Australian Residential Development Outlook Report
If you’ve been pounding the pavement looking for a good-value rental property, or pouring over The Canberra Times each Saturday morning in the hope you’ll find your dream home, good news awaits you.
For the last decade, we’ve produced 150,000 homes each and every year. Over this time, our nation’s population has grown, while the number of people living in each existing home has fallen.
It’s clear the maths just doesn’t add up. As any economics student will tell you, if demand exceeds supply, prices will rise – and that goes for buildings as much as it does for bananas. A critical shortfall in the number of homes in our capital cities has resulted in rapidly rising rental and sales prices. In this climate, first home buyers can be forgiven for thinking that the dream of home ownership is, in fact, a fantasy.
But the pace of building activity is beginning to step up. RP Data’s latest Australian Residential Development Outlook, which will be released tomorrow, points to building approvals hitting a 30 year high over the next financial year.
The report outlines the economic indicators that point to the right market conditions for growth: low interest rates, an expanding population, rising household wealth and strong housing finance. Growth in foreign investment in residential real estate is also encouraging more development.
The development industry is responding to these market conditions, and we are beginning to see many projects, once earmarked as commercial offices, being reinvented as residential developments.
The strength of residential development has long been an indicator of the overall strength of the Australian economy. Any rise in residential housing activity contributes to state and federal government taxes. In fact, just over 50 per cent of ACT Government revenue comes from property taxes.
But let’s look beyond dry economics. At its heart, the residential development industry is addressing one of our most basic needs – the need for shelter from the storm – and is building the homes we need to ensure future generations of Australians can also enjoy living in the Lucky Country.
Catherine Carter is ACT Executive Director of the Property Council of Australia