Building Activity figures released today by the ABS clearly indicate that the decline in housing activity which threatens to impact the economy across jobs, tax and demand-equivalent supply is gathering pace.
Dwelling units commenced dropped by 20 per cent year-on-year from 230,522 commencements a year ago to 196,867 for the year ending 30 June 2019.
Nicholas Proud, CEO of PowerHousing Australia, which represents 34 of Australia’s largest Tier One and scale-growth Community Housing Providers, said “the latest ABS Building Activity figures show that there is a vacuum of 35,000 homes that are not being built going forward, which holds serious ramifications for jobs, taxes and valuable supply with such a significant drop in activity.
“With around 40 trades and subtrades receiving work from every new house delivered, we today say goodbye to around 1.4 million future trade and para professional engagements lost for good as the number of new homes drop by 35,000 dwellings on the previous year.
“As Australia shifts back from the meteoric 230,000 home starts down by potentially 70,000 fewer homes delivered in 2022, prices may rapidly rise again once supply drops below the 180,000 homes roughly needed annually to support the demand. The risk is that if supply declines below demand once again and we don’t build enough homes to meet population needs, then excessive price rises will recommence above already unaffordable levels.
“Whilst the current commencements for the past year remain high, the downward trend and velocity of the drop must not be ignored otherwise recent small but positive affordability gains will be lost.
“Ten years ago Australia commenced only 132,501 dwellings to the year ending 30 June 2009, which fuelled price spikes across Australia and decimated housing affordability to levels that we have as a legacy today.
“Affordable housing is one of the last growth levers that can be pulled to reduce the housing commencement downturn. With the emerging Community Housing Provider sector increasing its size of development and management substantially over the past 5 years we are seeing supply solutions built by these organisations in this emerging social and affordable asset class.
“If given the right incentive such as property transfer, concession to provide rentals at more affordable below market levels with government guarantee then there is a global wave of international, institutional and domestic environmental, social and governance investment that could emerge to see new pre-commitment to scale developments underpin falling supply.
“In addition to the NHFIC Bond Aggregator, the activation of the soon-to-operate NHFIC Research House will also support new innovative financing mechanisms to the deliver the additional homes that will be needed in 2020-22.
“With the Federal Government now assigning three ministries to housing, this building activity data demonstrates the need for best practice options for delivering affordable homes to drive new commencements, halt the decline and support the overall economy.