Federal Budget delivers a plan for our growing cities but falls short on housing

The Urban Development Institute of Australia’s (UDIA)’s 11th Annual State of the Land flagship report has been released today at the UDIA National Congress on the Gold Coast. The State of the Land report is a comprehensive annual overview of Australia’s capital city new home markets.

Harnessing exclusive data from Research 4 and CoreLogic, the report foreshadows an imminent cliff-fall in future supply, which could serve to compound the current capital city housing affordability crisis.

The residential land development industry faced a challenging 2018 due to a ‘perfect storm’, which included weak buyer sentiment, a retreat of investors, and tightened credit conditions in the wake of the Hayne Royal Commission.

Key findings:

  • Across the nation 128,000 new homes and apartments were completed in 2018, which is an annual decrease of 4%.
  • Greenfield land lot sales have dropped 30% across all the capital cities in 2018, with sharper declines of 55% in Sydney and 34% in Melbourne respectively.
  • Dwelling approvals contracted by a pronounced 30% in 2018, with steeper falls of 35% in both Adelaide and Brisbane while plummeting 46% in Perth.
  • The rate of apartment deferrals and abandonments in 2018 increased by a striking 167% compared with the prior year.

There is a longstanding relationship between house prices and variables relating to dwelling stock, population growth and lending, which must be effectively managed to avoid a disorderly correction.

“New lending for dwellings is down over 20% for the same period, the largest decline in a decade,” said UDIA National President Darren Cooper.

“This rapid drop off puts the industry at risk, which contributes $202.9 billion to the economy annually and supports the employment of more than 1.43 million workers, further putting their livelihoods at risk.”

Mr Cooper said that such a significant cooling of the market will lead to greater supply problems and shortages in the medium term. The coinciding contraction and abandonment of projects places the market in a position where it will struggle to meet underlying demand moving forward.

“With market dynamics different between the capital cities, housing supply relationships and solutions are complex and require a coordinated government and industry response,” said Mr Cooper.

“We call on all political parties to make the provision of housing, underpinned by appropriate and timely infrastructure a key priority.”

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