Current at: 12 August 2008
A Time To Build For Growth
By Stuart Collins, HIA’s Executive Director ACT/Southern NSW
Building approvals and home lending statistics are generally considered to be good indicators of the level of housing activity occurring in a region. While the latest figures painted a grim picture for many industry people around the country the news on the ACT home front was far more encouraging.
The figures for June show building approvals were up by 17.4 per cent, defying the national trend that saw approvals weaken further to reach their lowest level since 2006. The news on home lending provided additional reason for optimism, with the ACT registering an increase of 1.6 per cent. Tasmania was the only State to do this.
The ACT building approval figures have been supported by a new report released by HIA entitled, ‘The Hot and Cold of New Home Building’. The report identifies the ACT as having a number of the ‘hottest’ building spots in the country in the six months to June. According to the report, Woden Valley grew by 80 per cent and Tuggeranong by a massive 533 per cent. Gungahlin-Hall also grew by over 10 per cent.
While this is a ‘good news’ story for the ACT, it is certainly not cause for complacency.
Particularly when we consider that vacancy rates in the private rental market continue to fall below 1 per cent throughout the ACT. Population growth continues, which means housing supply needs to be boosted to meet existing and known requirements.
Adding further pressure are widespread planning delays that are a product of the transition to a new planning system. This is generating longer lead times and adds a variety of costs to new construction. An example just this week saw a delay of a month cost a new home buyer $3,000 due to increases in material prices.
Potential homeowners are also waiting for the next interest rate decision before committing themselves to a building contract. While the next interest rate move is widely expected to be down, nerves persist after so many recent increases.
These factors, if not addressed, could easily have a negative effect on housing activity and the ACT could lose its bragging rights.
While it clearly does not have any control over interest rates, the ACT Government can stimulate housing activity in a number of other ways.
It must continue its accelerated land release programs, roll out more affordability initiatives (making full use of Federal Government funding), further reduce tax and infrastructure costs and modify its under-performing planning system.
If the ACT Government plays its cards right this could be the start of a new cycle in housing production that would allow the Territory to meet its underlying demand for an
additional 600 homes a year. If the opportunity is missed it will only hurt current Canberrans and pose a real issue for future residents.