Commonwealth ‘will have to respond’ to boost apartments

Apartments, semi-detached dwellings and townhouses, already suffering the hangover of the last housing-construction boom as local investors and foreign buyers dried up, now face further decline as a preference for space and land driven by the pandemic is compounded by a loss of migrants.

New dwelling approvals for attached dwellings have declined for the past 29 months and while the pace of decline was slowing until October – possibly reflecting the end of the natural unwinding – it subsequently accelerated again, official figures show.

Some sectors of the higher-density housing market were growing but many were not, and were in for a rough time, Mr Sukkar said.

“When you look at migration patterns and decision points for many people, often eight months to two years after you come to Australia, it’s after that you make the call to put down roots and buy something,” he said.

“We’re probably living off that tail of migration – of people who settled in Australia two years ago who are reaching that maturity of decision point. Obviously the hole that we’ve seen in migration is going to hit and it’s going to hit sooner rather than later.”

He declined to give any detail, but Treasurer Josh Frydenberg this week paved the way for the May 11 federal budget to be a big-spending affair when he said the government wanted to get the jobless rate down to a figure with a “4 in front of it” from 5.6 per cent in March.

“We’re examining a range of potential responses, but we’re keeping a really close eye on it,” Mr Sukkar said.

“There’s no supply strategy that we can embark upon that doesn’t include at its centre support for apartment and high-density projects.”

Melbourne-based developer, UDIA Victoria president and former Financial Review Rich Lister Ashley Williams said the help most needed was an incentive to clear completed stock and give developers confidence to start new projects.

“We’d welcome anything the federal government can do to help apartments,” Mr Williams told The Australian Financial Review.

“There is a stock overhang, there is a large number of unsold apartments on the market or owned by developers, and they’re not moving as quickly as we would like which means everyone – and I’m one of them – is looking at future projects saying I’m not going to progress future projects until I can see some level of activity on existing projects.”

Mr Sukkar also said WA MP Ben Morton was making a renewed push into possible reforms that could speed up planning processes such as more uniformity in application of the building code between states and the elimination of duplication between federal and state processes, as well as achieving consistency in accreditation of trades.

“The imprimatur for doing it now, why we’re able to take a fresh look at many of these issues, is the national cabinet that’s emanated from COVID,” Mr Sukkar said.

“There’s a renewed cooperation which means some of those decisions around red tape reduction we’re actually able to lead the charge on a bit more. There seems to be a spirit of cooperation with those reforms.”