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A move to increase housing supply to curb spiralling prices has met with tacit approval from brokers.
In recent weeks debate has raged on the best way to cool the market; one school of thought being meddling with lending rules, the other – espoused by building and real estate associations – to simply increase the supply of homes.
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Outsource Financial CEO Tanya Sale said that more homes should be welcomed by brokers, but the industry shouldn’t get too excited.
“It all comes down to supply and demand,” she said.
“There’s no use building lots of homes in outer suburbs when there’s more demand in areas close to the city.”
Ms Sale said that building more homes would only lead to more business if they are sold.
“You can have as much supply as you want, but if they can’t be sold, where is the demand?” she said.
Western Sydney is one area where demand and construction is high. Local franchisee, Maria Zappia from Mortgage Choice Blacktown, said that an increase in housing availability would translate to good news for brokers because of the many people that are pre-approved for property.
“It would help our clients to move forward and secure their property, which is what it’s all about,” she said.
“The problem I’m seeing is affordability more than anything else, but with more construction, it might make it more affordable for people to buy.”
A concern for brokers would be cheaper homes resulting in smaller loans; however, Ms Zappia agreed that smaller volumes could be countered by an increase in mortgages written.
“I would rather write two or three smaller loans than my client not buying because they can’t afford it,” she said.
“If the loan is not settled, it’s no use to me or the client.”
The debate surrounding more affordable housing in Australia, particularly in Sydney and Melbourne, has stepped up following the Housing Industry Association’s recent submission to the Financial System Inquiry that new homebuilding has not been sufficient to meet population growth.
According to the association’s submission, Australia needs to build 186,400 homes per year but has only averaged 158,000 over the past decade.
However, Aussie Cranbourne franchisee Michael Spalding has warned that new homebuilding may not be music to brokers’ ears.
“I operate in an area which is rife with new home construction, and I haven’t noticed a boost in business,” he said.
“There seems to be a lot of building going on, but I have no idea where people are getting the money from to buy.”
[Related: HIA says fewer taxes would mean more homebuilding]
