Westpac chief executive Anthony Miller told MPs that each dollar spent on construction was producing fewer homes, with higher building costs and slow approvals squeezing builders' margins and pushing investment toward higher-priced housing rather than affordable stock. Miller said the economic incentive structure was directing developers toward smaller numbers of expensive dwellings with higher margins rather than larger numbers of affordable ones.
A Westpac survey found 41% of Australians view the current moment as a poor time to purchase a first home, while 47% regard it as a poor time to sell. Despite those concerns, 79% of first home buyers reported feeling more motivated to purchase than a year earlier, and 55% planned to make some kind of housing change within the next year. Three quarters of respondents said they were waiting for prices to fall further before buying, and 73% said they were delaying until interest rates stabilised.
Among factors shaping property decisions, housing affordability ranked first at 40%, followed by interest rate uncertainty at 32% and falling property prices at 30%. 31% of Australians surveyed said there were either not enough properties available or that those on the market did not suit their needs. The Westpac Home Ownership Report surveyed 1,165 Australians aged 18 and over between 18 and 28 September, with results weighted to ABS population estimates.
Westpac said mortgage application volumes fell around 5% from pre-budget levels but rose 15% from a low point in July. Carolyn McCann, Westpac chief executive for consumer, said the market mood was one of concern rather than crisis, with people trying to make sense of conflicting signals on rates, prices, cost of living and the broader economy. She said recent house price falls would be welcomed by first home buyers seeking to enter the market, but that affordability and availability remain a major long-term challenge.
Miller told the inquiry that governments need to do more to stimulate new building investment, lift supply and improve affordability. He said adding resources to the demand side alone would not resolve the problem, and that governments still need to address the risks that push costs onto developers so that construction economics can support more affordable housing. Westpac said the negative gearing carve-out for new builds had produced some improvement in investor interest but not at the speed or scale the bank would want to see.
Investor home loans fell by a recorded 30.6% in the year to September, which was described as a record annual decline. Labor characterised the decline as a positive outcome for first home buyers because it indicated speculative investors were leaving the market faster than owner-occupiers, and pointed to an increase in the share of investor loans directed at new builds, which rose from 17% to 28% between the March and September quarters.
81% of Australians in the survey said they believe property ownership is the best way to accumulate wealth. Buyers who are adjusting their strategies in a shifting market may find scope to make lower offers, revise deposit targets or look at suburbs previously outside their budget, according to the survey findings.
Official statements: Westpac
Reporting: Yahoo Finance
Written by Pick & Scroll News from the reporting and documents linked above.
