OUTER LIMITS
On the edges of Sydney, where Australia’s biggest city sprawls across fields and market gardens, new-home demand is way up.
SYDNEY: On the edges of Sydney, where Australia’s biggest city is sprawling across paddocks and market gardens, demand for new homes is running harder than tradesmen can lay bricks.
As home prices have soared in established suburbs — values have doubled in Sydney since 2008 and nearly so in Melbourne — buyers seeking the “Australian dream” of a free-standing home and yard have flocked to the fringes where land is cheaper.
“It’s where we could afford,” said Sandeep Hehar, 28, who queued overnight with her husband to secure a plot of land in Oran Park, a new outer-Sydney suburb rising on the site of an old motor racing circuit where she hopes to build a four-bedroom home and start a family.
The construction rush driven by more people moving to the outer suburbs has helped reverse a downward trend in building approvals. House approvals touched an 18-month high of 9,929 in September, unexpectedly prolonging a boom many thought was winding down.
This frenetic activity has created a labour shortage in the industry.
“There aren’t enough bricklayers to keep up, so what builders have started doing is actually looking for other products to use rather than brick,” James Logue, housing manager at Fairmont Homes, a family-owned home builder based on Sydney’s southwestern fringe told Reuters.
“Much larger aerated concrete panels, sold by CSR Ltd under the trade name Hebel, are a common substitute, as they can be fitted to timber frames and completed much faster than building a wall from brick,’’ he said.
“Pretty much every builder here is just flat out, crazy busy.”
Demand from buyers such as Hehar propelled Sydney’s median residential lot land values to a record high of A$470,000 (US$356,680) in October.
At the same time, the extra supply of new homes has tempered once red-hot price growth to the relief of policy makers worried about a housing-bubble bust.
The roaring construction of new homes, however, is putting a floor under prices and is supporting the economy by stoking demand and jobs in the building industry.
“I think most people, including us, underestimated it,” said Jack Hoffman, general manager at Satterley Property Group, Australia’s largest privately-owned land developer, in Victoria state, where approvals to build new private homes hit a seven-year high in September.
“The population growth took people by surprise and that’s a real driver ... we’ve got strong levels of demand every time we’re releasing blocks of land.”
Forward-looking data promises even more life in the cycle yet.
Borrowing to buy finished new homes hit a 38-year peak in September. The monthly rate of building loan creation is also cantering at 6,400 — harking back to the boom-time borrowing rates of three years ago.
Private-home construction approvals rose for a seventh straight month in September, enough to turn back a downtrend in overall approvals, as some of the country’s around 230,000 annual migrants built homes for themselves.
To be sure, overall construction activity is below the heights it scaled during the boom’s 2016 peak, and many economists say the current building surge should stabilise over time.