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10-06-2015, 10:55 PM
New homes fail to dampen prices
THE AUSTRALIAN JUNE 11, 2015 12:00AM
Mark Coultan
State Political Correspondent
Sydney
Sydney property prices have skyrocketed at the same time as near-record amounts of new homes have come on to the market, contradicting Treasurer Joe Hockey’s suggestion that the answer to housing affordability is more supply.
Sydney housing prices have risen 39 per cent over the past three years, as housing approvals have risen almost 60 per cent.
In April housing approvals were the highest in two decades, up 32 per cent compared with the monthly average over the past five years. Housing starts, completions and land releases are also up.
Sarah Hill, an adviser to the NSW Minister for Planning and a member of the government’s housing affordability taskforce, said supply was an element of the problem, but there was no one silver bullet.
“This is going to be a multi-generational problem for us. This is not a problem which is going away with a quick-fix on supply,’’ she said. “The truth is that some people, no matter how hard they work, will never be able to afford a property, and that’s because their income doesn’t cover the cost of building a property — let alone land. Key workers, such as nurses and teachers, can work very hard in good jobs but it will never be affordable for them to live and work in areas they chose.
“We have a real conundrum. Supply will certainly ease that, but the truth is we now have three times the amount of supply coming on the market that we have had. But we still have a affordability crisis.
“This is because of underlying land values in Sydney. It’s a very attractive place to live and invest. Obviously negative gearing as an element to play in that. So does overseas investment.”
Ms Hill said it was not in developers’ interests to flood the market with new houses. “They won’t be building until they completely exhaust demand.”
She said that although investors, who outnumber owner-occupiers, were an element in increasing demand, there was a flipside, as they helped reduce pressure on the rental market. But anecdotal evidence suggested there might be a problem with overseas investors sitting on empty properties.
Property Council of Australia NSW executive director Glenn Byres said that although housing supply had risen to about 23,000 new units a year, Sydney was still catching up after years of under- investment. And in the future, Sydney would have to average 31,000 new houses a year to keep up with demand.
Housing Industry Association chief economist Harley Dale agreed, saying a recent surge in prices had followed a decade when prices rose only 16 per cent.
Grattan Institute chief executive John Daley said the value of economic growth was being capitalised in the housing stock of those who already owned homes, locking out non-homeowners. Low-income groups were just as likely as the rich to own their own home decades ago, but this was no longer true. He advocated a reduction on government reliance on stamp duties and an increased emphasis on property taxes. Stamp duties were a disincentive to selling, while property taxes encouraged people to sell to the someone who valued the property more highly that them.
THE AUSTRALIAN JUNE 11, 2015 12:00AM
Mark Coultan
State Political Correspondent
Sydney
Sydney property prices have skyrocketed at the same time as near-record amounts of new homes have come on to the market, contradicting Treasurer Joe Hockey’s suggestion that the answer to housing affordability is more supply.
Sydney housing prices have risen 39 per cent over the past three years, as housing approvals have risen almost 60 per cent.
In April housing approvals were the highest in two decades, up 32 per cent compared with the monthly average over the past five years. Housing starts, completions and land releases are also up.
Sarah Hill, an adviser to the NSW Minister for Planning and a member of the government’s housing affordability taskforce, said supply was an element of the problem, but there was no one silver bullet.
“This is going to be a multi-generational problem for us. This is not a problem which is going away with a quick-fix on supply,’’ she said. “The truth is that some people, no matter how hard they work, will never be able to afford a property, and that’s because their income doesn’t cover the cost of building a property — let alone land. Key workers, such as nurses and teachers, can work very hard in good jobs but it will never be affordable for them to live and work in areas they chose.
“We have a real conundrum. Supply will certainly ease that, but the truth is we now have three times the amount of supply coming on the market that we have had. But we still have a affordability crisis.
“This is because of underlying land values in Sydney. It’s a very attractive place to live and invest. Obviously negative gearing as an element to play in that. So does overseas investment.”
Ms Hill said it was not in developers’ interests to flood the market with new houses. “They won’t be building until they completely exhaust demand.”
She said that although investors, who outnumber owner-occupiers, were an element in increasing demand, there was a flipside, as they helped reduce pressure on the rental market. But anecdotal evidence suggested there might be a problem with overseas investors sitting on empty properties.
Property Council of Australia NSW executive director Glenn Byres said that although housing supply had risen to about 23,000 new units a year, Sydney was still catching up after years of under- investment. And in the future, Sydney would have to average 31,000 new houses a year to keep up with demand.
Housing Industry Association chief economist Harley Dale agreed, saying a recent surge in prices had followed a decade when prices rose only 16 per cent.
Grattan Institute chief executive John Daley said the value of economic growth was being capitalised in the housing stock of those who already owned homes, locking out non-homeowners. Low-income groups were just as likely as the rich to own their own home decades ago, but this was no longer true. He advocated a reduction on government reliance on stamp duties and an increased emphasis on property taxes. Stamp duties were a disincentive to selling, while property taxes encouraged people to sell to the someone who valued the property more highly that them.