Christopher Russell, Business Editor October 15, 2012 1:42PM
NEARLY all buyers of newly built homes in South Australia will be eligible for a State Government grant of up to $8500, Premier Jay Weatherill said today.
The New Housing Construction Grant will now be extended from just first home buyers in a drive to boost the ailing building construction industry.
However, in a sting to the market, first home buyer grants for established homes will be cut, then eliminated.
With the new and changed existing grants, new home buyers could gain up to $23,500.
This benefit would grow to $36,330 from stamp duty relief if buying a city apartment off-the-plan.
EXCLUSIVE by Andrew Clennell The Daily Telegraph October 09, 2012 12:00AM
PREMIER Barry O'Farrell will sell off government buildings valued at more than $300 million and redirect the money to kickstart housing infrastructure in Sydney's growth areas.
Government office blocks in Penrith, Queanbeyan, Wollongong and Newcastle, as well as Bligh House and the McKell building in the city, plus properties in Surry Hills and Parramatta will be flogged off to build roads, sewerage and water services for new housing developments.
The money will go to next year's second tranche of the Housing Acceleration Fund. In the June budget the government created the fund and gave $181 million towards developing 76,000 additional dwellings.
The sale, to be announced by the Premier today, follows a review of government properties commissioned by Finance Minister Greg Pearce. It comes after the government has already announced it is selling the desalination plant, the electricity generators, Port Botany and other ports.
Mr O'Farrell has said he will wait until the next state election before deciding whether to sell the electricity poles and wires, which could reap $10 to 15 billion for infrastructure once those companies' debts are paid off.
There are also suggestions that some disused railway land could be sold off for development.
That's hilarious. The NSW State government is going back to funding the infrastructure for new developments. Just like they used to a decade ago before they pulled their funding and lumped the developers with the costs. Now that has the potential to bring down the cost of new blocks of land.
This housing "crisis" is only a problem because of our high immigration intake. It's fairly clear that this is the cause but everyone knows the economy will tank big time if immigration slows to a trickle so we wave our arms around and do what we can to build more homes. At least they are focusing on new builds. Will put downward pressure on house prices.
A second consecutive monthly rise in dwelling approvals in September has further dampened expectations of a rate cut on Melbourne Cup day.
The number of dwellings approved for construction rose 7.8% to 13,338 in September 2012 in seasonally adjusted terms, according to the latest ABS data.
This was the second consecutive month they have risen following a 6.4% rise in August. Dwelling approvals fell 21.2% in July.
Dwelling approvals are a leading future indicator of housing activity and the increases in August and September will raise RBA concerns about low interest rates creating a housing bubble.
Approvals for private sector houses rose 1.2% in September to 7,484 led by Western Australia (4.7%), Victoria (3.3%), South Australia (1.7%) and New South Wales (1.3%).
However they fell in Queensland (-3.6%).
Over the year to September, approvals for houses are down 1.8%.
Unit approvals increased by 17.9% in September to 5,772.
The value of total building approved rose 3.2% in September, in seasonally adjusted terms, and has risen for 2 months.
The value of residential building rose 12.5% while non-residential building fell 12.3%.
Published 10:24 AM, 7 Nov 2012 Last update 10:32 AM, 7 Nov 2012
Construction activity declined again in October, though at a slower rate than in the previous month, according to a leading survey.
The latest Australian Industry Group/Housing Industry Association Australian Performance of Construction Index showed activity improving to an index of 35.8 in October, up from 30.9 the previous month.
Readings below 50 indicate a contraction in the industry with the distance from 50 indicative of the strength of the decline.
The reading for October is the 29th straight month that the index has contracted.
The rise shows contraction happening at its slowest pace in seven months, and provides some relief to a sector which has been in the red since mid-2010.
The survey noted a rise in new orders - at 36.8 points, from 29.1 in September - while the usually-weak house building sector jumped 12.5 points to 41.1 points.
HIA chief economist Harley Dale said the data provided good early signs that the sector could be turning around, although it was still weak.
"A protracted period of contraction in the Australian PCI, which in October extended to 29 consecutive months, represents a blight on Australia's economic performance and has made it difficult to find any glimmer of hope for the construction industry," he said.
"An October reading of 35.8 remains very weak. But at least the pace of contraction has eased.
"Signs of a recovery in residential construction are tentative to date and have generally been over-played. But, if we were to see a sustained improvement in key sub-indices of the Australian PCI, new orders, for example, over coming months, then that would be a key signal of a turnaround."
He noted that weakness continued in the employment subsector, with wages falling by 3.3 points to 54.7 in October.
Dr. Peter Burn, Australian Industry Group director of public policy, said that though both residential and commercial sub-sectors are still contracting, the October reading showed the decline is cooling.
"While the construction industry and particularly the commercial and residential construction sub-sectors are still contracting, the Australian PCI took a turn for the better in October with a cooling in the pace of decline.
"This was most noticeable in the long-suffering house building sub-sector where a combination of lower interest rates and a shift in the focus of new home buyer support have helped slow the pace of contraction.
"The residential and commercial sub-sectors still have a lot of recovering to do with construction activity, new orders and employment all remaining in the red," Dr Burn said.
CAN the Australian housing market recover as it has in the past or is it different this time?
Ask any foreign money manager what scares them about Australia's stockmarket and they will invariably say the risk of a housing collapse because of gross overvaluations. It makes a lot of sense. Virtually all the Western world has seen house prices crumble since 2007 while Australia's residential market has defied gravity, recording only gentle declines. The median house price in Australia is six times the median household income - 30 per cent greater than the US and the long-term average.
Does this mean that a housing recovery in Australia is a pipe dream? Is housing going to be a handbrake in the coming years rather than the path to economic prosperity? No one has a clear answer but they will arguably be the crucial questions for stockmarket investors as we enter 2013.
The bulls like myself believe that history will repeat itself and lower interest rates will eventually trigger a building cycle that in turn will drive domestic economic growth. The bears counter this by saying it is different this time because household debt still sits at a lofty 172 per cent of gross income. They believe any spare income from lower interest rates will be used to pay down debts and not ploughed into the property market.
In the early 1990s, household debt was only about 50 per cent of gross income, providing a sturdier platform for a housing boom.
If the bears are right, the Australian economy has a real chance of falling into recession as the peak of the mining and energy boom passes. We may talk about developing new areas of growth such as education, technology, tourism and high-level manufacturing, but the reality is these are niche industries that will take many years to develop into major engines of growth.
Housing is our only realistic hope of avoiding a protracted period of substandard economic growth.
Last week, building materials group CSR said it was optimistic that a recovery in housing activity was in its nascent stages. It pointed to a spike in housing finance as a strong lead indicator for future building activity.
Housing starts in Australia have sunk to a multi-year low of about 125,000 and are predicted to spike to 140,000 in 2013 with the moribund Sydney market, surprisingly, leading the charge.
In positive news for the construction sector, 2% more homes were built in the past quarter than the previous one.
The figures released today by the Housing Industry Association show marked increases in New South Wales and Western Australia, with a smaller rise in Victoria.
In NSW new housing commencements increased by 9.5%, triggered in part by changes to government incentives, which saw NSW first homebuyers receive a $15,000 government grant.
HIA economist Geordan Murray says the overall increase was driven by the rise in NSW.
“I would be hesitant to suggest that this growth would be continued,” Murray says.
Western Australian figures rose by 23.6% for the quarter, but Murray says this was because the state was “getting back to where it should be”.
“In April and May changes in the approvals process in Western Australia caused a bottleneck in new home commencements, causing a hold up in the June quarter,” Murray says.
The Western Australian state government implemented changes in April 2012, which affected everything from the design stage to the occupation of the building.
In the December Quarter Murray says the 5000 new home approvals to date suggest a continuing strong result for the state.
Aside from the large increases in Western Australia, New South Wales and Victoria (where there was a rise of 2.9%), the other states recorded drops.
Most notable was Queensland, where new home developments fell by 14.2%.
Here comes the Sydney construction boom I've been talking about for the past few years...
8th August... 2011?
Your an utter failure shadow. go put your tail between your legs and cringe in the corner.
Negative gearing is a form of leveraged speculation in which a speculator borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan
A negative gearing strategy can only make a profit if the asset rises so much in price that the capital gain is more than the sum of the ongoing losses over the life of the speculation. http://en.wikipedia.org/wiki/Negative_gearing
Definition of a doom and gloomer from 1993 The last camp is made up of the doom-and-gloomers. Their slogan is "it's the end of the world as we know it". Right now they are convinced that debt is the evil responsible for all our economic woes and must be eliminated at all cost. Many doom-and-gloomers believe that unprecedented debt levels mean that we are on the precipice of a worse crisis than the Great Depression. The doom-and-gloomers hang on the latest series of negative economic data.
In positive news for the construction sector, 2% more homes were built in the past quarter than the previous one.
Looks like it has finally arrived, 16 months after you called it. Now we can debate the meaning of 'nearly' and 'boom'.
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. H. L. Mencken
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