Calls for reform within the residential construction industry have intensified after a significant drop in new housing starts.
Master Builders Australia says the figures highlight an urgent need to address inefficient developer charges, poor land release regulations and a ‘cumbersome’ process of approvals in order to remove impediments to supply.
“To meet the needs of a growing population and to make inroads into the accumulated deficit of housing that’s arisen because of previous underbuilding, Australia needs to build 200,000 plus dwellings each year for a number of years,” Master Builders Chief Economist Peter Jones says. “Unless there is urgent reform to address supply bottlenecks, the strong industry response needed to meet underlying demand will not eventuate, with dire consequences for housing affordability.”
Housing Industry Association Senior Economist Andrew Harvey agrees, saying that the ‘glacial’ pace of policy reform to reduce new housing costs is unsustainable.
“Rather than focussing on a short-term budget surplus outcome the Commonwealth Government would be better-placed looking at how it can reform housing supply in order to lift home building levels, boost economic activity, and secure important productivity benefits,” Harvey says.
Harvey says working closely with states and territories on such notions as cutting stamp duty on new homes should be “at the top of the Government’s priority list.”
Figures from the Australian Bureau of Statistics show that on a seasonally adjusted basis, the number of new homes for which construction commenced throughout Australia totalled 33,653 during the December quarter – down 6.9 per cent when compared with the previous quarter and 13.4 per cent when compared with the same quarter in 2010 (see chart.) Starts on stand-alone houses (21,845) were down 2.7 per cent for the quarter and 7.7 per cent compared with one year earlier, while those on apartments and other multi-residential dwellings (10,379) plummeted 13.9 per cent in the quarter and were down 17.7 per cent year on year.
On the whole, seasonally adjusted dwelling start numbers nationwide have fallen for five of the past six quarters and are now at their lowest level since June, 2009.
Across the states, the Northern Territory was the worst performer, seeing a 20.1 per cent drop in the number of seasonally adjusted commencements. This was closely followed by the ACT (down 18.5 per cent), Queensland (down 17.9 per cent) and South Australia (down 15.4 per cent). Falls were also recorded in Victoria (down 7.3 per cent), and South Australia (down 3.3 per cent.)
On the positive side, Tasmania recorded an increase in starts of 5.8 per cent. The Tasmanian housing industry received a boost to its long term outlook in February with the approval of a new housing and education complex to cater for inward arrivals from Korea, Japan and China.
Housing starts also increased in New South Wales (up 0.6 per cent.)
The new figures come on top of weak indicators of activity going forward. As previously reported, recent figures show that in January sales of new detached homes across the nation fell 7.4 per cent, while the number of approvals for construction of new homes edged up but still came in below its equivalent number one year earlier by 14.6 per cent.