Victorian home supply still short: HIA

Housing starts in Victoria are set to rise over the next few years thanks to improvements to new home buyer affordability, but the state will be well short of what it needs to cater for forecast population, the Housing Industry Association said.

The number of new builds is expected to grow by three per cent over 2009/10 – to 43,130, and one per cent over the following year, to 43,540 – a consequence of relatively affordable housing conditions (thanks in part to federal and state government incentives.

High immigration and a relatively resilient economy are other demand drivers, the lobbyist said.

It is estimated Victoria will need some 45,000 dwellings per year for the short term, the group added, HIA executive director Gil King, saying development levies are stifling things at the supply side..

“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,” he 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.

“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”.

Nationally, the group forecasts housing starts to fall 17pc in 2008/09 to 132,000 before growing 11pc over the subsequent two years.

Australia will still be more than 50,000 short of homes each year, for the medium term, it added.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of