According to a new report, shifting labor and materials away from renovations and one-for-one replacements towards the construction of new housing can help address current housing shortages. Urban economist highlights that not enough resources are being allocated towards expanding the housing stock. The report by KPMG reveals that new private residential construction spending per capita is at its lowest level since 1987-88, while renovation spending has surged.
Shifting some labour and materials away from renovations and one-for-one replacements to construction of new housing stock can help relieve current housing shortages , the report said.Shifting some labour and materials away from renovations and one-for-one replacements to construction of new housing stock can help relieve current housing shortages , the report said.
“For every nail hammered and brick laid in residential construction, 40% of it is going into renovating a pre-existing home,” KPMG urban economist Terry Rawnsley said.“More straightforward planning processes and lower risks for builders make renovating existing homes a favoured option over adding multiple homes on the same block.”
Almost 10% of new private residential construction spending is on one-for-one replacements, KPMG found, with Victoria having the highest rate at 12.6% of new residential construction, followed by WA at 9.1%, and New South Wales at 8.7%.Between 2012 and 2019, new housing spending increased by 58%. But the departure of international workers and students in 2020-21 during the pandemic led to a per-capita investment spike of $1.9m per capita.
An analysis of NSW, Victoria, Queensland and Western Australia found that the local government area with the greatest spend on renovations was Brisbane, followed by Sydney’s northern beaches and Boroondara, in Melbourne’s east. Mornington Peninsula, south-east of Melbourne, and Stonnington, in the city’s inner south-east, made up the top five.
Housing Shortages New Construction Renovations Resource Allocation Urban Development
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