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eTradesman.com.au - Australia's Online Tradesman Directory

Positive economic outlook despite affordable housing issues

HIA Chief Economist Harley Dale was in Launceston today to host the HIA Commonwealth Bank Economic Outlook Forum which provided an update of the short to long term future for the Housing industry. HIA’s Branch Manager, Northern Tasmania, Mr Nick Proud, said that the outlook for Tasmania and the North in particular, as presented at the forum was positive for at least the next two to three financial periods. “As indicated at the forum, housing approvals are expected to increase across the State through to over 2700 homes built this financial year and the North of the State is expected to capture at least a 46 per cent share of this figure. Although there will be a slight slow down over the next two years, housing starts are expected to rebound by 2009-10 which is positive news,” Mr Proud said. “Renovations are expected to peak at around 683 homes being renovated in the financial year 2009-10. “The housing industry is forecasted to continue to be buoyant for the next three periods and today’s update provides support for the expectation that 2007 will be another good year for new housing which is currently a $1.1 billion industry for the state. “At the same time, however, housing affordability has dipped sharply in recent years. You’d have to think that if it hadn’t become so difficult for first home buyers to get into the market the outlook would be even healthier than it is. “The deterioration in housing affordability in recent years has been largely a structural phenomenon: a massive increase in land values; increased state and local government fees, taxes, and charges; and increased regulatory costs. “One of the main causes in the deterioration of housing affordability, particularly for those entering the market, has been the significant growth in house prices. “Since Dec-00 house price growth throughout regional Tasmania has been significant at 177 per cent, which outstrips the 158 per cent house price growth for Hobart over the same period. “The proportion of income that is being devoted to mortgage repayments has risen at a staggering rate in recent years.Mortgage holders in regional Tasmania are now having to allocate an average of over 21 per cent of their income to mortgage repayments, compared to 12 per cent 10 years ago. “The proportion of first home buyers in the market has dropped markedly. In January 2007 first home buyers in Tasmania comprised of 13.2 per cent of the market compared to 17.7 per cent for Australia as a whole. “It is clear that housing affordability is going to be a serious issue for some time to come and it will be up to governments at all levels to take additional steps now to provide a solution for the future,” said Mr Proud. “Governments need to look at every opportunity to work with the housing industry to address the problem. All levels of Government need to consider key drivers for the industry such as releases of developable land, developing greater incentives to building new housing stock, looking at residential code uniformity and simplification of planning at a regional level would all contribute to allow builders to go out and get on with the job. “Unless policy action is taken to address these substantial supply costs to housing then a significant improvement in housing affordability will not be forthcoming, said Mr Proud. Source: HIA Media Relations<-i>
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