Adding new housing projects to Australia’s already swollen pipeline has been likened to turning the “tap on a bath that is already full”, as analysis shows faster approvals are no silver bullet in fixing the nation’s crisis.
Data from property research firm Cotality shows approvals could move higher in the coming months due to rezoning reforms and incentives for new builds coinciding with falling interest rates.
But rather than fix the shortage of homes, it could cause a problem for the construction industry by adding new projects to an already long list.
“It’s like turning up the tap on a bath that is already full,” said the analysis from head of research Eliza Owen.
It found delivery to be the problem, not approvals, with 219,000 homes under construction and completion times ballooning.
“The real bottleneck lies in the build phase, not planning reform,” the analysis said.
The federal government’s goal to build 1.2 million new homes in five years, adopted in August 2023, is thought of as unachievable by the industry.
“With completion times already above average, and construction costs elevated, it seems an odd time to be incentivising more dwelling approvals and commencements to the backlog of work to be done,” the report stated.
The report calls for a move away from demand stimulation to sustainable delivery.
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“Making homes faster and cheaper to build, while still maintaining quality, resilient homes is the key challenge for policymakers to focus on right now,” the report reads.
Labor’s election win has prompted union bosses to call for the government to revisit potential changes to negative gearing and capital gains tax concessions.
But proposals to scale back the tax deduction is tricky for the government, after Labor took reforms for negative gearing to the 2019 federal election and lost.
Negative gearing allows investors to claim deductions on losses and the capital gains tax discount halves the tax paid by Australians who sell assets owned for 12 months or more.
The analysis says if governments are serious about delivering on the housing target, they “must focus on building capacity, lifting productivity, and ensuring every approved home actually gets built”.
