The Face Of Housing Is Changing
The location of Australian housing is changing, with new homes now being built outside of traditional residential areas.
The number of apartments approved for mixed-use settings, such as the above retail projects, is on the increase with Australian Bureau of Statistics figures showing mixed-use or city centre approvals accounting for 9.3% of all new dwelling approvals.
ABS director of construction statistics Daniel Rossi says the figures are the first of their type which look at the impact of land use regulation on supply.
It shows the majority of homes are being built on lot sizes far smaller than the national average block.
About a third (33.2%) of dwelling approvals are for homes on blocks between 200m2 and 400m2.
When it comes to land parcels receiving zoning approval, about a third (30.2%) are for blocks between 600 and 800m2.
“The takeaway is that we are delivering more dwellings in non-residential areas like city and mixed-use type areas through apartments – that change is happening,” Rossi says.
The ABS figures also show the average site area of new houses in Australian capital cities has decreased by 13% or 64sq m in the past ten years.
The average site area is now 432sq m.
Australian Values Top 10 Trillion
The total value of Australia’s 10.8 million residential homes has broken the $10 trillion mark for the first time.
According to Australian Bureau of Statistics figures, the total value of dwellings rose $221.2 billion in the March 2022 Quarter, lifting the total value to $10.2 trillion.
ABS head of price statistics Michelle Marquardt says the latest figures mean the value of homes increased by $1.8 trillion in the past 12 months.
New South Wales properties make up the largest proportion of Australia’s total value of dwellings, accounting for $4.1 trillion worth of property. Victoria is next with $2.7 trillion and Queensland third with $1.7 trillion.
ABS figures show it is the smaller capital cities which are performing the best with the median house price in Brisbane up by 29.3% to $787,500 in the past 12 months and up by 23.8% in Adelaide to $650,000.
While there has been much speculation about prices dropping in Sydney and Melbourne, median house prices are still higher than 12 months ago, according to the latest ABS figures.
The median house price in Sydney is up 16.4% to $1,245,000 and Melbourne is up 9.4% to $930,000.
Shortage Looms As Migration Picks Up
Migration is what will have the biggest impact on the Australian property market in the next few years, according to property investment expert James Fitzgerald.
He says Australia will welcome more than 200,000 people a year over the next few years and this will drive demand for housing with about 70,000 to 100,000 houses needed every year to accommodate the new migrants.
Since the pandemic started, Australia has barely built 70,000 new dwellings.
“Yet we are going to need to build a minimum of that every year just to keep up with the demand over the next two to three years,” Fitzgerald says.
“Adding to that challenge is the 1% vacancy rate across Australia, the lowest since 2006. That lack of supply is the reason rents in most capital cities have increased.”
Fitzgerald says the markets which traditionally benefit the most from overseas migration are Sydney and Melbourne, although there are also flow-on effects for the smaller capital cities like Brisbane, Adelaide and Perth.
He says in the coming years Brisbane’s market will also benefit from the 2032 Olympic Games as a result of the huge amount of spending on infrastructure in the lead-up.
“That spending on infrastructure is important because it creates jobs, improves amenity and ensures the city is capable of handling population growth,” he says.
Sydney’s median house price doubled between 1998 and 2003 in the lead up to and immediately following the 2000 Olympic Games.
Stamp Duty Changes Loom
While economists and industry experts are unanimous that stamp duty needs to be abolished, it remains unlikely until a solution is found for how to replace the $25 billion worth of revenue it raises nationally.
The Australian Property Council says stamp duty distorts behaviour, lowers turnover, locks people into inappropriate housing, dampens construction and reduces affordability.
The 2010 Henry Tax Review recommended using either an extension of the GST or a new broad-based land tax to replace it, but it is yet to change.
The New South Wales Budget does include some stamp duty reform measures and introduces an optional annual land tax rather than upfront stamp duty.
Victoria’s housing industry is backing the plan and would like to see it introduced in that state as well.
The move to a land tax would be permanently linked to the property which means future owners would have to pay land tax if that is what the previous owner had opted to do, so the tax is attached to the property not the owner.
Urban Development Institute of Victoria, chief executive Matthew Kandelaars says stamp duty is a “terrible, inefficient tax” and urged the government to seriously consider a similar overhaul.
QUOTE OF THE WEEK:
Centre for Independent Studies chief economist Peter Tulip:
“Tax on [property] turnover means people are in houses that don’t suit their circumstances. So, we would get a better allocation of houses if we replace stamp duty with land tax.”
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