The most recent lot sales for greater Perth for the June quarter show a massive growth in purchases, higher than any quarter in at least the last 10 years.
The result is four times the previous quarter result. Available lots have been said to have dried up and brickies are quoting $3 a brick which is double the normal rate.
In review of the ABS Building Approvals for the month of June for Western Australia, the result is the complete opposite. WA recorded the fourth lowest number of homes approved in a month since the ABS records commenced in 1983. Lucky for HomeBuilder you might say.
Homebuilder is yet to really commence nationally and whilst lot sales may be rising, the potential for this to bring forward only the most financially capable and secure is likely. How the requirements for the $25,000 to be viewed is uncertain and may not help those with low deposits to get across the line.
Ultimately the lot sales show that if government pulls a lever the market reacts and beyond the short-term boost of a flagging market, what is the market looking like thereafter is the real question.
In terms of ABS lending indicators released in recent days, the May and June Investor numbers are some of the lowest levels of investment lending in the past 20 years. Clearly those that normally buy a house for others with the view of making a capital gain and a deduction on tax are thinking twice and their future input into economic activity and new home starts is on the wane.
The numbers beyond a HomeBuilder burst is very uncertain. The market indicators and particularly drop off in investor lending is a real early litmus of the market heading towards a potential slump.
Having building sites remain open is critical to the economic lifeblood of our community and it won’t happen without government leadership.
Whilst it is a positive that Victoria has gone to a ‘pilot light’ operating environment rather than full shut down, beyond the HomeBuilder burst the construction sites across Australia may see a massive drop off that make a pilot light level of activity seem like boom days in comparison to what FY2022 is shaping up to be.
As indicated in the CoreLogic PowerHousing Australia Standard House feature and report a most successful way of securing a pipeline of ongoing work is to be achieved by providing additional social housing, particularly as the demand of middle Australia needing social and affordable housing will increase for up to five years.
Structured social and affordable housing delivery will be critical to creating additional jobs, stabilising pricing, and meeting additional demand for social and affordable housing at the time when it will be needed more than any other time in our history.
Outside of being our most basic human need, the provision and stabilisation of housing will be front of mind for the many hundreds of thousands of Australians who today are uncapable of paying and deferring their home loans. There are roughly 2.4 million rentals (out of 3.3 million) where the investors have one rental property and their principal place of residence. The inability to service that loan in many cases will see many tenants who may have avoided the crushing and devastating consequences of COVID in housing terms to this point until the landlord has to sell the home from under them.
The numbers of Australians that will need housing support in 2021-2025 will be unlike any time in our history or at least going back to World War II. For many people the cruel consequence of simply not having the chance to be productive, to work and achieve will be of equal significance.
For the first time since World War II, the Olympic Games which should have been running today has been cancelled. The greatest opportunity on one of the world’s largest stages to put human endurance, resilience, skill and strategy has been put on hold. Lifetimes of preparation have been told to stay home.
What has been cancelled here is symbolic of the loss facing many young people and those in many occupations – the platform to do their best. What they have trained for has gone overnight.
For Community Housing Providers (CHPs) in this COVID-19 crisis they are in a time where all their training and preparation is being demonstrated every day in every workplace and in every exchange with their tenants and the next few years their role to support in housing terms will grow.
The Federal Government will soon be called upon to partner with builders, developers, State and Local Governments to play a pivotal role in this crisis is like no other time in history. CHPs know it is time to put all hands on the wheel and work with all partners, work with governments and the broader community who are facing unprecedented challenges. They are best placed to deliver additional beds and play the economic and social shock absorber, providing new social and affordable housing. They will keep people employed and underpin the basic human need of shelter.
As will be indicated in future ABS updates from October onward, the numbers of homes and the jobs that go with that slab being poured, the brick being laid and the manufacturers and retailers that derive incomes will dry up. Whilst there are large building approvals still coming through, and housing completions still buoyant things may look ok today.
New homes take time to approve, then build and the foundations of economic recovery won’t be laid if State and Federal Governments don’t act soon.
By Nicholas Proud, Chief Executive Officer PowerHousing Australia
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