Victoria’s home boom dream hit by harsh reality check
Housing experts have recommended everything from importing tradies to enticing foreign investors after government figures revealed Victoria’s new home approvals are at a decade low.
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Victoria’s plans to build its way out of a housing crisis have had a reality check after new home building approval figures plunged to their lowest level in a decade in October.
Tradies at the coalface have revealed they worked 10-12 hour days up to six days a week to meet the rigours of the state’s last construction boom, and warned the industry would struggle with the next one unless the government gets more people on the tools.
In the 12 months since the federal government announced a one million new homes plan, Australian Bureau of Statistics figures show 10,000 fewer homes were given the nod across the state than in the year prior to the announcement.
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The 52,000 homes that did get the go ahead is the lowest figure since 2013.
While the increase in housing construction is touted as a key solution to the nation’s housing affordability crisis, the ABS figures also show the cost of building a new house or townhouse has risen more than $42,000 in Victoria since federal Treasurer Jim Chalmers announced the building boom plan – which he has since upped to 1.2 million homes.
Housing Industry Association estimates show that to reach the national target, Victoria would have to build a minimum 61,344 new homes for the next five years.
But their predictions assume Victoria will lose its title as the engine room of the nation’s construction economy to NSW, and latest figures show it has already slipped from approving 30 per cent of new Aussie homes to less than 20 per cent.
The Allan government wants to go further and build 80,000 a year for the next decade.
HIA chief economist Tim Reardon said a “rollercoaster” of record highs for the industry had turned to a decade low and Victoria would be wise to push for more public and social housing construction next year as a way to avoid losing tradies interstate until interest rate cuts spurred confidence from families and first-home buyers.
PropTrack economic research executive manager Cameron Kusher said the 10,000 home approval plunge in Victoria and a 27,000 drop nationwide was a “clear reality check” that we would be “well behind where we need to be in terms of building new houses” by next July.
“And the prospects of catching up are really low,” Mr Kusher said.
“I’m certainly not convinced that we can get anywhere near where we need to get for construction, we have never built 240,000 homes in a year nationally – let alone for five consecutive years.”
He said that despite a range of announcements already aimed at streamlining housing supply, governments would have to look at softening infrastructure pipelines and ways to increase skilled migration for trades.
Mr Kusher also warned it might take longer than the federal government’s five-year timeline from 2024-29 for the gap to narrow between established home prices and the cost of building a new home, which would also encourage more construction.
Mr Reardon advised the Victorian government should now review “punitive” extra taxes on foreign investors paying for homes in the state as a way to increase offshore funding for the building boom.
Metricon’s Victorian building and operations general manager Peter Temopoulos said while the nation’s biggest builder was confident in its ability to innovate and resume higher workloads, more “arms and legs” were needed.
“The industry needs more skilled labour; but builders are going to have to change the way they build ... we will have to come up with new innovations and ways to do things, such as more prefabricated building,” Mr Temopoulos said.
A slight easing in tradie shortages in the past few months has followed the firm reaching a tipping point where it is handing over more houses than it is starting for the first time in a number of years.
Metricon is also now one of Victoria’s largest builders of social and affordable housing for the Victorian government, something Mr Temopoulos said was expanding, but was unlikely to shift substantially from its current share of new home builds.
Master Builders Victoria chief executive Michaela Lihou said that after a decade of ups and downs, the organisation believed it was possible for Victorian builders to produce an extra 30,000 homes a year beyond current levels, taking the state to 80,000 new homes a year, but they would need help.
“Immigration is part of the solution, but significantly we need to rethink and prioritise our approach to training and promoting business and construction career opportunities for young people and women and also look at further developing and embracing modern methods of construction,” Ms Lihou said.
On the front line, carpenter Luke Marchetti said the boom of the past two years had been hard on tradies and he feared the planned construction boom, while a golden age for their profession, would be “pretty challenging” without a bigger workforce.
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