The Property Council of Australia welcomed a report released in December 2016 on housing affordability, saying governments need to focus on solutions that will make a difference to housing affordability for all Australians. The report was released by CoreLogic and Australian National University showing an increasing gap between household income and the amount needed for a 20 per cent deposit to purchase a home.
“This new report shows the problem for all to see – now we need solutions that will make a difference, not political distractions,” said Ken Morrison, Chief Executive of the Property Council. “Real solutions are required to ease housing prices for home buyers – and that is largely through increasing the supply of housing.” Melbourne house prices are 30% cheaper than Sydney prices and Melbourne has had 112,000 more building approvals over the last decade, illustrating that more supply results in lower prices. However, although Sydney has the highest shortage, Melbourne still needs more housing to meet demand.
The other factors that affect housing supply are unnecessary delays and costs, which drive up the costs of new dwellings. Ken Morrison said that all levels of government, Commonwealth, State and Territories, need to take responsibility and strike a deal to incentivise reform to fix the housing supply problem.
It would certainly be good news to builders and suppliers to the building industry to see governments working together to help increase housing supply. The Ai Group and Housing Industry Association Performance of Construction Index (PCI) rise in February 2017 to 53.1 showed a pleasing increase in construction activity for housing, but the current forecast by HIA predicts a drop, levelling out to 172,000 dwelling construction starts in 2018. However, HIA also reported that demand associated with population growth remained reasonably robust, particularly in Melbourne, and that new house construction would remain at historically healthy levels despite dropping back from the record levels of today. Apartment and town house constructions would be the most contracted, falling from 111,810 to 69,940 starts. Detach house construction would be less affected, with starts dropping from 116,420 to 104,440.
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