The housing and construction industry has increased its call for stimulus after official statistics yesterday revealed housing starts plummeted in the June quarter, particularly in New South Wales were starts fell by a massive 20%.
The industry is now calling for both the Federal and New South Wales governments to ease property taxes and introduce some kind of stimulus that will encourage new building and arrest the current fall in prices.
“The national figures are disappointing, but the New South Wales figures are really alarming,” says Urban Taskforce Australia chief executive Aaron Gadiel.
“To see a 20% fall in a single quarter is very concerning, but also if you look at the decline in trend approvals, it has been falling at twice the national rate. The figures show us what happened in the recent past, and we can see that New South Wales is in real trouble.”
Yesterday’s figures showed total starts fell by a seasonally adjusted 18.6% in the June quarter, with new private sector homes falling 15.5%, with other types of residential building increasing by 3.1%.
Gadiel says the impact of natural disasters has now long past, and the country is clearly facing a shortage caused by external factors.
“The weakness in New South Wales has absolutely nothing to do with natural disasters and is really a product of the deteriorating planning system.”
The group wants an emergency housing plan organised by Christmas, which will address a number of issues including high developer levies, lack of appeal rights, and include some assistance for first home buyers.
Gadiel warns unemployment will continue to rise unless something is done.
“There will be unemployed construction workers, businesses and retailers in further trouble because so much of the economy has been tied to construction.”
Over the past few months the building and construction industry has seen a number of businesses collapse, many of them SMEs which make supplies for new homes. Both Gadiel and other industry bodies have warned the construction downturn poses a threat to the national economy.
In July, 85 companies in the building and construction went under, partly due to a greater focus on SMEs by the ATO, according to liquidation experts.
However, Gadiel says while the New South Wales Government has improved prospects for first home buyers in its latest budget, it doesn’t go far enough and the property price threshold for assistance should be lowered.
“The Government has made some very sensible changes to the system, but most new construction will miss out because the scheme caps out at $500,000, while most new construction in Sydney will be above that level.”
“The other problem is that the scheme will work as long as there is land available, but that stock of existing, improved land is running out.”
Housing Industry Association chief economist Harley Dale says the time has come for both national and state governments to take action.
“The bottom line is that we saw this coming, and we actually warned back in March that there would be a need for consideration of stimulus. We are seeing the deterioration of the housing market.”
“I think in New South Wales the case is appropriate to look at a state-specific problem, as well as the aggregate level. The numbers do demonstrate the need for a national focus.”
Property groups including the Housing Industry Association are set to appear before the Government’s tax forum next month and lobby for changes to stamp duty and taxes they believe hinder first home buyers.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
