Australia heads towards an apartment drought
The Property Council is predicting an apartment supply crunch across some of the country’s largest housing markets, which can only be curtailed by coordinated state government efforts.
Apartment supply across Australia’s three largest markets is expected to reach ‘crisis levels’ by 2024, with construction expected to dwindle to only 20 per cent of 2018 levels, the latest Jobs and Homes report by Urbis and the Property Council of Australia has revealed.
To curtail the problem and ensure the construction industry isn’t crippled by a predicted loss of $5.9 billion over the next four years, the PCA has called for urgent government intervention, including a reduction in international investor surcharges, apartment construction sweeteners and substantial improvements to planning.
“Apartment construction is a critical component of Australia’s future housing supply and a vital job creator for our economy,” said Property Council chief executive Ken Morrison.
“While approval numbers are increasing, they mask a decline in construction activity that will lead us to a severe structural undersupply by 2024.”
Despite modest stimulus efforts by some state governments, Mr Morrison judged that the dial has not moved for apartments, with surcharges on international investment said to remain a major handbrake for many potential projects.
“Without changes in policy, our apartment building industry will shed 30,000 direct jobs and produce $5.9 billion less in housing assets over the next four years,” Mr Morrison said.
As things currently stand, Sydney is expected to feel the largest impact, including a loss of $3.5 billion in construction value and over 17,000 direct jobs.
Meanwhile, Melbourne and Brisbane could lose $1.1 billion and 6,000 jobs each, while Perth could lose $181 million and almost 700 jobs.
Can it be fixed?
Given that three to five years are required between project inception and completion, Mr Morrison urged the governments to act now to boost apartment investment.
“Over recent years, we’ve seen a proliferation of new taxes and regulations across Australia that have been a handbrake on investment and directly impacted our levels of apartment supply,” Mr Morrison opined.
As such, the Property Council has outlined a course of action, including:
- The provision of relief from foreign buyer surcharges;
- The acceleration of planning approval;
- The extension of off-the-plan apartment stamp duty concessions;
- The removal of land tax barriers to build to rent projects; and,
- An abandonment of Victoria’s new “windfall gains tax”.
Without government support to boost apartment supply, Mr Morrison said apartment prices and rents could significantly increase across Australia’s major cities in the very near future.
“This is a wake-up call for governments as our biggest apartment markets will welcome growing numbers of people once COVID-safe immigration inevitably returns,” Mr Morrison said.
“Governments can unlock a wave of new investment by removing recent property tax hikes and overseas investor surcharges.
“International buyers and build-to-rent investors will be key to the next generation of projects and further opportunities exist to encourage these investors through planning system improvements and stamp duty relief,” the chief executive concluded.
More from this writer:
-
Why it’s still worth selling – even in lockdown
-
Over 200 Perth suburbs see winter price growth
-
Auction volumes on their way back up
-
Low interest rates drive record refinancing
-
Tassie’s own $20k HomeBuilder grant finds early success
-
Capital cities see stronger auction success
-
2020 vs 2021: How lockdowns have impacted the market