On the 1st May 2008, ABC Radio's PM program had a story about the latest slump in building approvals.
http://www.abc.net.au/pm/content/2008/s2233081.htm
Negative building figures continue
PM - Thursday, 1 May , 2008 18:14:00
JASON ANDERSON: This is a shocking situation and one that unfortunately by the time the real depth of the impact in terms of lower middle income households becomes apparent, it's going to take two or three years even if we get some policy response.
You know we put a lot of emphasis in terms of the contributions, say the infrastructure investment to the economy, but there's scant attention payed to housing which unless we start to address that, we will run into a position where it's going to start having negative feedbacks in terms of what we can sustain in terms of employment growth.
We know that a large proportion of our employment growth at the moment is being sustained by rising overseas migration and that's adding very substantially to rental demand. But we're at a point where we've almost exhausted the existing stock.
Unless we get some very substantial improvement in terms of the rate of supply, this is going to have feedback effects on the potential employment growth not in the next year or two but over the next five years.
Jason Anderson is an economic forecaster specializing in the building industry. He has come out openly to say that employment growth is being sustained by the increase in overseas immigration. Interestingly the way I interpret his remarks is that he has described the situation as a pyramid scheme that needs increasing growth to sustain itself. But we may have now may have reached the point where a combination of high interest rates, massive debt burdens, the credit crunch and past population growth may have ended the virtuous cycle of growth and could instead reverse itself without drastic action, and surprise surprise, Kevin Rudd has chimed in from the same song book:
from:
http://www.news.com.au/business/money/story/0,25479,23634094-5013951,00.html
PRIME Minister Kevin Rudd says Australia needs one million new homes over the next six years to keep up with estimated population growth.
Mr Rudd spoke today at a Housing Industry Association (HIA) conference, where he also released a paper detailing his Government's new rental affordability scheme.
"Based on these numbers from the HIA, over the next six years or so this country is going to have to build an additional one million new homes,'' Mr Rudd said.
"It won't solve housing affordability, but it will make something of a difference.''
Mr Rudd said Australia was in a housing deficit which had led to rising house prices and an increasingly tight rental market.
"In the last 12 years, the median house price in Australia has risen by 200 per cent,'' he said.
"Home ownership for many these days is as much stress as it is security.''
Mr Rudd released the National Rental Affordability Scheme (NRAS) technical discussion paper, which is now available for public comment.
The scheme offers payment or tax offsets to property owners who lease out new homes at 20 per cent below market rates.
It only applies to new properties, to encourage the construction of new and cheaper homes for rent.
Participating landlords would receive a $6000 federal grant or tax offset plus a $2,000 State Government contribution every year for 10 years.
The paper says the scheme would aim to provide funding for 50,000 homes between now and June 2012.
so far the government has not offered anything beyond tinkering at the edges to increase supply and will continue to pump the demand side with increases in the skilled immigration program.
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