WESTPAC MAY DOMINATE the Parramatta skyline, but like every bank it will face fierce competition when it comes to fuelling the surge in construction finance needed to fund the immense amount of new housing so desperately in demand, in Sydney’s western CBD, and everywhere.
The NSW Productivity Commission on Wednesday released a comprehensive study ‘Review of housing supply challenges and policy options for New South Wales’, one that, among other things, analyses the supply of credit as an element in the suite of solutions “to free up construction capacity to build more homes quickly.”
“The supply of credit will need to expand over the medium-term if developers are to deliver a substantial increase in housing” the commission noted.
Property developers “report that lenders are less willing to extend loans for site acquisition, given uncertainty over planning outcomes and timeframes.”
This is being addressed, in part, via the designation of Transport Oriented Developments, or TODs, and the dissemination by the NSW Government Architect of medium density and higher density pattern books that local councils will typically need to accept when considering development applications.
But more is happening.
Last week the Economics References Committee of the Senate announced a short, sharp tax inquiry.
With particular reference to, among many themes:
Whether capital gains tax concessions for passive investment cause a misallocation of capital into the non-productive economy which has to be offset by higher taxes on active income which drives down productivity and the velocity of money.
The velocity of money along with the volume of housing credit is the crux of the badly needed solutions to Australia’s housing crisis.
The timing is hard to predict but the consequences are not.
Five times its current book amounts to mortgage receivables of $3 trillion for Commonwealth Bank.
Last week’s Housing Now! Conference in Parramatta was the inspiration for this analysis.
Check out the Housing Now! Manifesto.