THE building and construction industry is applauding today's passing of the Housing Supply Bills by the Federal Government, with the support of the Greens and some Independent members through the Senate.

Master Builders Australia CEO Denita Wawn said, “The combination of the Housing Australia Future Fund (HAFF), the National Housing Supply and Affordability Council, and Housing Australia embeds housing as a core infrastructure priority for the Federal Government.

“Master Builders thanks the Greens, Senator Jacqui Lambie, Tammy Tyrrell and David Pocock who have come out to support the passing of the HAFF.

“The cooperation seen across all levels of government to prioritise tackling the housing crisis is a relief to many doing it tough. Whether it is social and community housing, rental properties, or owner-occupiers, the common constraint is supply.

“The Housing Australia Future Fund legislation is a vital piece in the housing puzzle by encouraging investment in the social and community housing sector," Ms Wawn said.

“Passing this legislation is imperative to delivering the National Housing Accord target of 1.2 million new, well-located homes in the next five years.

“Master Builders acknowledges the tireless efforts of Minister Collins in ensuring this legislation passes and thanks her for the ongoing collaboration with the industry.

“The government has rightfully not bowed to pressure for harmful rental market interventions that would do nothing to boost housing supply.

“We know the biggest handbrake on housing supply is making it easier for new projects to get the green light by kickstarting private investment and reducing development costs and delays," she said.

“To improve housing affordability across the market, all levels of government must continue to work together to implement continuous land supply through rezoning and planning, and taxes on the development and buying process should be reduced,” Ms Wawn said.

Master Builders is part of the National Affordable Housing Alliance (NAHA)of peak bodies, unions, the superannuation and community housing sectors. This alliance supports the objective of enabling a perpetual pipeline of investments that delivers an annual additional supply of housing that leverages taxpayer and private investment. 

The HAFF starts delivering on this framework with a $10 billion investment to deliver 30,000 new social and affordable dwellings in its first five years. The funding is targeted at areas of greatest need including crisis housing for women and children leaving/experiencing domestic violence, improving housing in indigenous communities, specialist services for veterans and frontline worker accommodation.

www.masterbuilders.com.au

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SALES OF NEW HOMES across Australia fell by 2.4 percent in July, "continuing to bounce along very low levels" according to Housing Industry Association (HIA) senior economist Tom Devitt.

The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home construction.

“This month’s decline leaves sales in the three months to July 2023 down by 33.4 percent compared to the same period in 2022,” Mr Devitt said.

“Weak new home sales, together with an elevated number of previous sales being cancelled, reinforce the expectation that Australia will see a decade-low level of home building next year. Even a cut to the cash rate now would not produce a recovery in new house commencements until the second half of 2024.

"Underlying demand for housing continues to be supported by population growth, acute shortages of rental accommodation and strong employment figures," Mr Devitt said. 

“Meeting the appropriate levels of new housing for Australia’s current and future population will require changes to the other policies that inflate construction costs. These are not only interest rates, but also tax settings, land release and planning reforms, and macro-prudential rules that squeeze out owner-occupiers and investors alike.

“The National Cabinet’s recent announcement to increase its five-year housing supply target is a welcome step in the right direction.

“Coordination among all levels of government and the industry will be crucial to achieving this goal,” Mr Devitt said.

Compared to the previous month, sales in July 2023 decreased in most of the large states, led by Queensland (-11.6 percent) and followed by Western Australia (-9.3 percent), New South Wales (-1.6 percent) and Victoria (-0.6 percent). South Australia was the only state to see an increase (+35.5 percent).

Similarly, sales in the three months to July 2023 decreased compared with the same period in 2022 across most of the large states. This was led by Queensland (-52.3 percent) and followed by New South Wales (-48.4 percent), Victoria (-37.2 percent) and South Australia (-26.0 percent). Sales in Western Australia on the other hand increased by 17.3 percent.

www.hia.com.au

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THE release of the May 2023 building approvals and lending data shows "a welcome uplift" in higher density home building approvals, according to Master Builders Australia chief economist Shane Garrett. However, he has warned of "the need for sustained recovery" and cautioned against "unnecessary government-induced cost pressures".

Mr Garrett said higher density home building approvals jumped by 59.4 percent during May, recording their strongest monthly total since the end of last year.

“However, detached house building approvals remained flat during the month and are about 15 percent down on a year ago," Mr Garrett said.

“May’s sharp increase in unit/apartment building approvals is welcome given the severity of shortages in the rental market. 

“The difficult conditions in the rental market are the result of prolonged underbuilding in the medium/high-density part of the market. This dates from before the pandemic.

“The 12 interest rate increases we have endured so far have made it much more expensive to build new homes. Higher mortgage rates have also forced up the cost of providing homes to the rental market.

“Lending figures provide a good indication of what’s likely to develop on the ground over the coming months.

“The number of loans for the construction of a new home eased slightly during May (-0.2 percent) and a 5.1 percent uplift in the number of loans for the purchase of newly built dwelling. However, loans are still over 40 percent lower than a year ago,” Mr Garrett said.

Master Builders Australia chief executive Denita Wawn said while the bounce in higher density building approvals during May was welcome, new home lending data suggested that "tough times still lie ahead".

“We will need to see a sustained recovery in higher density home building volumes before the affordability crisis in our rental market starts to abate," Ms Wawn said.

“Combined with the larger than expected slowdown in inflation last week, today’s figures should give the RBA decent grounds for holding rates tomorrow (Tuesday, July 4).

“Increasing the construction of necessary new homes will contribute to alleviating inflationary pressures throughout the economy," she said.

“While the fight against inflation appears to be favourably shifting, it is crucial not to jeopardise progress by imposing unnecessary cost pressures through government regulation.

“By pumping up costs right across the economy, proposed changes to industrial relations would be very counterproductive in terms of beating inflation and unduly add costs to construction,” Ms Wawn said.

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"Despite record levels of migration, the number of new homes commencing construction is set to slow for at least the next 12 months,” Housing Industry Association (HIA) chief economist Tim Reardon said this week.

HIA released its economic and industry Outlook report on Frdiday. The report includes updated forecasts for new home building and renovations activity nationally and for each of the eight states and territories.

“There has been a rapid slowdown in the volume of new building projects entering the pipeline, especially new apartments, over the past year,” Mr Reardon said. 

“The sharp increase in the cash rate has compounded the barriers created by extraordinary restrictions on lending and investing, increased construction costs and regulatory costs.

“The rise in the cash rate is the key reason for the slowdown in the number of new homes commencing construction. There are long lags in this cycle and the full impact of the increases to date will not be apparent, until late 2024.

“Leading indicators of home building activity have fallen to exceptionally low levels. New home sales are almost 50 percent lower than a year ago. Lending for the purchase or construction of a new home has fallen to its lowest level since 2008," Mr Reardon said.

“The slowdown in the commencement of new homes is counter to the goal of increasing supply and delivering one million homes over the next five years.

“Beyond the rise in the cash rate, the supply of new homes is also constrained by a range of regulatory and cyclical challenges. The government’s Housing Australia’s Future Fund isn’t a solution to all of these problems, but it is a necessary step toward improving the supply of new homes.

“Removing barriers to investment, reforming local council planning processes and stable economic settings are also necessary steps,” Mr Reardon said.

www.hia.com.au

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