Housing supply

Housing supply needs to be repaired quickly, say property bosses from Mirvac, Lendlease, Stockland and PwC

Tony Lombardo took over the management of Lendlease last year. In his previous role as Asia manager, he was familiar with Singapore’s carefully managed approach to housing and a planning system that can deliver in months what it takes years to approve in Australia.

“We should have bipartisan support for a 25-year vision for this state that basically says ‘this is where our corridors are going to grow.’ Let’s get those mapped out precisely enough that both sides of politics support it, and then make it easier to get that approved.

Another federal government lever that can be pulled is properly targeted infrastructure investment, to be applied in unison with the states, Stockland Chief Tarun Gupta said.

Such infrastructure spending would help “open up vast swathes of housing that are currently dormant, he said. But inaction, given years of undersupply already predicted, “would create overheated rents,” Gupta warned.

Rental markets are already tight as a drum. Vacancy rates exploded at the start of the pandemic as tourists and students returned home, but have since reversed, falling below 1% in most capitals except Sydney and Melbourne, where they are well below by 2%. The housing shortage has caused asking rents to skyrocket – up around 20% in Sydney and Brisbane, and more than 9% in Melbourne – over the past year.

And while the Reserve Bank’s double 0.5% rate hike this week will add momentum to the house price correction already underway, Sydney prices are still nearly 23% higher. above pre-COVID levels and Melbourne prices hit 10% higher.

Labor and the Coalition have both tabled housing plans in the federal election to bolster the firepower of homebuyers in the market, fueling demand and driving up prices.

But the three property leaders said the real solutions to the housing puzzle lie on the supply side, by removing planning blockages, which are particularly serious in NSW, and freeing up land for development through rezoning.

“We know it can be different,” Lloyd-Hurwitz said.

“Because during COVID there was a concerted push to get things that were stuck in the system out of the system. And they did. So it can be done with some creative thinking about how our whole planning system works.

With the NHFIC releasing housing shortage forecasts in February, it was warned that the disruption in supply, along with increasing delays and delays, particularly in the single-family housing market, would drive up prices. costs. In some areas, it could take more than six years to bring supply to market, meaning any delay in development now would impact affordability years from now as population growth resumes.

“If housing authorities actively slow or impede the flow of new housing supply, this can exacerbate upward pressure on rents and prices, which should be avoided if improving housing affordability is a primary focus,” the housing authority said.

Since that report, new numbers show that the cost of a new home has jumped $76,715 in the past year to top $400,000 for the first time. This week, JPMorgan analysts estimated that average construction completion times are at least four months longer than they were in the previous fiscal year.

But in addition to shortages of materials, it is a shortage of labor that is strongly felt, and not only in the construction sector. Lack of labor was one of the factors driving up prices that was singled out by the RBA on Tuesday, forcing its hand on monetary policy. And that’s why real estate leaders are pushing for a rapid increase in immigration levels.

Stockland’s Gupta said the direct impact of labor shortages in housing construction – by lengthening completion times and increasing costs – was being felt across the economy.

“And if that continues, you lose productivity in the economy,” he said.

“Things will start to overheat because there are only limited resources that everyone is banking on. And that will translate into poor economic performance in years to come.

“Immigration, the urgent arrival of targeted skilled migrants, is what is needed because there are real bottlenecks in many sectors of the economy, whether it is construction, hospitality, tourism, you know, IT, finance, law. Whether it’s white collar or blue collar, there are real bottlenecks.

Official figures show overseas migration has fallen to its lowest level since World War I, resulting in a net loss of 89,000 people in the year 2020/21. The loss of workers is evident in the unemployment rate, which has fallen to 3.9%, a 48-year low.

But Tony Lombardo of Lendlease said it was not just skilled workers who were sorely needed, but casual labor – such as students working in restaurants or fruit pickers – who were vital.

“It is the services that are in difficulty. And SMEs are the backbone of the economy,” he said.

“We need to make sure SMEs are able to get that workforce and the support they need in the face of building inflationary pressures.”

Acknowledging that immigration can be a “political danger zone,” Lloyd-Hurwitz said community views on multiculturalism have become increasingly positive over the past two years.

“So let’s not talk about big business and big profits. It’s about this local business owner who has to close on a Friday because he has no staff.

“And that’s the group of people you can talk to about why we need this. [immigration]. Because they feel it in their daily life. It is no longer an abstract notion, it is a real notion. Businesses have to close because they cannot find staff.

AFR Editors’ Forum: the future of cities

  • Fixing housing supply quickly: Property chiefs Australia’s top housing officials have warned that another housing crisis is ‘brewing’ with state and local government planning bottlenecks stifling the economy supplying new homes and putting renewed pressure on affordability as population growth recovers.
  • ‘Cities are firing again’ Our cities are changing after the pandemic, but urbanization still has a long way to go, say leaders of Australia’s leading property companies.
  • Pandemic offers opportunity to rebuild the city Australian cities and their CBDs are being remade in the wake of the global pandemic as workers, more flexible than ever, return to hybrid workplaces to rediscover the ‘joy’ of living collaborative effort.
  • See the video
  • Read Transcript This is the edited transcript of the Editors Forum Roundtable on the Future of Cities, held on June 2 and is coordinated by The Australian Financial ReviewMichael Stutchbury, Editor, and Nick Lenaghan, Real Estate Editor.