From the CEO
Another month and another interest rate rise, albeit slightly less than anticipated this time around. The political debate around tax cuts, cost of living and lack of housing supply is heating up and whilst I wouldn’t gauge public sentiment solely on Letters to the Editor in The West Australian – today’s edition has a snapshot of the sheer frustration by those most impacted by lack of housing choice.
The concerning thing is, we may not have seen the worst of it yet. As fixed interest loans come to an end and repayment shock hits the hip pockets of many Australians that can least afford it, more will be forced out of home ownership into a rental market that is effectively non-existent here in Western Australia. Whilst the number of investor housing loans in Western Australia has grown substantially since 2020, the impact on supply has been negligible. So it’s a case of jumping out of the frying pan into the fire for many residents over the coming 6-12 months.
So what do we do about it? Incentivise and attract investors to WA, don’t put additional barriers in place (real or perceived) with changes to the Residential Tenancy Act, prioritise visa processing for construction workers, look at more ways to reduce the cost of living for a fixed period for those that are most in need and make sure we get a handle on a single source of truth around the real state of forward housing supply.
UDIA WA presented our progress on a national research project being piloted here in Perth on the development ready pipeline for housing supply to Ministers Carey and Saffioti earlier this week. The response was very positive and we look forward to sharing more over the coming weeks on our journey to delivering an accurate, single source of truth on just what capacity we have in the short to medium term to play our part in delivering housing choice.
UDIA WA welcomes new Executive Director, Strategy and Policy
We are pleased to announce that Sarah Macaulay will be joining the UDIA team in late October, as our new Executive Director, Strategy and Policy.
Sarah has a BSc (Hons) Environmental Science (First Class) and is a Chartered Transport Planning Professional. She has 19 years’ experience across transport, urban and development planning, road safety, and environmental and sustainability-related areas from consulting and a purpose-led member organisation in the UK and Australia.
For the past nine years, she has held various roles within the Social and Community Impact division at RAC, including in recent years as Acting General Manager, Social Impact.
At RAC, Sarah was responsible for providing strategic leadership, advice, and support to drive outcomes from RAC’s social impact activities towards a safer, sustainable and connected future for Western Australians. She led teams across public policy, demonstration projects (such as RAC’s Automated Vehicle Program, Electric Highway, and Reconnect WA initiative, as well the development of RAC’s Air Health Monitor network), organisational sustainability, and impact measurement and reporting.
In consultancy, she had key roles on masterplanning projects, detailed development assessments and development control matters, as well as the formulation of strategic transport and planning documents for local governments.
RBA lifts rates…again
On Tuesday, the Reserve Bank of Australia made the decision to increase the cash rate by another 25 basis points to 2.60 per cent. While this move was expected, it is a tough blow to many homeowners struggling to make repayments.
In a statement following the latest announcement, RBA Governor Philip Lowe said that the Board is committed to returning inflation to the 2–3 per cent range over time.
“Today’s increase in interest rates will help achieve this goal and further increases are likely to be required over the period ahead,” Mr Lowe said.
“The cash rate has been increased substantially in a short period of time. Reflecting this, the Board decided to increase the cash rate by 25 basis points this month as it assesses the outlook for inflation and economic growth in Australia.
“Today’s further increase in interest rates will help achieve a more sustainable balance of demand and supply in the Australian economy. This is necessary to bring inflation back down.
“The Board expects to increase interest rates further over the period ahead. It is closely monitoring the global economy, household spending and wage and price-setting behaviour.
“The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market,” Mr Lowe said.
Latest market data released
On Friday, UDIA WA released our latest Urban Intelligence Report to members only, outlining the most recent economic and property market information including land sales, house and land settlement data and economic trends such as building approvals and lending indicators.
The report also includes an exclusive feature article unpacking the impact of rental vacancy rate is having on supply pipelines.
UDIA members can read the full report here.
NHFIC – building material and labour cost inflation increases
The National Housing Finance and Investment Corporation (NHFIC) released data insights this week on the influences driving the recent construction cost inflation.
The research analyses the demand and supply-driven components of building material cost inflation and is based on data to 30 June 2022.
The findings of the report are in line with UDIA National’s own data, showing that building material and labour cost inflation increased at its fastest pace in nearly 50 years on the back of supply constraints over the past year – something the industry has been warning Government about for more than 18 months.
Logistical constraints on construction materials due to the pandemic have continued, resulting in the cost of plywood and steel reinforcement increasing by more than 25 per cent over the past year, and some products such as structural timber rising by more than 40 per cent.
UDIA National has advised that more onshore manufacturing for construction-related products is required to tackle this issue head-on. We are calling on the Federal Government to urgently look at manufacturing loans, grants and guarantee initiatives to support the needs of the industry.
“Direct actions such as these are needed to address product shortages into the mid- and long-term, taking pressure off existing international supply chains and building greater diversity, competitiveness and resilience,” said Maxwell Shifman, UDIA National President.
“Unless there is a boost to manufacture of construction materials, already constrained new housing will be further exacerbated, making construction even more expensive and leading to further demand-fuelled house price increases,” he added.
While UDIA welcomed the initiative from the Federal Government’s Jobs & Skills Summit to increase in the permanent Migration Program ceiling to 195,000 in 2022-23 to help ease widespread, critical workforce shortages, skilled workers for the construction industry are desperately needed and needed right now.
Australia needs to do everything possible to catch up an estimated 50,000 housing shortfall that was not built due to pandemic-related delays.
“We need to build skilled capacity quickly by drastically increasing and fast-tracking skilled visas above the 12-month average to catch up the lost productivity,” said Mr Shifman.
Read the full NHFIC report here.
Fremantle Design Week
Fremantle Design Week is a walkable design festival in the heart of Walyalup/Fremantle which will run from 14 October through to 21 October. The program includes exhibitions, talks, walking tours, open studios and a professional development symposium.
The Symposium will aim to examine city-making from different perspectives and provide practical ideas to inform a better, more sustainable future.
Find out more about Fremantle Design Week here and register for the Symposium here.
A mid-tier transport strategy for Perth
UDIA WA is supporting a consortium of 15 local governments, led by the City of Canning, in advocating for the development of a Mid-Tier Transport Strategy for Perth that complements the State Government’s METRONET network.
To that end, we are hosting an Industry Breakfast event featuring the Minister for Transport the Hon. Rita Saffioti and Manager of City Planning at the City of Canning Sergio Famiano, as they outline what a mid tier network could look like for Perth.
Ben Haddock from ARUP will join our presenters for a panel session following the presentations.
Find out more and register here.
Expand your knowledge of built form
UDIA WA is pleased to offer members the opportunity to expand their knowledge of built form development with our highly regarded and unique professional development course tailored to the local development industry.
This course, facilitated by leading industry practitioner and UDIA WA Awards head judge Danielle Davison, teaches the practical elements of residential built form development.
The course covers everything from site identification, feasibility analysis and assumptions, product design, and demographic analysis, to the delivery, titling, contracting and sales and marketing.
Real life examples, and plenty of life lessons, make this an excellent course for anybody wanting to get into medium to high density development, for those that are already in the industry wanting to grow their knowledge base, or for those that service the industry and wish to better understand a developer’s assumptions.
More information and to register here.