The Allan government is already spruiking its housing success. Here’s what the data says
By Rachel Eddie and Kieran Rooney
More than 70,000 homes have been built in Victoria since the state’s Housing Statement was released 14 months ago, the government says.
That means Labor is already falling short of its lofty target of an annual average of 80,000 – and that’s if the estimate stacks up.
Here is what the data says:
Late in September 2023, then-premier Daniel Andrews said his reform agenda would ensure 800,000 new homes were built over a decade to resolve a housing affordability crunch that the state government blames on supply.
The government later clarified that it expected construction to escalate towards the end of that decade, so future annual totals would have to exceed 80,000 to make up for early shortfalls.
Jeroen Weimar, the Department of Premier and Cabinet’s deputy secretary of housing implementation, told a parliamentary inquiry last month that an estimated 70,707 homes had been built in Victoria since late September 2023.
“The [Australian Bureau of Statistics] data does not quite match up to those timelines, but our estimate is 70,707 homes have been built across Victoria … since the statement was released,” Weimar told parliament’s public accounts and estimates committee.
The Department of Premier and Cabinet told The Age this estimate was based on the most recent 12 months of data on home completions from the ABS, which spans July 2023 – before the Housing Statement – to the end of June this year.
That adds up to 60,606 homes which, averaged per month over 14 months, tallies with the estimated 70,707 completed homes.
“So whilst there is a long way to go, there is a lot of work to do, we are seeing some very early signs that the reforms that are in place and a lot of hard work across the industry is starting to have some effect,” Weimar said.
Maxwell Shifman, chief executive of Intrapac Property and former president of the Urban Development Institute of Australia, said all those 70,000 homes would have been in train for years before the Housing Statement.
“The houses that have been completed in the last 14 months have absolutely no connection to the Housing Statement or any other recent government policy announcement,” Shifman said.
The 60,606 figure for 2023-24 is on par with the long-term average over the past five years of available data.
Other data from the ABS perhaps says more about the current residential building climate: the number of new residential projects starting construction went backwards to 52,659 in 2023-24.
Housing Industry Association economist Maurice Tapang said this was more indicative of current conditions.
After dropping 3.2 per cent in the year to September, the number of residential approvals did improve in October, based on data released last week by the ABS, bringing it on a par with the five-year average.
Tapang said approvals for detached homes were improving but the number of apartment approvals would need to double to reach the state’s target.
Worker shortages were still biting and high-interest rates softened buyer demand, hampering a developer’s ability to get finance, though forecast rate cuts next year could boost confidence.
Tapang said the state government’s 12-month incentive to wipe stamp duty for off-the-plan purchases would help at the margins but did not create structural changes.
Shifman said the Housing Statement made no material changes and the 800,000 target was absurd.
“There’s a negative chance of it actually being achieved, below zero.”
He estimated that, once attrition is accounted for, only about 40,000 properties approved this year would ultimately be built.
RPM Real Estate’s report on the greenfield market for the September quarter said sales in the growth areas of Melbourne and Geelong had increased by 1 per cent but remained 38 per cent below the 10-year average.
Urbis analysis for the Urban Development Institute of Australia in August found the pipeline of apartments in inner and middle Melbourne for 2022-27 was almost half the annual average of 2016-21.
About half had been approved but were idle without financial backing, the report said. It estimated the number of apartments in inner and middle suburbs alone would fall short of the government’s target by an average 7340 a year.
The report said the removal of stamp duty concessions in 2017 softened sales and the foreign- purchaser duty helped get first home buyers in the door but led to fewer apartments being built.
Premier Jacinta Allan followed the Housing Statement with another run of announcements in October – the 12-month stamp duty reprieve, promising 50 activity centres allowing taller buildings in the suburbs, reviewing developer contributions to local infrastructure, releasing extra greenfield land, and overhauling the Victorian Building Authority.
Linda Allison, chief executive of the Victorian division of the Urban Development Institute of Australia, welcomed the new stamp duty concession but said it relieved just “one tax of many”.
“If we want to attract more capital into Victoria, then we would really want to see some movement on the foreign investor or foreign purchaser additional duty,” Allison said.
“Industry and consumers are holding their breath for interest rate cuts. We have seen construction costs stabilise a little bit, but we’re still very much in a crisis situation.”
A government spokesman said more homes were approved and built here than in any other state.
“We know that more needs to be done because more homes mean more opportunities for young Victorians – we want to give them the same chances their parents had.
“It’s why we’re introducing bold reforms to deliver more homes near train stations in suburbs close to the city, a 10-year pipeline of land for family homes and backyards, off-the-plan tax concessions, more townhouses in the suburbs and more green spaces.”
Master Builders Victoria chief executive Michaela Lihou said the industry was heading in the right direction but growth was still slow and cautious.
“MBV welcomes the reported slight increase in building numbers over the past 14 months, but notes that consumer confidence – which is critical in seeing these numbers improve more dramatically – still remains low, with major uncertainty around interest rates.”
Liberal MP Wayne Farnham, a former builder of 30 years, said a developer in his electorate of Narracan previously sold dozens of newly subdivided lots on a weekend but was now selling about five a month.
“The figure that Jeroen Weimar released in [the public accounts and estimates committee] of 70,707 is probably the biggest load of crap,” Farnham said.
Opposition planning spokesman James Newbury said: “Labor has broken their promise to deliver 80,000 homes this year and instead of admitting it, they are making up phoney figures to cover up their failure.”
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