Plea for red tape relief as home building slumps by 13 per cent in the past year
As a ninth residential builder collapses in just seven months, new data has revealed a troubling drop in house construction approvals.
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Housing construction approvals have dropped by 13 per cent – a slump of more than 1600 dwellings – in the past year, worrying new data has revealed.
It has raised concerns about worsening housing affordability and sparked industry calls for red tape to be slashed.
The figures come as the state’s fragile building industry was dealt another blow with the collapse of a ninth residential builder in just seven months.
Adelaide-based CV Constructions, trading as Emerald Custom Homes, has been placed in liquidation owing at least $1.3 million to dozens of creditors, and leaving eight homes unfinished.
Liquidator Mark Leese, of Agile Business Advisory, said the company closed after it was unable to secure building insurance necessary to keep trading.
Seasonally adjusted figures from the Australian Bureau of Statistics showed a 12.7 per cent drop in the number of dwellings approved in the year to May, down from 12,645 to 11,036. There were 871 dwellings approved this May, a fall of 41.2 per cent from 1483 the same month last year.
The total value of new buildings – residential and commercial – approved across the state crashed by 19.6 per cent in the past year from $6.69 billion to $5.38 billion.
The next worst state was WA, down 14.7 per cent.
In SA, the value of new commercial buildings dropped by nearly a third. The Advertiser yesterday reported the broader construction sector had delivered an extra 8800 jobs in the year to May. But industry leaders said that growth was mostly in areas such as mining and large public projects including roads.
Master Builders SA chief executive Ian Markos said red tape was standing in the way of people building new homes at a time when low interest rates should be driving growth.
“It’s easier to buy an established house than putting up with the process of council applications, the cost of holding the land while it’s waiting to go through and the additional costs that are being forced on people to build a home,” Mr Markos said.
He said measures such as compulsory rainwater tanks and energy efficiency audits should to be scrapped immediately to stimulate the housing construction market.
“This level of stupidity has to end,” he said.
“The Government can fix this very quickly.”
Property Council SA executive director Daniel Gannon said the statistics were “very concerning”, especially in light of the State Government’s announcement last month of land tax changes that would prevent major landowners reducing their tax bill through complex ownership structures.
He said the “last thing” the Government should do was to “take a sledgehammer to the property sector”.
“This data spells trouble for the next 12 months,” Mr Gannon said.
“Building activity and business confidence could fall off a cliff in the medium term if the State Government doesn’t scrap its land tax change (and) foreign investment tax and if it doesn’t take population growth seriously.”
Opposition treasury spokesman Stephen Mullighan said the housing industry was “reaching a crisis point”.
“The Government’s response in the State Budget is woefully inadequate. Supporting only 90 houses being built over the next two years will make virtually no difference to activity in the industry,” Mr Mullighan said.
“The Government also owns home lending agency Homestart, which has significant capacity to help new home buyers access finance and enter the market, which would also help support more housing construction activity in the market.”
Treasurer Rob Lucas said the Government was looking at cutting red tape but in the meantime its increased infrastructure spending proved its commitment to the industry.
“The softening national market and in SA is obviously a concern,” Mr Lucas said.
“The Government acknowledges that in relation to the construction industry broadly, not just housing, that we need a very strong infrastructure program and that’s why we’ve announced an $11.8 billion infrastructure program over the next four years.”
The Sunday Mail revealed last month that SA needs 100,000 affordable homes to meet demand, but has only 44,000 households living in social housing.