Master Builders Speak Out
While Queensland consumers continue to face a decline in new housing affordability, Master Builders applauds the Reserve Banks (RBA) decision yesterday to keep rates on hold.
The Master Builders December 2007 Quarterly Housing Cost Index reveals that new home affordability continues to decline as household incomes struggle against progressively higher construction and labour costs, rising land prices, government taxes and higher property and rental prices.
Master Builders Director Housing Darren Barlow says the RBA?s decision to increase interest rates over the last 12 months in order to soften consumer demand and reduce inflation appears to be working.
"There has been a significant reduction in dwelling approvals in Queensland, with new home approvals falling by 15.7% in seasonally adjusted terms during March 2008.
"In Queensland housing stock is already mismatched, with underlying demand outstripping supply.
"Unfortunately, as a result, this fall in dwelling approvals may further increase the cost of housing, both in terms of rental or home ownership costs, which will in turn negatively impact on housing affordability.
"The RBA?s decision to keep interest rates on hold and await further economic indicators is a sensible one that will hopefully take some pressure off home owners who are already struggling.
"Government recently added to that struggle, with the implementation of a new payroll tax that is expected to increase the cost of building a new home by a further $3,391 per home."
The Master Builders affordability model is based on the ratio of the total cost of building to average weekly earnings.
The model uses the cost of building a single story, four bedroom brick home with a double garage, formal dining area and family room in Brisbane’s south-east region.
"According to the Housing Cost Index, the cost of building a new home has increased over the last 12 months by $17,072, which represents a 6.77 percent increase," says Barlow.
"In short, this means that with increasing land, housing and building costs severe pressure is being placed on households and negatively affecting housing affordability in Queensland."
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