Jump In Approvals To Increase Housing Supply

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Dwelling approvals are up 14.5 per cent through the year after rising by 3 per cent seasonally adjusted in August.

“The jump in building approvals must be seen as a positive in boosting new housing stock to keep a lid on house prices and ensure affordable home ownership,” Peter Jones Chief Economist Master Builders Australia said.

“As the RBA says, supply factors are critically important – the supply response determines whether additional demand feeds into higher prices or not,” he said.

“Alarmist calls by some commentators for measures to curtail so-called speculative investment in housing need to be treated with caution to ensure they do not stymie the residential building upswing,” Peter Jones said.

“There is no need for a knee-jerk reaction; the imperative must be to clear the impediments that are limiting the ability of the building industry to add new housing stock,” he said.

“Master Builders Eight Point Affordability Plan sets out the urgent reforms needed to free up supply-side constraints. This is the best solution to address housing affordability concerns,” Peter Jones said.

“Fiddling with lending ‘rules’ and or tinkering with particular taxes will do very little if anything to address the core reason behind deteriorating affordability and the downward trend in homeownership – a lack of supply,” he said.

“Removing the shackles of poor land release strategies, inefficient developer charges/ infrastructure levies, and poor planning and development programs would allow residential builders to better meet demand, thereby limiting the potential for steep price increases,” Peter Jones said.

Key statistics:

Building approvals have got off to a strong start in the 2014/15 financial year with approvals close to 200,000 compared to 193,617 for same period in 2013/14.

A positive trend has re-established itself in all states except Tasmania:

approvals1

 

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