record building approvals, but will it last?
Earlier this month it was revealed that the country has hit a 20-year record of building approvals. According to the Australian Bureau of Statistics, October was the fifth month of consecutive approvals increases.
Western Australia did particularly well, with a 0.4 rise in October - the sixth month of increases in a row. Builders in Perth will be glad to know that the sector is expanding as the year draws to a close, pointing to a good start to 2015.
However, according to many sources, this reliance of the economy on the residential building sector may be ill-placed. Industry figures warn that, if serious action is not taken by politicians and economists to balance market forces in such a way as to encourage further growth of the industry, ordinary home buyers could take a hit.
"There has been a string of disappointing data updates to the wider economy in recent weeks, but the residential construction sector has remained fairly resilient. Policymakers should be working to ensure that the sector can continue to be a key source of strength in the wider economy as the re-balancing of domestic growth continues to take effect," said Diwa Hopkins, economist for the Housing Industry Association.
Sentiment like this is not uncommon with the government expected to undertake a review of taxation policy in 2015. Master Builders Australia (MBA) noted that the current spate of market activity needed to strengthen and continue in the new year to best serve the industry and the broader economy.
"However, some of the shine can still come off this positive outlook of policy reforms to tackle barriers to increased supply including local constrained land release, inefficient taxes and charges and council red and green tape are not implemented," said Peter Jones, chief economist of MBA.
A voice for the industry
The Real Estate Institute of Australia (REIA) has joined forces with a host of practitioners and industry representative bodies from a range of sectors, to form the Business Community for Tax Reform (BCTR).
The main goal of the BCTR is to present the views of the most influential business groups in the country to government, and weigh in on decisions made about the future of tax policy in the country.
Issues sure to be addressed are stamp duty and investing through negative gearing, which will affect all new home builders and property buyers alike.
The HIA has previously pointed out that, the impact of excessive stamp duty on first home buyers is great. This is especially the case in Western Australia, where the purchase of a median price home will see first timers spend their entire government grant on stamp duty.
The effect of these excessive imposts is far-reaching, according to Amanda Lynch, CEO of REIA, who states that the tax limits the ability of labourers and home owners to be as mobile as a modern economy demands.