Victoria is at the centre of Australia’s population boom and housing construction boom, leading the way in Australia’s population expansion and residential building, a report from the Housing Industries Association (HIA) has found.
Victoria has five of the top 10 fastest growing local areas in the HIA’s Population and Residential Building Hotspots report, while Queensland comes in second with three suburbs in the top 10.
The report provides a snapshot of Australia’s fastest growing metropolitan and regional areas in the last financial year and identifies ‘hotspots’ as local areas where population growth exceeds the national rate and the value of residential building work approved is in excess of $100 million.
The country’s top local building hotspot was Whittlesea North in Victoria, where residential building work approved rose to over $484 million and the population growth rate was 18.3%, compared to national population growth rate of 2.1%.
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Victoria’s Wyndham South was second, with almost $284 million in construction and a population growth of 12.8% while Griffin-Mango Hill in Brisbane came third with almost $150 million worth of residential building work approved and a population growth rate of 12.8%.
Victoria’s surge ahead was due to cheap and accessible land and streamlined planning processes, says Chief Economist at HIA Harley Dale.
“Ten of the top 20 hotspots are located in Victoria. The main reason Victoria is succeeding is because it’s currently the strongest new home building market in Australia and if you compare it to the other three largest states – New South Wales, Queensland, and Western Australia – it is also the most affordable new home market state,” he says.
NSW was a serious underperformer in the report. Despite the state’s population having the second highest population increase in Australia, the state is seriously lagging behind the rest of Australia in the number of building approvals.
“NSW is a very expensive new home building market,” says Dale. “There are considerable problems with planning delays and land supply. These issues have been around for years.”
“Queensland has historically enjoyed relatively fast population growth and that’s evident in many of those areas that have made the hotspots list,” Dale says. “There was also a lot of building activity approved in Queensland last year. The problem is that a fairly large chunk of that is not actually constructed.”
“There are a number of reasons for that and one is that it’s simply not financially viable for the developments to go ahead,” he says.
Considering the recent economic climate in Australia, Harvey points out the results are promising. “The 2008/09 financial year was a very challenging one for Australia’s new home builders and renovators with a sharp fall in new home starts and a moderation in renovations activity,” says Dale.
“At the same time, Australia’s population was growing at a historically fast 2.1% pace. Meanwhile very low interest rates and assistance to first time buyers targeted to new homes created the conditions for a first stage housing recovery in 2009/10.”
“Hotspots across Australia’s states and territories and these areas have experienced healthy new home building and renovations activity in 2009/10,” Dale says.
Dale says the report highlighted that a considerable number of areas around Australia have the potential for a continued and strong housing recovery.
“The challenge is ensuring that the recovery actually takes place in terms of amount of construction that actually occurs – how many concrete slabs are laid and how many frames are built,” he says. “We need to see that activity on the ground.”
“As we move through 2010, it’s becoming increasingly apparent that the actual construction we are seeing is falling short of what needs to take place to get to the recovery point,” he says.
He argues that while the recovery we’ve seen so far is promising, if we don’t see these key indicators improving, growth may not continue at the same pace.
“If we don’t see them turn around soon, it would suggest that recovery we have seen in 2010 will not be sustained in 2011 and beyond. We need sustained recovery that will last more that one year,” he says.