Australia's Housing Industry Wants Immediate Rescue Package
24-Jul-2012
By Ray Brindal
CANBERRA--Australia's Housing Industry Association lobby Tuesday called for an immediate rescue package from the government and longer-term structural reform, lest the sector--one of the economy's major drivers--continues to languish in recession.
"Economic conditions in the housing industry are the worst in decades," Shane Goodwin, the association's managing director, told reporters, adding that new dwelling starts this year will fall by around 12% year-on-year to an estimated 130,000--the lowest number in four decades--and well below the long-term annual demand average of 165,000.
"At best there is only a very modest recovery in the pipeline and even then, that could be 12 to 18 months away," he said.
Mr. Goodwin was commenting after convening a roundtable meeting of industry and government officials, including Housing Minister Brendan O'Connor, and representatives of the government's Treasury Department, Reserve Bank of Australia, Westpac Banking Corp. (WBC.AU) and national building supply companies including CSR Ltd. (CSR.AU), Boral Ltd. (BLD.AU) and Brickworks Ltd. (BWK.AU)
Manufacturers and all businesses in the supply chain are shedding staff and moth-balling plants, and the industry--which is worth an estimated A$70 billion a year to the economy, or almost 5% of gross domestic product--is seeing disinvestment and is contracting, he said.
Any industry rescue package would include further stamp-duty reductions by state governments, which have an immediate impact, but longer-term structural issues need fixing, he said.
"Our product is too dear because of the amount of embedded taxation," with 46% of the cost of a house and land package in Sydney being embedded taxation, and 42% in Melbourne, Mr. Goodwin said.
Planning constraints add to the costs of land supply, while buyers lack confidence and are finding it increasingly difficult to get finance, he noted.
Earlier, Mr. O'Connor, the housing minister, pledged the government would review industry regulations at all levels to make sure there are no impediments.
Building-approval figures jumped to record levels in May and while this isn't yet a trend, it is a positive sign, he said.
Inflation is contained, housing mortgage rates are the lowest in two years and this is leading to increased interest among people to enter the market and buy houses, he said.
"So there are some very positive signs but there are some structural issues that we need to attend to" with state and local governments, he told reporters. |
