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Australia’s most populated state could face an ongoing housing crisis unless empty government promises become deep commitments, according to the state’s peak real estate executive.
Tim McKibbin, chief executive officer at the Real Estate Institute of NSW (REINSW), explained that “the problem we have is supply of property.”
“We don’t have enough property for those aspiring to be owner-occupiers or similarly, those people looking for a rental property,” he said.
On a recent episode of Secrets of the Top 100 Agents, Mr McKibbin explained the state’s desperate need for 42,000 new dwellings built per year to cure its current supply before revealing that “we’re building less than half of that.”
“Year on year, the problem is getting bigger, and year on year, the queues down the street to acquire the available property are getting longer.”
While describing the Albanese government’s pledge, announced by Treasurer Jim Chalmers last October, to “build one million new, well-located homes over five years from 2024,” as “great,” Mr McKibbin identified holes hiding within the initiative.
“Building a million properties over the next [few] years is great, but they’re not talking about an additional million properties,” he said. “As I understand, they’re talking about a million properties that are going to be built by developers anyway.”
“That sounds great, but I think in many respects [the federal government] is just taking the credit for building activity that would’ve taken place anyway,” he declared.
The REINSW CEO joins a number of industry voices who questioned the federal government’s supply ambitions, including CoreLogic’s head of Australian research, Eliza Owen, who at the time posited whether the Accord’s one million homes target could be considered “below target.”
He believes a failure to introduce more stock to the residential property market will exacerbate existing problems born from present supply shortfalls, such as the state’s rental crisis.
According to REINSW data, NSW’s vacancy rate hit a 13-year low in March (1.3 per cent), while CoreLogic found the state capital, Sydney, ended 2022 as the state’s second most expensive rental market, with median rents of $679.
Add to this, the return of 50,000 Chinese students and increased migration following the reopening of national borders at the end of the pandemic, which saw the state report a net population increase of 62,210 in the 2021–22 financial year, according to the Australian Bureau of Statistics.
Mr McKibbin insisted these factors highlight “insufficient supply [while] demand is continuing to grow.”
He criticised local councils for driving the housing crisis, particularly with their lagged approval times, which he revealed results in it taking “longer to get your development application process [and] get it through council than it takes to build the property.”
NSW Department of Planning data indicates the average time for councils in the state to determine a DA last month was 116 days, with Liverpool City Council’s 296-day average determination period being the largest in the state.
In Mr McKibbin’s eyes, there needs to be incentivisation for local councils from both state and federal governments to streamline the process and quicken the pace of such decisions are made.
He also criticised government taxes on property, which can be as much as 40 per cent of the purchase price.
“If you buy a property for $1 million, $400,000 of that is government taxes and charges. $400,000! The government can’t talk about affordability being one of their key goals if they’re inflating the price by $400,000, by 40 per cent,” he declared.
High taxation on property “flows through the market to the second and third sales of the same property,” he said.
“Everything that is circulating in the market right now are simply symptoms of that [supply] problem,” he concluded.
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