What is going on in the new housing space?
Key takeaways
Owner residents outnumber investors in new housing loans, indicating a preference for home ownership among individuals seeking new properties. Around 70% of investors opt for existing homes rather than new construction.
There is a notable trend where twice as many detached houses are built compared to attached dwellings in Australia, a gap that has been widening in recent years.
Townhouses are the primary choice for new attached dwelling construction, overshadowing mid and high-rise apartments, which have seen a decline in approvals over the past seven years.
The decline in larger apartment project approvals is attributed to rising construction costs, which present a significant barrier to new home building .
Melbourne aims to become the nation’s rental capital, while large-scale residential development in Sydney faces planning delays, and Brisbane grapples with union control over construction amid skills shortages.
It has been said that a picture is worth a thousand words.
So limited words this week.
I will let the charts and tables do the heavy lifting.
So, what is going on in the new housing space?
There is a snapshot.
Chart 1 and Table 1 show owner residents outnumber investors when it comes to new housing loans.
Meanwhile, most investors – some 70% – buy an existing home, as seen in Chart 2.
Chart 3 and Table 2 show there are twice as many detached houses built when compared to attached dwellings across Australia.
A trend which has been widening in recent years.
As seen in Chart 4 and Table 2, townhouses dominate new attached dwelling construction.
Mid and high-rise apartment approvals have nosedived over the past seven years.
The tailspin when it comes to larger apartment project approvals has a lot to do with construction costs, as seen in Chart 5 and Table 3.
But the high and rising cost of construction isn’t the only barrier to new home building.
Other constraints include high interest rates; delays in getting planning approvals and labour shortages.
See Chart 6.
End notes
It appears that Australia’s east coast capital cities are heading in different directions.
Melbourne is aiming to become the nation’s rental capital, with the state government having devised policies to turn Victoria’s capital from a high dwelling/car ownership city into one where renting a dwelling becomes the big growth area and where per capita car ownership falls.
The government understands that renters are more likely to vote for Labor (or for The Greens) than those who own a dwelling.
Whilst, Melbourne’s population may rise significantly, partly because of what is happening in Sydney and Brisbane.
Large-scale residential development in Sydney remains extremely difficult – due mostly to planning delays – while large-scale construction in Brisbane is now controlled by militant unions who have taken advantage of chronic skills shortages – due to the clustering of government construction projects and the rush to get Olympic stuff completed (chart 7) – to gain higher pay for less work.
To add insult to injury the Queensland government’s new Homes for Queenslanders scheme includes a policy that would see taxpayers pay for the cost of council charges imposed on new developments, as developers claim such charges can add to the cost of housing.
Well, New Zealand recently attempted to do similar and found that such a hospital pass had little impact on construction rates or housing prices.
It was only when NZ changed zoning restrictions that the housing supply improved.
Yet in the other part of Australia, the Western Australian government has relaxed planning laws to allow homeowners to build a small second home on their property.
Planning approval will no longer be required to build ancillary dwellings – a granny flat – of up to 70sqm, and they can now be built on housing lots of any size.
Rightly so a building permit will still be required.
The WA reforms are well aimed to address new housing supply.
