Yes, the question is: How do increased construction costs help affordable housing? Naturally, the answer is: It Doesn’t! We know that and you’d think the Government could figure it out too………..🙄 You know, holistic policies, better planning, cheaper construction costs……..more affordable housing for everyone.

Government Fails Affordable Housing.

Another title for this newsletter could have been, “How Does the Government Shoot Itself in the Foot with Affordable Housing?” It is certainly well practiced in doing that and not only concerning affordable housing. You know, piecemeal policies, poor or no planning, ever-increasing construction costs—nobody can afford a home.

Real Estate Flow-On Effect

Increased construction industry costs have the obvious impact of increasing the price of your new home. Possibly not so obvious is the flow-on effect on the real estate industry as a whole.

For example, many small-medium developers who create a large number of detached, semi-detached and unit accommodation spend a lot of time weighing up the costs of any such development. Take into account the purchase price of the land, which may include an existing building and therein a price which has increased drastically over the past two years, within itself due to ‘Covid panic’. Add the large number of taxes at all levels of Local, State and Federal Governments, then put spiralling costs of construction on top of that and it is no wonder that a number of large developers and builders have already gone to the wall and many more small-medium development sites lie untouched.

Brisbane Rental Crisis

The flow-on effect of increased construction costs also treats the various levels of Government with disdain by reducing the cost effectiveness of much demanded “affordable housing.” Has anyone tried renting a property lately? Good luck on that front, with 20 and even 40+ groups showing up at rental open homes regardless of the rent being asked. Add to that a number of new renters who will very likely hit the market when the large number of fixed interest rate loans end in the near future and suddenly become unaffordable. Remember paragraph 2 in this one? “Bewdy! The bank said we can afford to borrow $1M so let’s get that $1M luxury place we’ve always wanted.” All those people who didn’t, “buy a house you can afford now and that you can afford when interest rates rise, or when you come off the fixed interest period”. Have a quick refresh here: But then there’s more….large numbers of international immigrants returning will also need short term property.

Poor Government Property Policy

With such issues as increasing domestic and international immigration to SEQ, the increased price of ‘pandemic crisis’ real estate and land costs of the past two years, in addition to construction and transport labour shortages together resulting in increased construction costs in general, all this means that “affordable housing” is a long way off yet. Governments at all levels need to seriously take on a concerted, coordinated, holistic approach to solving this problem, rather than their usual piecemeal efforts designed to do nothing more than get them through the next election.

Put simply, governments across the board need to start growing renewable pine forests……..“40 years ago.” (PPBA is not a fan of mass destruction of old-growth forests). Implementing sustainable, good-quality training schemes for building and transport trades, seriously reforming taxes at all levels for small-medium developments and creating sensible land release policies for new builds is sadly lacking. But don’t they already do this? In a fashion and usually one piece at a time.

A thorough overhaul of the affordable property system is what is called for.

When you need to look seriously at purchasing your property, all you need to do is to call Premier Property Buyers Australia and we will help a great deal with the affordability of your next home or investment property.

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