HOW DOES CONSTRUCTION SUPPORT AFFORDABILITY
It’s hard to ignore the rapid rate at which homes have been popping up around the country. Construction has been a bright spot in real estate in Australia for some time, with a steady stream of properties helping to support confidence, jobs and keep the economic wheels spinning.
Not only that, but it creates opportunities to buy a house. This impressive activity is showing little sign of slowing down, either, as new figures from the Australian Bureau of Statistics show strong growth during May. According to the latest building approval data, the total number of new dwellings approved for construction increased 2.4 per cent during May in seasonally-adjusted terms. In fact, there has been a 17.6 per cent rise over the 12 months to May.
The Property Council of Australia pointed out that this is an encouraging sign for affordability, particularly for real estate in Sydney. Executive Director Residential Mr Proud noted there were 70,000 more approvals in the past year than in the 12-month period to May 2012, with New South Wales in particular showing strong improvement. Some 57,088 new dwellings were approved in seasonally adjusted terms in NSW for the 12 months to May 2015, a 10 per cent rise on the same period to May 2014. This could represent an important step forward for reducing housing deficits and counteracting rapid price growth.
“The only meaningful way to take the pressure off prices is to increase new housing supply,” Mr Proud said.
Construction activity has been especially strong in the apartment segment. Master Builders Australia said multi-unit approvals posted an all-time record in May, with 7,300 dwellings in buildings of four storeys or more approved over the period. While this means multi-unit homes for sale may be more accessible when completed, detached houses still face supply pressures.
Master Builders Chief Economist Peter Jones said policy restrictions on releasing greenfield land may be holding the industry back. This point was echoed by the Housing Industry Association (HIA), which highlighted a 15.1 per cent increase in multi-unit approvals during May.
However, approvals for freestanding homes dropped 8.5 per cent over the month. HIA Senior Economist Shane Garrett said this means policy makers need to do more work to ensure a steady supply of both affordable apartments and houses for sale. “They must rectify the bottlenecks in the planning system, redress the excessive fees and charges on new residential developments and ensure that the pipeline of residential land will meet the ongoing community demand for new homes,” he concluded.
With such a solid supply of properties in the pipeline, maintaining this level can support affordable and help households buy a home in Australia.