4 October 2018

Affordable land the key as ACT slides in number of detached houses being built

| Ian Bushnell
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There are not enough detached houses being built to meet demand.

As the demand for detached homes keeps pushing house prices to record levels in the ACT, a new report shows the Territory sliding to the back of the pack when it comes to residential construction.

The Housing Industry Association’s latest Housing Scorecard shows the ACT slipping to sixth in its state-by-state performance review of residential construction, dragged back by the low number of detached houses being built.

The detached house market is the third weakest nationally and only betters WA and the NT.

The report says detached house approvals in the June 2018 quarter were 21.5 per cent down from the decade average, commencements in the March 2018 quarter were under by 40.7 per cent and the number of dwellings under construction at the end of March was under by 6.2 per cent.

“It is lucky for the ACT that activity in multi-unit dwelling construction is faring much better, although this is little consolation for households who want to live in a new detached house or those who are in the business of building them,” it says.

The issue is certainly not the economy as in WA and the NT, with strong population growth, low unemployment and high incomes.

Strong housing finance figures suggest that sentiment among homebuyers also remains very positive, the report says.

Lending to first home buyers in the June 2018 quarter was 14.0 per cent above the ACT’s decade average, the second strongest in the country, while lending to non-first home buyers was even stronger, 21.9 per cent above the decade average and the strongest in the nation.

HIA Executive Director – ACT/Southern NSW Greg Weller said it was an unfortunate set of indicators and disappointing, but the key to a revival was an increase in the supply of affordable land.

“It wasn’t that long ago that the ACT was nipping at the heels of some of the top performing states such as NSW,” he said.

He said units were going quite well but detached housing was really letting the ACT down.

Mr Weller said the ACT had never really recovered from the 2015-16 slump in detached housing when there were only 1000 starts.

He said the recent 175-block release in Taylor and the coming start of the release of 600 blocks in Whitlam next year were positive signs but the ACT had to compete with the cross-border developments in areas such as Murrumbateman and Googong where the big difference was the price of land.

“We’ve got to be sure we are offering land that is a reasonable price,” Mr Weller said.

That was a challenge when the Government was a seller and developer of land in the ACT, and so reliant on the revenue from land sales.

“There is a conflict there where the Government is involved in land development and one hand it has a responsibility to raise funds to be able to provide services to the community, but on the other hand it has an obligation to ensure that housing is affordable and can be accessed by the entire community, and unfortunately in this model the two of those don’t always go together,” he said.

Part of the answer was looking at some of the older existing suburbs where dual occupancy and subdivision could provide more land.

“The Government has a strong program of infill, and we’re supportive, but it shouldn’t be one or the other. We should ensure all housing types are being catered for, both detached and high density,” Mr Weller said.

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