Thursday, June 17, 2010

Without stimulus our home building industry would be...

NSW owes what remains of its residential construction industry to government stimulus.

Bureau of Statistics figures released yesterday reveal the second-worst March quarter for housing construction since in the 40 years such records have been kept.

Work started on just 3672 private houses in the quarter, fewer than half the 8843 started in Victoria and a long way below the 6000-plus totals common earlier in the decade.

Work began on only 2050 units, also well down on the totals of more than 5000 common earlier in the decade. Only 88 house conversions got under way.

"The industry is being kept afloat by the roll-out of public housing," said Aaron Gadiel, chief executive of the developer lobby group Urban Taskforce Australia.

Stimulus-funded public housing accounted for an unprecedented 2442 starts, a leap of more than 400 per cent, and by far the busiest quarter on record.

Nationally public sector housing starts jumped 73 per cent while private starts remained unchanged...

"The good news is public sector dwelling starts are expected to stay high for a while yet," said Commonwealth Bank economist Michael Workman. "The Federal Government has committed to higher levels of social and defence housing as part of its stimulus program."

"But the response of the private sector is painfully slow. Most of the recent lending for housing has contributed more to lifting prices, especially in the high demand inner-city suburbs, rather than expanding supply where required."

Mr Gadiel said it was apt that these figures came out as the Local Government and Shires Association announced councils were "banding together" to
fight state government efforts to limit their taxes on new homes.

"Councils seem to believe that each new levy they impose can be funded from endless developer profits without hurting buyers," he said.

"That’s a key reason why NSW has suffered record low levels of residential development for each
of the last four years, while Victoria has boomed."

Separately released Residex figures show Sydney house prices climbing a further 1.6 per cent in April to be 17 per cent higher over the year.

The typical Sydney house price stood at $657,500 and the typical unit price $459,500.

Melbourne house prices climbed faster, gaining 22 per cent over the year to push up the price of a typical house to $582,000 and a unit to $445,000.

Published in today's SMH and Age

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