Housing crisis: Stockland CEO calls for policy changes

There is a chance to ‘reset the nation’ if new housing-related policies are enacted, Stockland CEO Mark Steinert says.

Stockland CEO Mark Steinert. Picture: Naomi Jellicoe

There is a “once-in-a-generation opportunity to reset the nation” if the raft of new housing-related policies are enacted by federal, state and local governments and harnessed to the infrastructure spending already under way in some states.

Mark Steinert, chief executive of Stockland, the country’s largest residential developer, said that if all the initiatives came into play it could unlock tens of billions of dollars in potential savings that could be channelled into housing affordability.

“The federal government’s policy changes, the attitudes the state governments are displaying, holding local government accountable around (housing) supply targets, infrastructure building around heavy rail and the focus on building new hospitals and schools — this is a game-changer,” Mr Steinert told The Australian.

While Melbourne was leading the way, the biggest impact was being felt in Sydney and other states were coming up to speed on housing, planning and infrastructure initiatives, he said.

However, many of the budget announcements, such as the tapping into superannuation for first home owners and establishing the National Housing Finance and Investment Corporation — a bond aggregator to encourage investment in affordable housing — were still to be enacted.

“The super initiative still needs to passed, the National Housing Finance and Investment Corporation still needs to be set up and the housing infrastructure fund needs to start allocating capital — and we will see a series of city deals that will accelerate momentum.”

Stockland wants to tap into the provision of affordable housing, turning residential ownership into an institutional investment.

“We would like nothing better than to build a portfolio of multifamily (housing), mostly likely on the affordable side,” Mr Steinert said.

“We are exploring in some markets if we can get a yield high enough from the town home product to hold it and that equation is getting closer.”

Providing funding to community housing groups through a body that could issue bonds along with other initiatives could make the sector a viable investment.

“The question is ... will holding that build to rent (affordable housing) in trust structures, will that get to the point that it will work? It’s quite possible.”

First-home owners would also be tempted back to the market by the new policies, with a number of state governments recently bringing in stamp duty concessions.

“Plus, the ability to make concessional contributions to your housing super saver, providing it’s approved, on top of normal super saving is a very tax effective way for a first-home buyer to save that deposit, which is really the biggest hurdle.”

At their peak, first-home buyers accounted for 20 per cent of the market but have fallen to about 11 per cent, squeezed by rocketing prices and competition from investors and offshore buyers. “Investors have tempered their activity as a result of lending constraints ... so that first-home buyers and domestic buyers are stepping up,” he said. Demand from foreign buyers had also eased.

“(First-home buyer numbers) are rising from their lowest ebb, and with state and federal support, economic conditions and increasing supply, you would absolutely expect first-home buyer numbers to rise. It may only be 2 or 3 per cent of demand, but that’s quite material in absolute numbers.”

Mr Steinert said housing markets were proving resilient, underpinned by a continuing undersupply in most capital cities, particularly in Sydney. This would only be partly eased by the wave of new apartment building.

This housing market cycle was longer than past cycles, he said. “We are over four years into it now, and normal cycles would now be in the down trend. Since coming out of the global financial crisis there has been a period of low interest rates, employment growth rising from a low base, continued migration and natural population growth, along with the dearth in building after the GFC.

“The last time you saw those preconditions was in the 90s,” he said.

Barring a black swan event, Stockland joins a number of economists and analysts rejecting a bursting of the Sydney/Melbourne housing bubble, and favour a soft landing.

Stockland expects Sydney’s rampant housing price growth to slow rapidly over the balance of the year, to be flat to 2-3 per cent for the six months to December, taking the annual rate of growth to around a still healthy 6-7 per cent. This would halve the annual pace of growth of 12 per cent recorded in June by CoreLogic.

Over the past week, the National Australia Bank and an ANZ/Property Council index have forecast a similar rate of easing. Melbourne would see a similar pace of price growth by the end of the year. Its prices increased nearly 14 per cent in the year to June 30.

Stockland expected Brisbane to see housing prices increase 3-4 per cent for 2017 (price growth was 2 per cent annually at June), and Perth, where prices fell 1.7 per cent in the year to June, should finally see some rises, Mr Steinert said.