Why haven't billions of dollars of homes been built?
We've been hearing about land supply issues for a little while now, with calls for governments to cut red tape and for fees to be reduced, so people can have an easier path to their Australian property investment. And while this is a crucial move, and something that could really unlock the Sydney market by letting more people buy, how serious is the supply situation in reality?
Knowing the numbers is key to being ahead in the property investment game. Whether you're using a buyers' agent to collate a portfolio of fantastic suitable properties for your situation or are planing your finances, knowing the details is a must. So let's take a look at the supply issues and see exactly where Sydney is at.
In a February 24 press release from the NSW Division of the Property Council of Australia, there was some dissection of where supply shortfalls for land and homes was occurring. According to the NSW Division Executive Director Glenn Byres, that falls to local governments.
"Councils need to get on with the job of issuing approvals, delivering the housing required to keep pace with population growth and a better planning system is essential," he said.
"And if we fail to keep pace with demand, we drive up prices and make housing less affordable for the next generation of homebuyers".
The report says in the last 10 years, the average number of annual housing approvals was 17,002. However, the target was 22,178 each year. This means that we fell short of home approval expectations by 56,320 dwellings over the last decade.
That's huge. Multiply it by RP Data's median Sydney end home value of $831,750 for homes in January this year and it works out to more than $46 billion of homes. But what does it mean for the future?
Lobbying and pushing
Mr Byres called for more sites for construction and development to be approved, and it's something that's been backed up by David Bare, the NSW Executive Director the Housing Industry Association. While Mr Bare's focus was on governmental policy changes to eliminate taxes and increase land supply, Mr Byres also noted the need for urban renewal along old transport lines and around town centres.
There's going to be no short-term solution to the supply problem, and the best you can do for now is get the right advice and make the most of what you can get out of the market. Of course, there are some easy ways to get ahead of the market there - like engaging the services of an expert buyers' agent.