfall.


Mr Gadiel said the Federal government should immediately release a series of reports prepared by federal officials on reforms to the nations housing supply.


These reports were commissioned by the Council of Australian Governments in April and were completed mid-year, but they still have not seen the light of day.


Now is the time for these documents to be put into the public arena for discussion and debate.


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


Please note: Graphs illustrating the current situation across Australia, NSW, Victoria and Queensland are in the PDF available below.


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