Construction industry lacks funding

16th Apr 2010

Queensland's housing supply levels are forecast to fall well short of demand in coming years as a lack of construction funding continues to cripple the industry new figures show.

While the Australian economy rebounds from the financial crisis, Queensland, particularly its construction industry, continues to struggle - tight funding conditions in place for the last 18 months have hardly improved.

Brisbane-based THG's urban economist Richard Katter said the continued lack of construction finance would have a detrimental effect on supply figures.

Mr Katter found that as a proportion of gross state product, approved construction finance in Queensland fell deeper than in NSW and Victoria.

Construction finance approved in Queensland from 2007-09 fell 57 per cent and in Victoria 22 per cent, according to Mr Katter's analysis.

"As a result we can expect Queensland's housing affordability crisis to worsen as supply continues to be unable to keep up with demand." he said.

"Queensland's extended planning timelines, excessive infrastructure charges and anti-development legislation are also making developing property increasingly difficult."

One of the biggest factors was Suncorp's $12 billion withdrawal from construction finance space, which represented 25 - 35 per cent if the state's development funding market. He estimated that Suncorp's departure had contracted the sector by a third.

"The void left by Suncorp is yet to be filled," he said.

In its Housing to 2020 report last week, the housing Industry Association said Queensland has an aggregate housing shortage of 800 dwellings, and that 471,000 dwellings would be needed in the next 10 years.

HIA Queensland president Warwick Temby said the shortage would only worsen without a plan from the government to release well-located, affordable land.

"Planning restrictions, higher taxation on new housing relative to existing dwellings, labour shortages, and onerous regulation on new housing all add to the problem and constrain growth in new home construction," Mr Temby said.

Article Source : http://www.afr.com