This article is from the Australian Property Journal archive
The Housing Industry Association has delivered a Recovery Blueprint to the New South Wales Government aimed at rescuing the state from its economic depression.
The HIA’s Recovery Blueprint found that the economy had stalled largely because investment in housing had dried up and the industry was in decline.
HIA’s NSW executive director Wayne Gersbach said housing starts will be 30% lower in this financial year compared with 2003 with housing approvals dropping by 45% over the same period.
According to the HIA’s Recovery Blueprint, building activity in NSW is now at a 20 year low.
“Sales for detached homes peaked in 2001/02 at 23,504; ran at 21,000 for 2003/04, and in 2004/05 were 13,362, the lowest on record!
“Building activity has been drawing on a pipeline of approved new work. We are beginning to get to the end of those projects which have been in planning for the last 12 – 18 months. This will further increase demand levels, affecting affordability across the State,” Gersbach said.
The Recovery Blueprint found home buyers continue to suffer unprecedented levels of mortgage stress and for almost four years, despite recent price falls, first home buyers in Sydney must commit on average 37% of household income to meet their mortgages.
Those who can afford to enter the market face a median house price of $525,000 – almost ten times average annual incomes.
Gersbach said despite improving over the past two quarters, Sydney housing affordability is at a level equivalent to that of the late 1980’s when official interest rates were 17%.
“History shows us that housing leads an economy into and out of recession. With its strong multiplier effect the housing industry is able to inject a much needed stimulus into the flagging NSW economy.
“Manufacturers are relocating to other states with some plants already mothballed.
“Following years of constrained land supply and a climate of investor uncertainty, it is critical that the housing industry is rejuvenated and set on a path for growth well into the future,” he added.
According to the HIA Recovery Blueprint, the underlying demand for housing in NSW is still strong, yet there are significant affordability and red tape problems that stifle industry activity and prevent new home buyers from entering the market.
“HIA’s recovery blueprint unlocks the industry’s potential through a number of short and medium term measures aimed at restoring buyer and investor confidence,” Gersbach said.
Key components of the HIA Recovery Blueprint are:
· A State top-up of $7,000 for the First Home Owners’ Grant
· A Land Tax concession for investors
· Fast-tracking of major residential rezonings and related applications
· A simple, one-step approval procedure for dwellings
· A new infrastructure fund that relieves the up-front burden on homebuyers from paying costly state and local levies.
The package calls for the establishment of a Premier State Infrastructure Fund to attract private capital for major infrastructure projects and suggests that State Government leverage the $700 million in unused Section 94 contributions to attract private investment for community infrastructure.
HIA’s plan also calls for the reintroduction of Government infrastructure bonds.
“Infrastructure is critical to NSW in maintaining housing affordability. It must be seen as an investment in the State’s future and not a liability to be borne solely by this generation of new homebuyers.
“NSW needs a circuit breaker to boost buyer confidence and stimulate investment. These measures will go a long way toward restoring the health of the NSW economy,” Gersbach said.
By Kathryn O’Meara
