Housing affordability 'continues to deteriorate'

PROPERTY

Housing affordability across Queensland's major population centres continues to deteriorate, says Master Builders, Queensland’s peak body for housing and construction.

The organisation has released its "State of the State" housing industry report for the March 2010 quarter and Master Builders’ director of housing policy, Paul Bidwell, says that while the subdued state of Queensland’s building industry helped to moderate rises in new home construction costs across the state, there are simply not enough homes being built to "meet current demand, let alone future growth".
“Despite the easing in construction costs, housing affordability in the Brisbane, Gold Coast and Sunshine Coast regions continues to approach crisis levels. And the news is not much better elsewhere in the state with all major population centres still considered unaffordable by international standards.
“We know the major constraints facing the housing industry include the planning approval process and the availability and cost of finance – both of which have a significant impact on the cost of land.
“We need to build 40,000 dwellings per year in Queensland to meet projected demand. Yet in 2008-2009, we only built around 35,000 new homes.
“It is absolutely critical that all levels of government take a coordinated and cooperative approach to addressing the shortfall.
“Restrictions on supply and over-the-top infrastructure charges simply push up the price of land and, consequently, the price of new and established homes.
“We simply are not building enough houses to meet current demand, let alone future growth. The consequences for housing affordability will be devastating.”
Mr Bidwell said increases in new home construction costs for the March quarter had varied across the state.
“The cost dropped slightly on the Gold Coast (down 0.47 per cent) and increased by 0.66 per cent in Townsville, while Brisbane increased slightly by 0.22 percent, which is up 3.2 per cent from this time last year.
“Excluding the cost of the land, the bulk of the cost of constructing a new home is for materials (varying between 51 per cent in Toowoomba and 56 per cent in Cairns). Price movements in this component were the key driver of the change in construction costs during the quarter.
“The change in the cost of labour (which accounts for 30 per cent to 33 per cent of the total cost) was almost negligible over the three months to March. This is not overly surprising given relatively soft industry conditions, which have reduced wage pressures and skills shortages in the short term.
“However, Mackay, Toowoomba and Townsville, with exposure to the mining industry, generally recorded higher cost increases than elsewhere in the state, suggesting that labour markets are tightening as mining industry activity rebounds.

Copies of the State of the State report along with nine regional reports are available at www.masterbuilders.asn.au – click on ‘Publications’ and ‘Housing industry reports’.