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November 19, 2012 1:37 pm
Just outside the small town of Branxton work will shortly begin on a big new construction project.
Called Huntlee it will be the first town in New South Wales, for almost 50 years. It promises 7,500 new homes and a 200 hectare town centre that developer LWP Property Group hopes will create thousands of permanent jobs.
Huntlee and other “new town” developments such Oran Park Town in Sydney’s southwest are important because policymakers are looking for a pick-up in construction to take up the slack as Australia’s resource investment boom slows.
Growth in the housing market is seen by the Treasury as a “natural” and “desirable” development. This is because new home building has struggled to keep pace with population growth, largely rising because of immigration. According to analysts at ANZ, new housing completions have dipped below the long-term average of 150,000 a year.
In spite of this, Australia’s notoriously high house prices have been soft over the past year, particularly in locations such as the Gold Coast where large numbers of investment apartments were built.
Recent home financing data show demand is growing but many people are sceptical that housing starts will rise significantly even though interest rates have been lowered by 1.25 per cent since November 2011.
Planning restrictions, debt-laden households and a squeeze on developer margins because of changes to the provision and funding of infrastructure, all weigh against a rise in property building. Indeed, the Reserve Bank of Australia is only forecasting a “modest pick-up” in dwelling investment in the medium term.
Danny Murphy, LWP’s managing director, says it will have taken the company seven years to get approval for the first 2,000 lots at Huntlee if, as he expects, they are signed off early next year.
“It shouldn’t take this long for a project like Huntlee that has state significance. The approvals process is so cumbersome,” he says.
“The government’s lower Hunter Valley strategy sees a need for 115,000 new homes over the next 25 years. That’s 4,000 to 5,000 homes a year.” But he estimates the annual rate of construction in the Hunter Valley over the past five years has been 3,000 to 3,500 homes.
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