Interest rates and house prices
The RBA released an interesting report on Monday outlining the relationship between interest rates and house prices entitled A Model of the Australian Housing Market. The findings, including the clear relationship identified between strength in housing prices and lower interest rates, suggest that if rates continue to fall, as Jonathan Pain predicted in his recent presentation, this may have a positive effect on house prices in WA.
The model suggests four key findings, including:
- That much of the strength in housing prices and construction over the past few years can be explained by the fall in interest rates – some of this fall reflects lower world real interest rates and some is cyclical.
- A large part of the effect of interest rates on dwelling investment (and hence real GDP) occurs through the channel of housing prices.
- The model suggests that an increase in population growth will reduce rental vacancies, boost rents and housing prices, and increase construction. This helps to explain developments following the immigration surge of the mid 2000s.
- The model is consistent with some important longer-run trends. Construction activity is approximately cointegrated (trends together) with income, although the housing stock is not. The rental yield is cointegrated with the user cost of housing. Rents tend to grow slightly faster than inflation but slower than income per capita.
UDIA is looking forward to hosting a presentation by RBA Assistant Governor Michelle Bullock next Wednesday to hear more insights on how the RBA views
More information available here.
Parliament introduces mandatory training laws for councillors
UDIA is pleased to advise that several recommendations in our submission to the state government on the local government reform agenda have been implemented.
Local government election candidates will be required to complete an online induction prior to nominating for this year’s local government elections under new legislation introduced today into State Parliament.
The Local Government Legislation Amendment Bill 2019 introduces priority reforms to better equip council members to undertake their role, and provide greater transparency and accountability to the community.
Candidates will be required to complete an online induction prior to nominating for election to ensure they are fully aware of what is involved in being an elected member and the rules around campaigning.
Following election, they will also be required to complete five modules of training within the first 12 months of being in office.
Additional reforms introduced include the requirement for a code of conduct, CEO recruitment and performance management standards, a new framework for the acceptance of gifts and improved reporting to the community.
Urban Intelligence
UDIA released our monthly Urban Intelligence report on Tuesday to all members, providing a run down on all the latest relevant economic and property data for the month of February. Some of the headline figures include that total lot sales lifted in February, 17% higher than February last year, however prices were down some 3.7% from the same time last year.
Bank lending restrictions still appear to be holding back housing demand with FHOG applications in January down 12.9% year on year, and sales in the established market also remaining subdued. These restrictions also appear to be a drag on investment housing loans, which were down some 38.2% in December despite the low rental vacancy rate of 2.9%.
UDIA WA Members can download the full report here.
Strata Titles Regulations – UDIA responds
UDIA has made a comprehensive submission to the Strata Titles Regulations Discussion Papers: Management and Seller Disclosure, Termination of Schemes, and Staged Subdivision on behalf of members. UDIA has been very supportive of the strata reform legislation package that was passed through parliament recently and we are keen to ensure the regulations provide a suitable framework for implementation.
Overall, UDIA has suggested that the regulations must seek to ensure the delivery of the State Government’s development objectives by providing an efficient strata development process, meaning we must balance safeguards for individuals with ensuring that the needs of the boarder community are met.
More specifically, UDIA made a range of recommendations, including the need to include a ‘grandfather’ clause, enabling recently completed and emerging strata development projects with sales and pre-sale commitments prior to the proclamation of the 2018 Strata Titles Amendment Act to remain governed by the existing 1985 Act.
We also suggested that, in terms of the termination of schemes and compensation required, the costs of the various requirements of the various stages of the termination process should be capped, relative to the value of the lots within the scheme. This would also help in ensuring the funding provided to owners is used effectively and efficiently.
To view our full submission download here.
Medium Density Development Panel – opportunity to participate
The Department of Communities is pleased to present the opportunity to join the Medium Density Development Panel.
Communities is creating a panel of organisations and consortia to provide integrated project management, design and construction expertise to deliver a selection of medium-density housing projects on Communities-owned land.
The Panel presents an attractive opportunity to collaborate with Communities to deliver diverse, quality medium-density infill that will accommodate residents of all ages and family types with varying needs and budgets.
Communities is conducting a single-stage procurement process with two phases to select preferred proponents to form the Panel:
Phase 1: Request for Proposal for appointment to the Panel
Phase 2: Project Allocation, Design, Feasibility, Commercial and Contract Negotiations
Project managers, builders and designers are encouraged to submit a combined integrated proposal by 2.30pm WST on Wednesday 10 April 2019.
All relevant documentation can be found on Tenders WA (Ref: HOU201901201).
Wanju and Waterloo Industrial Park district structure plans
The state government has released revised draft Wanju and Waterloo Industrial Park district structure plans, originally released in 2016 and 2017, for public comment.
The Bunbury Outer Ring Road has been realigned in both plans and additional background work has also been carried out to help inform the revised plans including a landscape vision plan, water servicing report, revised staging plan, agri-food planning analysis and a strategic bushfire hazard level assessment.
Wanju is expected to be one of the most significant urban developments in the South-West in recent times, with 20,000 new homes to accommodate 50,000 people.
The proposed Waterloo Industrial Park will deliver land for commercial, light and general industrial uses, and has been identified as a suitable agri-food processing precinct.
For more information and to comment visit here.
We value your feedback
UDIA is currently working on several submissions on behalf of members. We encourage you to forward any feedback on these items to policy@udiawa.com.au
Draft Position Statement for Tourism land uses within bushfire prone areas (here). Submissions close 20 March, 2019.
Local Government Act Review, submissions closing 31 March, 2019. More information here.
People less likely to live in couple families with kids
The Australian Bureau of Statistics (ABS) has released interesting data today in relation to household living arrangements. The major finding is in relation to the fact that Australians living in couple families with children will continue to fall over time, with analysis showing that between 1996 and 2016, the proportion of Australians living in couple families with children declined from 54 per cent to 49 per cent, and the ABS projects this to further decline to 48 per cent by 2041.
The proportion of Australians living in couple families without children increased over this period, from 19 per cent in 1996 to 21 per cent in 2016 and is projected to remain stable at 21 per cent by 2041
This data confirms anecdotal evidence that shows households are shrinking and reinforces the need to provide a diversity of housing choices to meet changing demographics.
More information available here.
2019 Built Evolution Conference
The 2019 Built Evolution Conference – ‘Taking Timber to New Heights’, will explore the emerging technology, innovation and sustainable design of multi-storey timber commercial and residential structures currently being built in Australia and overseas.
The conference is on 4 April at The program includes nationally and internationally recognised design and building professionals of mid-rise and tall timber buildings on the methods used to achieve efficient design, performance and cost savings.
This conference will interest building and design professionals including developers, architects and building designers, engineers, residential and commercial builders, government authorities, educators and suppliers. CPD points are applicable to this full day Conference.
More information here.