Construction to create affordable homes for sale
A strong supply of new homes for sale isn’t just essential to keep the wheels of the real estate market spinning – it’s crucial for supporting affordability in some of the busiest and in-demand areas. This can give young and first-time buyers the chance to get a foot on the property ladder, while maintaining economic growth and prosperity more widely.
Building approvals take off
While there has been a question hanging over supply in recent times, it looks as though the construction industry is finally making headway into the housing shortage. New figures from the Australian Bureau of Statistics (ABS) show an impressive increase in the number of dwellings approved during May, culminating in an even larger improvement over the past year. Approvals jumped 2.4 per cent in seasonally adjusted terms over the month, and 11.6 per cent over the preceding 12 months.
In fact, the Housing Industry Association (HIA) highlighted that there were 218,442 approvals recorded in the year to May. This is a new record for any 12-month period since 1983, which suggests a steady stream of property for sale is in the pipeline in the months ahead.
This may be particularly comforting for first-time buyers, as the Property Council of Australia points out that new home building is the only real way to improve affordability. However, there is still some way to go before approvals are at a satisfactory level.
The market needs to see an approval rate of 200,000 or over annually for the next five year to meet demand for real estate in Australia, but executive director of residential Nick Proud said these results appear to be a step in the right direction.
“The only meaningful way to take the pressure off prices is to increase new housing supply and today’s data shows Australia is continuing a significant run of residential approvals,” Mr Proud said.
Construction activity strong in Sydney
Real estate in Sydney could see the rewards of booming construction. In a market renowned for its soaring prices, New South Wales posted 57,088 approvals in the year to May – a rise from just 34,500 in the 12 months to May 2012. Mr Proud said this will improve housing affordability, relieving price pressures and potentially rewarding young buyers with the opportunity to enter the property market.
“It is critical we sustain this level of activity for the foreseeable future,” Mr Proud urged.
NSW executive director Glenn Byres echoed this point, emphasising that the state government needs to do away with restrictive measures that prevent homes from being completed. One such initiative the government can take is removing stamp duty, as well as reforming planning policies and improving infrastructure.
Each of these factors can support momentum in new home building, Mr Byres said, and assure home ownership as a viable path for all Australians.