RBA urges more high-rise amid home-building constraints
RBA governor Michele Bullock said governments were making the right moves on housing affordability but builders were still finding it “very challenging” to secure new supply.
Speaking at her second parliamentary hearing in less than a week, Ms Bullock reiterated that the housing shortage was the key issue.
“Governments appear to be making the right noises in terms of looking for ways to unlock the ability to facilitate developments, and I think high density is an important part of that,” he said in Canberra on Thursday.
“When the bank liaises with companies (construction companies), they say the process of approving a high-density development is very, very challenging, particularly in New South Wales.”
Liberal senator Andrew Bragg said Ms Bullock’s statement that governments were making the right noises was illuminating.
“I would go further than that,” he replied.
“In the case of the NSW government, they are actually making moves.”
In recent years, the NSW Labor government has increased permitted building heights around transport hubs, reduced local councils’ ability to halt projects and streamlined the state’s planning approval pathways.
But the Housing Industry Association said planning delays remained a major hurdle for builders across the country.
Almost nine in 10 builders surveyed in HIA’s Small Business Conditions Report reported approval times exceeding eight weeks, and one-third experienced delays of more than six months.
“For small businesses, time is money, and long approval processes mean higher holding costs, delayed starts and increased financial risk, reducing the number of homes that can be delivered,” HIA managing director Jocelyn Martin said. he said.
Making it easier to obtain development approvals is only one piece of the puzzle.
Ms Bullock said it had actually become harder to finish projects since the COVID-19 pandemic as the industry faced numerous restrictions.
“From what we’re hearing from our contact, that’s easing a little bit, but certainly about a year out of COVID, the time it took to get those transactions done actually got longer because you couldn’t get them, so there was a huge backlog,” he said.
Although the sector remains well behind the National Housing Deal’s target of 1.2 million new homes over five years, there are some hopeful signs.
Treasury housing group chief executive Ben Rimmer said homes were now almost one per cent cheaper to build than they were at the start of the deal in July 2024.
“The construction of houses is also accelerating,” according to Senate estimates, he said.
“There has been a 10 percent improvement in this outcome over the same period. One might think that 10 percent doesn’t sound like much.”
“This is a month behind the average construction time for single-family homes. This means the builder can move on to the next project faster and more homes can be built.”
