Housing shortage to increase

The federal opposition says housing shortages in the near future are likely to be far higher than predicted in a new report.In a report commissioned by the federal government, the National Housing Supply Council has confirmed there is plenty of land available for development on the fringes of Australia's major cities.But it says without significant government and industry intervention the housing crisis could increase tenfold by 2028.In 2008, the housing shortfall was around 85,000 dwellings.In three years, the number was expected to reach 203,000 and hit 431,000 by 2028.The forecasts are based on recent housing development and government funding trends.But if these trends slow, the predicted shortfall could top 800,000, the report warned.The shortfalls could also be higher than the report predicts because it fails to include the impact of the global financial crisis.Opposition housing spokesman Scott Morrison said the projections are "overly optimistic"."Banks and housing groups have been forecasting an undersupply of 200,000 dwellings in the next financial year and I think that's pretty accurate," he told AAP.Mr Morrison said exorbitant state and local government charges associated with new housing development must be cut and more land released.The government should also be doing more to help the private sector rather than public housing, he said.But National Housing Supply Council chairman Owen Donald said the majority of housing demand was coming from the bottom end of the market and people from lower socioeconomic backgrounds were going to be hardest hit as rents and housing prices lift.He said there had been a significant boost to housing investment, particularly in social housing, by the Rudd government but much more was needed."The absence of a very significant industry response and a very significant response from government will actually lead to a deterioration of housing supply ... and ... affordability," Dr Donald told reporters.Housing Minister Tanya Plibersek said the bleak outlook should not be seen as a sign that the Australian dream of home ownership was no longer achievable."No, this report shows that with government action and with industry responses we can begin to close the gap between housing demand and housing supply," Ms Plibersek told reporters.Ms Plibersek said it should also send a clear message to industry."The incentive is that they want to build the sort of houses that people want to buy, that's their bread and butter."

housing sustained by first home buyers

It's only first-home buyers entering the property market that is keeping the sector afloat, the Property Council of NSW says.The housing market in Sydney's west is enjoying a mini-property boom, the latest figures from the NSW Office of State Revenue shows.The number of sold sales across all western Sydney suburbs for the three months to February soared by up to 20 per cent on last year, News Limited reported.Sales in suburbs such as Blacktown and Penrith sales are up 20 per cent. In Liverpool, Campbelltown and Fairfield they are up 12 per cent - to a six-year high.The number of contracts exchanged in the three months to February was up more than 1,100 over the same period last year.But it is only the first-home buyers that are producing the figures, the NSW Property Council says.Its executive director, Ken Morrison, says the figures point to the need for extending incentives to get buyers into the market."The rest of the market is very, very flat and falling and we saw that this week with new data out from the ABS (Australian Bureau of Statistics) on development approvals figures."So the rest of the market is extremely flat and falling."The only thing that is holding it up is this first home buyer incentive."NSW Treasurer Eric Roozendaal also attributed the sales increase to first time home buyers entering the market.He said that half the homes sold in the areas had been bought by first-home buyers, adding that more than 8,500 contracts had been exchanged in the last three months."We're seeing people take advantage of the NSW government stamp duty concessions and the first home-owners grant to move from rental accommodation into their first home," he told ABC Radio on Saturday.

well, lets see if the councils can see their way through being power wielding dictators and actually allow small developers to build and help the economy to resurrect instead of obstructing the way as they have been to date

Rate cut or not to rate cut, that is the question

The Reserve Bank's recent aggressive policy of interest rate cuts could be coming to an end this week, a prominent economic expert says. The RBA gave strong indications two weeks ago that it would be backing away from a series of drastic rate cuts that have seen four percentage points shaved off the cash rate in the past six months.While some are predicting the central bank will ease rates by as much as 1 percentage point tomorrow, others, including Macquarie Bank's interest rate strategist, Rory Robertson, think it could leave rates on hold. "I think this week's policy decision probably boils down to a choice between a 50-basis-point cut or a policy pause," he told AM. "The Reserve Bank's cut by four percentage points in the past five or six months; that's the sharpest easing in monetary policy in their history and mortgage rates in Australia now, in the 5 to 6 per cent range, are as low as they've been in 40 years. "So I think the Reserve Bank has flagged pretty clearly its inclination to think about pausing. "Whether or not it pauses tomorrow, I'm not sure. I think there is a real possibility the Reserve Bank will pause after cutting at five consecutive meetings."
Mr Robertson says he thinks Australia is heading into a recession, but he argues there may be justification for keeping some "fuel in the tank" for later interest rate cuts to stimulate the economy. He says with the second stimulus package injecting money into the bank accounts of millions of Australians from April, the Reserve Bank could afford to see whether the economy recovers without the need for further rate cuts. "The Australian economy to this point hasn't shrunk at a dramatic pace," he said. "We've cut as hard as any other central banks have cut and our policy rate is actually connected to something that matters and that's mortgage rates at least," he said. "So I think there is room for the Reserve Bank to take into account of the fact that interest rates have come down across the economy, there have been two fiscal packages, and the Australian dollar has come down a lot. "I'm not convinced that faster is better in terms of rate cuts from here. I think that's the story the Reserve Bank is in the process of telling."Don't expect a rate cut this month.