MORE PRODUCTION FOR DEVELOPERS IN 2012
Written on the 8 November 2011
THE Bligh Government’s $10,000 Building Boost had little to no effect, but developers expect three times more demand for production than current levels.
Figures from the latest Prodap Report show most respondents, from more than 150 active land and housing developers operating within the Coast’s local government area, expect to complete more than 100 lots in the next 12 months.
Master Builders Queensland (MBQ) housing policy director Paul Bidwell agrees that developers think conditions will improve.
“The MBQ snapshot of industry conditions for the September quarter shows the Gold Coast residential property market is still in a very grim state,” says Bidwell.
“Our view is it will improve across the state because the fundamentals are quite positive, but they don’t expect to reach satisfactory levels by the end of the year.”
Research from Prodap shows aggregate sales of residential land and housing developments rose by 4 per cent during the September quarter of 2011. Although only two projects sold more than eight lots per month, 12 projects are expected to record sales at the same rate next year.
However, the higher production levels do not take into consideration the flow-on effects of the Gold Coast being successful in its bid to host the 2012 Commonwealth Games.
Economists predict the Reserve Bank of Australia will cut the base interest rate by 0.75 per cent in the new year. This could see comparison mortgage rates dip below 6 per cent per annum by the end of 2012.
Report author Bill Morris says the development industry will benefit from a fall in interest rates.
“House mortgages are difficult to qualify for at inflated prices and high interest rates,” says Morris.
“The Reserve Bank has been out of touch with the property market for some time, and no amount of token rebates from governments can overcome that.”
Bidwell blames the Gold Coast City Council’s planning approval process and infrastructure charges for being the biggest constraint to growth in the city’s property market.
“We have a planning system that has a long way to go before it’s efficiently responsive to market requirements,” he says.
“The process needs to be changed so that it balances competing interests and finishes in a timely way to give builders certainty.”