Developers scoff at 1.2m new homes target Michael Bleby Senior reporter Sep 12, 2023 https://www.afr.com/property/reside...cy-searches-for-magic-formula-20230912-p5e3xi A dysfunctional planning system and huge labour shortage will cripple the Albanese government’s target of 1.2 million new homes in the next five years, despite billions of dollars of public funding pouring into the sector, warn senior property industry figures. Nigel Satterley, the prominent West Australian developer, said only half of those homes would be finished – between 600,000 and 650,000, “if we’re lucky” – because of a lack of workers to build them. Australia can only hope to build 600,000-650,000 homes over the next five years: developer Nigel Satterley with (from left) the Financial Review’s Michael Bleby, Master Builders Australia’s Denita Wawn and Cedar Woods’ Nathan Blackburne. Michael Quelch “For the last eight years, we’ve been finishing 13,000 homes [in Perth] – the demand is 18,000 to 20,000,” Mr Satterley told The Australian Financial Review Property Summit on Tuesday. “You look around Australia, most probably the underlying demand for housing is about 140,000 dwellings. We can’t build 140,000 or complete 140,000 dwellings.” Tim Gurner, the billionaire Melbourne developer, said the problem was not just a labour shortage but a combination of poor planning laws and high costs and that 14 of his 30 development sites were on hold as a result. Mr Gurner said the government’s target of building 1.2 million homes over five years would be extremely difficult, if not impossible, unless fundamental changes took place. “The government, who have never done it before, don’t have a solution on how they’re going to deliver it, don’t have the trades and don’t have the planning expertise,” he said. “I don’t know how they’re going to do it. How are they going to deliver the housing [needed]?” Housing Minister Julie Collins told the Summit on Tuesday that the 1.2 million new homes target was “ambitious but achievable”. “We want to overshoot that, and we’re incentivising the states and territories to do the reforms necessary to get those additional homes,” Ms Collins said. “What we want to see though over time is less up and down of the housing market and much more stable construction.” The government on Monday secured the passage of its signature housing policy – the creation of the Australian Housing Future Fund and a $10 billion investment vehicle to build affordable homes. It is also considering reforms to unlock institutional investment in social housing that were recommended by its independent advisers led by Susan Lloyd-Hurwitz. In August, the federal and state governments agreed to a target of 1.2 million new homes by 2029. The Commonwealth will incentivise the construction of the new homes by paying $15,000 to the states for every home above the old target, which was 1 million homes from July 2024. “It doesn’t matter what number they make it, whether it’s 1.2 million or 5 million, it’s all the same. We won’t be getting there,” said Robert Lynch, chairman of residential builder Tamawood. But planning problems, such as delays over rezoning in NSW, remained the biggest obstacle, he added. “There’s a problem with local government. In NSW, it’s taking seven to 20 years to get a new rezoning through for residential. We’re talking about building houses over the next five years. That’s a bit of a problem,” he said. “After you get your rezoning through, it takes you – for a decent size development – three years to get a [development application] through and when you eventually get your DA through, you’re 23 years older.” Brendan Coates, economic policy program director at Grattan Institute, said planning was the biggest obstacle. “The thing that would make the biggest difference is reforming those planning rules because we think they are the single biggest constraint now,” Mr Coates said. “The basic rules of what you’re allowed to build within 10 kilometres of the city centre in Melbourne and Sydney is the biggest driver of unaffordable housing in Australia because it will not be affordable unless it’s abundant. That would be number one; the states reforming those planning rules to up-zone what is possible.” Ms Collins said the government would consult states and territories on recommendations of a report from the newly created National Housing Supply Council about getting institutional funding into the sector. However, she gave no timeline for doing so. “We understand that this is important and want to move as quickly as we can,” she said. With the country facing a severe rental crisis, a further 30,000 to 50,000 rental properties were needed immediately to bring that market back into balance, said Nicola Powell, Domain’s chief economist. Cautioning against the negative sentiment she said was growing towards property investors, mum-and-dad investors should be seen as small businesses, Ms Powell said. To step up its housing development, Australia would need a combination of faster land release, speedier development and a greater proportion of institution-grade social and affordable housing, AMP head of investment strategy and chief economist Shane Oliver said. Accelerating construction to a never-before-reached average of 240,000 homes a year would be even harder at a time when interest rates were rising, in contrast to the last apartment boom between 2015 and 2018 when they were falling, Dr Oliver said. “If we’ve struggled over the last five years – and much of that period interest rates were lower – how are we going to do it over the next five years?” Dr Oliver told the Summit. “That’s going to be a bit of a challenge. One thing that might make it a little bit easier is if there’s more focus on social and affordable housing, so a lot of the extra housing is somewhat lower-cost housing, entailing less resources and less hours to build and that may make it a little bit easier.” Nathan Dal Bon, chief executive of the National Housing Finance and Investment Corporation – to be renamed Housing Australia – said the $10 billion fund created under the new law would start developing 40,000 subsidised-rent homes. He agreed with Dr Oliver that a stronger community housing sector was crucial to building homes faster than in the past. “Apart from providing that stable and secure housing for people in need, I think there’s also the objective in terms of trying to build the community housing sector in Australia,” Mr Dal Bon said. “It’s a relatively nascent sector. [A] key lesson from overseas has been having a vibrant community housing sector providing support services, whether they’re wrap-around services or stable and secure accommodation for those in need – I think it’s important.” More also needed to be done to get large-scale institutional investment in social and affordable rental housing to cover a supply shortfall, he added. A key – and still unresolved – goal of the new legislation and the separate agreement by national cabinet to build 1.2 million new homes over the next five years, was to develop a new asset class that would draw in funding from superannuation and other funders, Mr Dal Bon said. “What is that magic formula to encourage them to invest in social and affordable housing?” he asked. “It’s really trying to find that formula, so they can get their risk-adjusted return hurdles. “And then ... looking at ways that we can get the scale that institutional investors typically need to make the effort and the time to invest.” Mark Bouris, executive chairman of mortgage broker Yellow Brick Road, said resistance to the higher-density development that was crucial to boosting housing supply could be overcome by offering existing residents incentives. “Maybe the state or federal governments could look at saying ... if you agree as an area to have 10 more developments in your area to build another 25,000 apartments, everybody who lives in that area will get a zone-based tax rebate,” Mr Bouris said. “That’s fiscal policy at its best. I’d like to see what are the bottom-down incentives that are happening to make sure these things are approved.”
Greens to tap renters’ anger to steal Labor seats Tom McIlroy Political correspondent Sep 15, 2023 https://www.afr.com/politics/federa...rs-anger-to-steal-labor-seats-20230915-p5e513 Labor frontbencher Tanya Plibersek and backbencher Josh Burns are among the inner-city targets of a Greens strategy at the next federal election that will try to turn renters into a new voting bloc. Greens leader Adam Bandt will tell the party’s Victorian state conference on Saturday that its members should be proud of forcing the Albanese government to give up $3 billion in sweeteners in exchange for support for its housing plan. And the claim to be fighting on behalf of renters should be a call to arms for members to enlarge the party’s support. Greens leader Adam Bandt says renters are angry at the major parties. Alex Ellinghausen “What’s clear is that in fighting Labor we are fighting the political arm of the property and real estate industry,” Mr Bandt will say, according to notes provided beforehand. “Winning that fight might not happen in a few months, and it won’t happen with the current size of our movement. The last few months have helped get renters closer to winning, but there’s more to do.” Legislation setting up the Albanese government’s Housing Australia Future Fund, a $10 billion housing investment vehicle that aims to build 30,000 affordable homes in the next five years, passed through parliament on Thursday with Greens support after Labor agreed to hand another $1 billion to the National Housing and Investment Finance Corporation for spending this year. The Greens dropped their demand for rent caps, but have vowed to keep pursuing the idea. “This week we have proved that pressure works. When the government announced their Housing Australia Future Fund, they said there was no money for public and community housing available to be spent now out of government revenue,” he will tell the conference on Sunday. “Not if a gamble on the stock market pays off, but right now. By pushing the government, we secured over $3 billion for public and community housing. Available this year. “This will make a real difference to people. And the Greens delivered it. You should be proud.” He will make that clear Labor and Liberal seats in inner Melbourne, Sydney and the NSW Northern Rivers region are in the Greens’ sights for the next election, which could be held as soon as August 2024. More than half of residents in Environment Minister Ms Plibersek’s seat of Sydney are renters, and about 40 per cent of Mr Burn’s inner-Melbourne electorate of Macnamara are renters. In nearby electorates including Higgins, held by Labor’s Michelle Ananda-Rajah, more than 30 per of residents are renters. Mr Bandt will also give a shout-out to Greens candidate Mandy Nolan, already preselected for the NSW electorate of Richmond, and promise to fight more on the hot button issue of housing. “We grow our power on the streets and in the parliament,” he will say. “We grow our power by working hard. We grow our power by meeting the people where they are at and showing that we will fight, fight and fight. “Labor has abandoned renters. Labor has every seat at the national cabinet table on the mainland, but they came together to decide to back unlimited rent increases.” According to the Parliamentary Library, the earliest possible date for the next federal election is August 3, 2024, if it is a standard House of Representatives and half-Senate election. The latest date is May 17, 2025. The Greens won the Queensland electorates of Brisbane, Ryan and Griffith in 2022 to take their tally to 15 seats. “If Labor doesn’t notice there are thousands of renters mobilising across the country, fighting for their collective interests, fighting to freeze and cap rent increases, then they’ll lose hundreds of thousands of votes, and seats, to the Greens,” Mr Bandt will say.
You watch, on the eve of elections, the ruling politicians will make more bs sweetener housing promises. (which will never eventuate).
Cost-of-Living Stress Fuels Crime Wave in Australia, New Zealand Ainsley Thomson and Karen Leigh Wed, 27 September 2023 (Bloomberg) -- A man strolls out of a New Zealand supermarket carrying bags stuffed with nine stolen legs of lamb. Another pushes out a shopping cart stacked with NZ$1,500 ($896) of pilfered corned beef and mayonnaise. Yet another smashes a security guard in the face with a bottle of milk before making off with a basket of goods. None attempt to disguise their theft. The men, featured in security footage released last month by Foodstuffs North Island, which is part of the nation’s largest grocery chain, are emblematic of the escalating retail crime wave sweeping through the country and neighboring Australia. The theft is brazen, organized, increasingly violent and is costing the two nations an estimated A$10 billion ($6.4 billion) a year combined, according to retail groups. Experts say the incidents underscore the hardship many people are facing as costs rise for everyday items. With consumers squeezed, organized criminals are finding a ready market of buyers for stolen food and other household items, said Phil Thomson, chief executive officer and co-founder of retail-crime intelligence platform Auror, which operates in New Zealand, Australia, North America and the UK. “The majority of the theft that occurs is from people who do this as their full-time job,” he said. “About 10% of people are causing about 60% of the crime. And it’s all profit motivated. They’re stealing to order and they’re stealing it to on-sell.” New Zealand and Australia aren’t alone in dealing with a rise in retail crime — in the US, “flash robs” involving gangs of thieves have targeted luxury malls in California, while in the UK, organized criminal gangs are stealing high-value items, lifting theft there to a record high. The data for the Southern Hemisphere neighbors, though, are stark. Shoplifting and retail theft in New Zealand increased 45% in 2022 compared with 2021, according to figures released by police this month, which includes theft reported directly to them and through Auror. Theft from retail stores was up 47.5% year-on-year in June in New South Wales, Australia’s most-populous state, according to government data released earlier this month. Continues.... https://au.finance.yahoo.com/news/cost-living-stress-fuels-crime-190000906.html
Over the past year, the average Australian monthly grocery bill has risen by seven per cent to $740. Credit: Glenn Campbell/AAP Australians resorting to theft amid high cost-of-living William Ton AAP October 23, 2023 https://www.perthnow.com.au/busines...-to-theft-amid-high-cost-of-living-c-12292641 Some Australians are turning to low-level crime to survive as households buckle under the soaring cost of living. More than one-in-10 Australians, or about 2.4 million people, confessed to having stolen from businesses in the past year as they reached financial breaking point, a survey of more than 1000 respondents from comparison website Finder has revealed. Over the past year, the average monthly Australian grocery bill has risen by seven per cent to $740, according to Finder’s Consumer Sentiment Tracker. The most common theft occurs at supermarket checkouts, with five per cent of people walking out without paying for groceries. Four per cent of respondents admit to deliberately scanning an item as another cheaper product at self-service checkouts. The head of consumer research at Finder, Graham Cooke, said that many Australian households are financially strapped, with a rising number in survival mode. “Aussies are clearly struggling to afford necessities, and some are turning to criminal behaviour to get by,” Mr Cooke said. The survey was released on the same day as Foodbank Australia’s latest report, which found 36 per cent of all households are struggling with food insecurity - an increase of 383,000 from the previous year. The Foodbank Hunger Report 2023 found 3.7 million households went hungry in the past year. Finder’s Consumer Sentiment Tracker found four per cent of Australians had driven away from the bowser without paying for fuel in the past year, while two per cent had left a cafe or restaurant without paying. Gen Z are more likely than their older counterparts to take basics such as food or fuel without paying, with about one-in-four respondents admitting to stealing. More than 10 per cent of Gen Z had left the supermarket without paying for an item, compared to three per cent for Gen X - which has prompted shops to ramp up monitoring at the checkout. Mr Cooke advised those struggling to afford food to visit food banks rather than risk getting a criminal record. “With supermarket profits up dramatically, it would be understandable for consumers to expect their retailers to do more to help them get through the cost of living crisis,” he said.
Australia records biggest income decline in the developed world Michael ReadEconomics correspondent Nov 9, 2023 https://www.afr.com/policy/economy/...ecline-in-the-developed-world-20231108-p5eijq Economists have urged Treasurer Jim Chalmers to overhaul Australia’s tax system after new data showed households suffered the largest fall in living standards of any advanced economy over the past year. Inflation-adjusted disposable incomes have hit their lowest level since June 2019 as high inflation, a rapid increase in mortgage repayments and rising income taxes ravage household budgets, newly released data from the OECD show. In the 12 months to June, Australian household incomes slumped 5.1 per cent, the sharpest fall recorded across the OECD, according to analysis by The Australian Financial Review. The figures underscore the political challenge facing the Albanese government, as polling consistently shows the rapid rise in the cost of living has become the single most important issue for voters. The data are also adjusted for population growth. The Opposition hammered Labor over the figures during Senate question time on Thursday, accusing the Albanese government of overseeing falling living standards. A spokesman for Dr Chalmers said “higher interest rates and higher inflation are putting pressure on people and that’s why our number one priority as a government is addressing inflation and the cost of living”. “We’re rolling out $23 billion worth of cost-of-living relief which is easing pressure on Australians at the same time as it helps to ease inflation in our economy,” the spokesman said. “The ABS has confirmed that without our cost-of-living plan, inflation would be half a percentage point higher.” Opposition finance spokeswoman Jane Hume accused the government of taking its eye off the ball. “With inflation forecast to stay higher for longer, interest rates rising, and real wages going backwards, it’s clear that Australians are paying the price for Labor’s lack of a plan in this crisis,” Senator Hume said. Disposable incomes surged at the onset of the pandemic as the Morrison government unleashed $429 billion in fiscal stimulus, which experts have since found dramatically overcompensated households for the losses experienced due to COVID-19. Excessive stimulus meant the Australian household sector accumulated a far larger savings buffer than other advanced economies, according to economists at the US Federal Reserve. While those savings have supported households over the past year, the researchers found the buffer was almost depleted. The decline in real incomes over the past year contrasted with the OECD as a whole, where living standards increased 2.6 per cent. The United States recorded a 3.5 per cent increase in disposable incomes over the past year after a sharp 12.4 per cent peak-to-trough fall when pandemic supports were withdrawn over the course of 2021 and 2022. ‘Bracket creep is also definitely a factor’ Seven consecutive quarters of decline meant Australian real household incomes were now just 18 per cent higher than in 2007, compared with 22 per cent across the OECD as a whole. While headline inflation in Australia is lower than the OECD average, nominal wages are also growing at a much slower pace than many other advanced economies, including the UK, Canada, the Euro Area and the US. Jarden chief economist Carlos Cacho said the OECD data showed Australian households were victim to a perfect storm of factors that led to materially worse outcomes than other countries – surging population growth, persistently high inflation and a household sector dominated by variable rate borrowers. “Bracket creep is also definitely a factor in Australia. A combination of strong nominal gross income growth and the non-indexation of tax brackets means the rise in tax paid is above our global peers,” Mr Cacho said. Australia is among the cohort of 21 OECD countries that do not index their tax brackets for inflation. Seventeen OECD countries automatically adjust their brackets to compensate for higher prices. Because tax brackets are not indexed to inflation, increases in nominal wages lead to increases in average taxes, since a greater proportion of a worker’s pay is pushed into the highest bracket applicable to them. Economists call this bracket creep. As a result, a near-record 16.2 per cent of household incomes was lost to income tax in the three months to June, according to the national accounts. Deloitte Access Economics lead partner Pradeep Philip said the decline in real incomes highlighted the importance of fundamentally overhauling the tax system. “The over-reliance of taxation on individuals is something that has to shift dramatically,” Dr Philip said. “The key thing is to shift the mix away from direct personal income tax to other sources.” Households are unlikely to receive relief until July 1, 2024, when the stage three tax cuts come into effect, which will return some bracket creep to households. The package will abolish the 32.5 per cent and 37 per cent brackets, introducing a single 30 per cent rate for incomes between $45,000 and $200,000. But experts say more fundamental change is needed. Interest rate pain E61 Institute research director Dan Andrews said Australia should shift its tax burden from individuals to less sensitive areas like land or consumption, such as through raising the GST. He said high rates of personal income taxes were a major disincentive for secondary earners, who faced high effective marginal tax rates when they worked more hours since they might lose family tax benefits or other payments. “The evidence internationally is that when taxes really distorts labour supply, it comes from the second earner in a two-adult household. When a wife, for example, goes back to work, they lose other benefits, so it’s not worth working,” Mr Andrews said. Another factor dragging on household incomes was the dominance of variable rate mortgages, which made households highly sensitive to changes in interest rates. “The pass-through of interest rate hikes to households is faster and stronger for Australia than many peers,” Mr Cacho said. “Norway and Sweden are the next two countries with the weakest real disposable income growth, who are also seeing a material drag from interest payments.” The share of outstanding mortgages with variable rates is higher in Australia than in any other advanced economy except for Norway, according to Reserve Bank research. With the cash rate at 4.35 per cent, a household with a $500,000 loan is paying $1210 a month more on its mortgage than it was in May 2022, representing a 59 per cent increase, according to RateCity. Dr Philip said Australia’s 2.2 per cent population growth rate explained about one-third of the decline in per capita incomes. “The problem is not population growth per se, because there are a lot of benefits from population growth, and Australia has unambiguously been a winner from population growth,” he said. “The solution is actually to grow the economy to accommodate that high population growth because then we create a virtuous cycle. “We want people coming in because there are skill shortages. We need reforms that lift the supply side and growth capacity of the economy.”
I think so, but I'm not too sure how it goes. The thing is, in China their labour rates and laws are lower than in Australia. In Australia their costs will be higher so maybe the competitive edge no longer exists. https://www.chinesebusinessguide.com.au/cbg-listing/buildersConstructions.asp
It is actually quite hard to explain this. - low commodity prices in a heavily commodity skewed economy. - high interest rates - China tensions still the property market is robust...
analysis If housing was considered a human right, would it fix our housing crisis? By business reporter Gareth Hutchens Posted 50 minutes ago https://www.abc.net.au/news/2023-11...man-right-or-a-pure-financial-asset/103089296 Should housing be considered a fundamental human right?(ABC News: Arianna Levy) What should we do about our housing crisis? Here's how policymakers from the past thought about housing and citizenship and economic rights: "We consider that a dwelling of good standard and equipment is not only the need but the right of every citizen – whether the dwelling is to be rented or purchased, no tenant or purchaser should be exploited for excessive profit." That was written in 1944 by the Commonwealth Housing Commission. The Commission had been given the task, by the wartime Labor government, of figuring out how to fix Australia's acute housing shortage and provide adequate housing for everyone in the aftermath of World War II. It estimated it would require, by the end of 1955, the erection of at least 700,000 dwellings, and it recommended a major building program. It said the program may need an extra 35,000 to 45,000 tradesmen, and that immigration policy should encourage more building labour to come to Australia. It was scornful of the way private landlords had historically treated renters in this country, and said housing was a right and should stop being a "field of investment" that yielded high profits for a minority of landowners. It recommended a large amount of government-financed housing be built for sale and rent for low income households, with weekly rents being no more than one-sixth of a family's income. It said we had to get Australians into homes, and those homes should be affordable and adequate — not sites of exploitation for profit. Does any of that feel familiar? Well, last week the NSW Housing Minister, Rose Jackson, said we'll have to treat housing as a "fundamental human right" if we're to fix our current housing crisis. It's a time capsule that reflects the aspirations of housing reformers of that period in history. While many of its recommendations were ignored, it provided the background to the first Commonwealth and State Housing Agreement (CSHA) signed in 1945, in which the federal government agreed to provide funding for public housing, and state governments agreed to build and operate that public housing to provide security of tenure to Australians who couldn't afford to own a home. Under that agreement, the federal government hoped to see between 20,000 and 30,000 low-income dwellings built in its first year, and later 70,000 a year until the post-war housing shortage was overcome and all substandard dwellings were replaced around the country. It estimated it would take about 10 years. After the Commonwealth Housing Commission published its first interim report, the Curtin Labor Government announced its plans for a home-building program after the war.(Courier Mail, 8 December, 1943, page 3) That first CSHA agreement was followed by renewed housing agreements in 1956, 1961, 1966, 1973, 1978, 1981, 1984 and beyond, as the housing needs of Australians, and as Commonwealth-State relations, evolved over time. But the second agreement, in 1956, was significantly amended by the Menzies Coalition government to promote private home ownership over public rental housing. It encouraged state governments to sell houses that had been built for rent under the original 1945 CSHA, and it diverted some federal funding away from public housing and rental assistance schemes to help middle income earners buy a home. At the same time, there was strong growth around Australia in owner-building, made possible by the large number of prematurely subdivided blocks and vacant allotments that were sitting idle in major cities from the pre-war era. As those dynamics combined, it saw the overall level of home ownership lift from 53.4 per cent of households in 1947 to 71.4 per cent by 1966. A huge amount of direct government intervention had helped to create the "Australian dream" of widespread home ownership. The "Australian dream" of home ownership was deliberately created.(Source: Dr Cameron Murray, submission to the House of Representatives Standing Committee on Tax and Revenue’s inquiry into Housing Affordability and Supply, September 2021) But as the decades rolled by, the motivating spirit of that first Housing Commission report was left in the past. As more public housing was sold off in the 1970s, 80s, and 90s, public housing waiting lists grew longer, and low income families were increasingly pushed back into private rental markets to sink or swim, with homelessness rising. According to the late Professor Patrick Troy, by the mid-1990s Australian governments were recreating the social conditions that had originally led to the demands for a national public housing program in the 1940s. But fast forward to today, and some policymakers are now reviving some of the old wisdom to combat our current housing problems. "Housing should not be seen as a financial asset, it should be seen as a fundamental human right," Ms Jackson said. "Surely we need our tax system to enable opportunity for everyone to have secure access to one home before incentivising a minority to have many," former NSW Planning Minister, Rob Stokes, said at the at the same event. It's really interesting to see representatives of rival political parties sharing such similar opinions. Has there been a genuine shift in the political wind? While we think about that, the old Housing Commission report from 79 years ago has a few more concerns worth considering. The report's authors were very conscious of the damage that can occur to society when property prices rise too quickly, saying rapidly rising prices place an "undue burden" on younger generations. They said for much of modern Australia's history, interest rates and initial deposits demanded had prevented many low-income earners from purchasing a home, leaving them to fend for themselves in private rental markets where speculative landlords expected a high yield on their investments, which had obvious consequences for families trapped in the unforgiving rental cycle. And they said the private sector had repeatedly failed to build adequate housing for low-income groups in Australia, suggesting that governments should accept responsibility for doing so. In short, they warned if you treated housing like a financial asset, rather than a right, you end up with serious social problems. "The Commission considers that the housing of the people of the Commonwealth adequately, soundly, hygienically, and effectively, each according to his social and economic life is a national need, and, accordingly, should cease to be a field of investment yielding high profits," they concluded.