Eliza Owen (pictured above), CoreLogic’s head of research, analysed recent housing policy proposals, including the federal government’s pledge to fund infrastructure like water, sewage, and roads to support new developments.
By subsidising infrastructure costs, this approach aims to lower the financial burden on developers and jumpstart stalled projects.
“This effective subsidy... should help to reduce the cost burden on developers and support a kickstart of shovel-ready projects,” Owen said.
The proposed “use it or lose it” condition encourages quick construction on approved housing projects, with around 34,000 still waiting to break ground as of June 2024.
The Victorian government has announced new high-rise development zones around key metro hubs, allowing apartment complexes up to 20 stories near some stations.
However, Owen questions the feasibility: “High-density unit development... has not exactly led to prosperity and wealth creation for their owners.”
The challenge remains whether this type of supply can attract young families, as data showed that only 1.7% of one-family households live in high-rise apartments, compared to 82% in detached houses.
The Victorian government’s new 12-month stamp duty concession on off-the-plan townhouse and unit purchases may also boost demand.
Owen explained that past programs like the First Home Owners Grant and HomeBuilder had similar effects, creating surges in first-home buyer activity.
With a growing gap between house and unit prices – $313,500 in September 2024 – units may become an appealing option for younger buyers looking for affordability.
While both state and federal governments are focused on increasing housing supply, Owen warns that the success of these policies depends on their execution.
The Victorian government’s focus on high-rise development echoes the oversupply of the 2010s, which drove down prices without generating the same wealth as detached houses.
Meanwhile, the federal government’s pause on construction code updates may impact the quality of new housing.
With housing a central issue in upcoming elections, more policy announcements are likely.
Owen emphasised that governments must carefully balance supply, quality, and demand: “All levels of government need to be careful about getting that supply right if it is going to have take up from buyers.”
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
