Some Big Numbers
In an AFR published list of Australia’s top private companies, three of the top ten spots were Building Construction. The three; Meriton, BGC & Hutchies had combined revenue of $8.1 billion, an impressive figure. Other interesting facts show the importance of Professional Services in the economy with four of the top twenty private companies also having combined revenue of $8 billion, while health care and hospitals were also big area of growth. As employment grows in professional services and health becomes an issue with an ageing population both trends show up in the core demographics impacting housing demand.
Some recent in Canberra that directly relate to development are the Deputy Prime Minister and Minister for Infrastructure and Transport and Regional Development The Hon Michael McCormack MP, and in the Outer Ministry, Minister for Cities, Urban Infrastructure and Population The Hon Alan Tudge MP. Alan Tudge, has backed a ‘bigger Australia’ with more decentralised cities aimed at easing congestion in the major capitals, he has also talked about plans to steer migrants away from Sydney and Melbourne into the regions, along with a focus on new infrastructure ahead of population growth, also to help ease congestion crisis in major capitals.
Liverpool On the Move
Sydney’s South-West is one of our most active housing markets and its good news to see plans that will see Liverpool’s city centre will be completely revitalised which will see up to 10,000 new homes built and more than 22,000 new jobs created. Plans include 25 hectares of land in the city centre that has been rezoned from commercial to mixed use, to power-up the CBD as a vibrant new commercial and residential hub. The rezoning enables increased building heights for selected key sites and easier access to public transport, already the local campus of Western Sydney University and University of Wollongong and Liverpool Hospital’s will deliver $740 million of redevelopment.
We have already past the 25 million population milestone and already looking to the next big population event, including one prediction that we will have almost 40 million by 2055. If that happens we have a big task to find a way to keep new, affordable homes coming into the market. In 2016 Australia built a record number of 230,000 new homes, the question is, can we and will be able to maintain this rate of annual supply to keep pace with population growth? Governments and planners must recognise that growth in the housing sector and improvements in housing affordability will be negatively impacted by adhoc changes to negative gearing, capital gains tax or charges on foreign investors. Matters for our new ministers!
Interest Rates Still on Hold
We know that official interest rates are still on hold, while one bank has moved to increase rates. In relation to the housing market here’s what Philip Lowe, RBA Governor said in part announcing the interest rate decision: “Conditions in the Sydney and Melbourne housing markets have continued to ease, and nationwide measures of rent inflation remain low. Housing credit growth has declined to an annual rate of 5.5%. This is largely due to reduced demand by investors as the dynamics of the housing market have changed. Lending standards are also tighter than they were a few years ago, partly reflecting APRA’s earlier supervisory measures to help contain the build-up of risk in household balance sheets. There is competition for borrowers of high credit quality.”
NSW Infrastructure Spending
Infrastructure and construction are significant drivers of the NSW economy and so the impact of the state government’s four-year capital investment program to 2020-2021, which is forecast to be $87.2 billion is central. More than half is dedicated to transport and roads spending totalling $51.2 billion over four years. Public Transport and Roads investment over the four years will see $26.6 billion for public transport and $24.6 billion for roads. These investments are central to the future development of many housing and employment opportunities across the state.