Relief is needed as construction costs continue to mount

THE Commonwealth and State Governments need to respond immediately to the impacts of the supply shock that is smashing the nation’s development and construction sector.

This is view of property advocacy group Urban Taskforce.

Tom Forrest, CEO of Urban Taskforce, said the recent Australian Bureau Of Statistics data on new dwelling commencements and completions until December 2025 show some promising signs across the nation in terms of new build commencements.

“However, seeing this translate into completed new homes is now at risk,” Forrest said.

“Almost every line item involved with the delivery of new housing has spiked since the
Middle East crisis began.

“Developers, quantity surveyors and cost estimators are all reporting a spike in construction costs of between 10 and 15 per cent since the start of the year.

“The feasibility of delivering housing was already holding new supply back. The impact of the war in Iran and the shock jump in diesel prices will cripple supply.

“The news in December was promising. Since then, project feasibility has turned to custard. Urgent relief needs to be rolled out in terms of suspending the fees, taxes and charges placed on new housing.

“Measures that may have been scheduled for announcement in upcoming Budgets must be brought forward and implemented right now.”

Forrest said the Commonwealth needs to invest in infrastructure to address the housing supply crisis.

“It should use the impact of the war in Iran as an opportunity to do better, not an excuse for giving up on housing supply.

“The news in NSW is also one of improvement – but to see that translate into new homes, we must see urgent government action similar to the urgency showed by the former NSW Government at the start of the pandemic in early 2020.”

Urban Taskforce is already calling for NSW premier Chris Minns and treasurer Daniel Mookhey to urgently review the various fees, taxes and other charges placed on new housing supply in order to boost project feasibility.

“The war in Iran threatens to make the housing supply crisis even worse,” Forrest said.

“Deferring charges like the Housing and Productivity Contribution and local government infrastructure contributions to the time where homes are ready to be occupied will reduce pressure on the financing of projects.

“If the Government is serious about housing supply, it needs to show this by cutting or deferring the fees, taxes and charges that add so much to the cost of new housing supply.

“Equally, the NSW Government needs to consider suspending affordable housing taxes and water infrastructure development charges. This cannot wait until the NSW Budget is handed down in June.”