Last week property’s most influential leaders and insiders gathered to discuss the opportunities and challenges facing the property sector. Here’s the result.
Government has identified a need to build 1.2 million new homes by 2027 to meet demand yet the common consensus was we’ll achieve less than half that number due to both supply side and demand side factors.
Supply Challenges:
- Zoning/planning rules constrain dwelling height, density and relevance.
- Infrastructure (transport, schools, shops, recreation) is inadequate in the areas we could and should build more homes.
- Materials are still expensive and in short supply.
- Man power is inadequate – some estimate we are short 500,000 construction related employees.
- Finance is challenging, funding costs are high.
Demand Challenges:
- Withholding tax/foreign buyer surcharge have squashed foreign investment retarding appetite for new development.
- Interest rates/inceased holding costs for investors have reduced appetite.
- Rising government contributions for developers add significantly to the end cost of new homes.
In the words of BIS Oxford Economics: new homes will be built, but not as many as the Federal government hopes.
In the meantime, Sydney and the rest of Australia will endure a housing crisis which will only mean one thing: rising prices.
That’s all for this week. If you have any questions, please do get in touch.
You can book a call with me here.
