THE recent release of the National Housing Supply Council report has highlighted the considerable gap that exists between housing supply and demand. This gap is likely to have a significant effect on low-income households and result in ongoing affordability issues.
A number of factors in the current market could combine to constrain the rate of development of new housing. Current economic conditions are certainly having an effect: the tightening of credit for the housing industry has meant that projects that would increase supply are being deferred if they cannot meet stricter pre-sale requirements being imposed by banks.
Another issue noted by the report is the relatively high land and construction costs for medium- and high-density dwellings, especially in multi-storey developments. This is causing a lack of new supply, particularly in areas with strong demand.
Similarly, the timing of broad-hectare lot construction varies in accordance with economic cycles, industry capacity and changing demand. This means that there is rarely an oversupply of new developments, as projects are unlikely to be started until there is pent-up demand.
Planning, zoning, subdivision and development approval processes are often lengthy, and are a major continuing constraint on supply. Related to planning and development approval processes are concerns about high and compounding taxes and charges, including developer contributions for hard and soft infrastructure that increases the price of housing and may delay or preclude development.
To overcome these issues, a co-ordinated approach by federal, state and local government is required
If interested in learning more about this update please contact me today!
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