Housing starts in Victoria are set to rise over the next few years thanks to improvements to new home buyer affordability, but Victoria will still be well short of the number of homes it needs to cater for its growing population, according to HIA’s March quarter Victorian Outlook report.
Victorian housing starts are forecast to grow by 3 per cent over 2009/10 to 43,130, and 1 per cent over 2010/11 to 43,540, reflecting more affordable housing conditions (thanks largely to federal and state boosts to the first home buyer grant), strong immigration, and a relatively resilient economy.
However, underlying demand for new housing in Victoria is estimated to run at over 45,000 dwellings per annum over the next couple of years. This means Victoria will still be well under the number of homes needed to cater for its growing population.
HIA’s Victorian Executive Director Gil King said land supply was still a crucial issue in Victoria. He said State Government levies on developments in Melbourne’s fringe areas could stifle the industry’s ability to meet predicted housing demand.
“The State Government’s new infrastructure levy on developments in Melbourne’s fringe areas, the Growth Areas Infrastructure Contribution, is an unfair levy that will ultimately be passed on to new home buyers,” Mr King said.
“It is ridiculous that land owners have to pay a full upfront payment for infrastructure, prior to any ability to gain revenue from it. Effectively this may take some land out of the supply chain if prospective buyers are unable to pay the new asking price,” Mr King said.
“Given the Government has already revealed it is running short of its own targets for land supply (that is, it is well under 15 years of supply across Melbourne’s growth areas), HIA is concerned that the levies will worsen housing shortages across Melbourne,” Mr King said.
The report shows the renovations market in Victoria continues to perform well. Growth prospects are considered to be relatively healthy over the next two years with gains forecast of 3 per cent over 2009/10 and 1 per cent over 2010/11.
Nationally, HIA forecasts housing starts to fall by 17 per cent in 2008/09 to a level of 132,000 before growing by 11 per cent over the subsequent two years. Australia will still be more than 50,000 short of homes each year, for some years to come.