Today, the Federal Government released the Economic and Fiscal Update. This document provides us with a better understanding of the impacts of COVID-19 and the economic outlook, albeit through a murky lens.
The update shows that the Federal Government have done a commendable job in their recovery efforts for the national economy and in providing for the health and safety of Australians, however much more will need to be done. The Federal HomeBuilder scheme has had little impact in NSW with fewer than 1000 greenfield lots available and eligible in Greater Sydney and very limited application even in the Hunter, Central Coast and Illawarra regions.
The uncertainty around the future of the property industry has made developers increasingly concerned about the economic outlook. UDIA NSW want to see State Government stepping up to the plate to provide our industry with real support and stimulus for the residential development sector.
To date, the State government has been focused on the short-term COVID fixes and enabling measures for planning. However, there has been no sustained economic stimulus for the residential sector throughout COVID-19. Only five residential projects have arisen from the NSW Government’s accelerated planning system, out of 48 total fast-tracked major projects over four tranches.
The latest DPIE data shows that we are at the lowest levels since September 2013. There were only 33,000 approvals in Greater Sydney over the year to May 2020. The apartments sector is at serious risk in Greater Sydney. Apartment approvals have dropped 64% since the peak in September 2016, four years ago. This points to the challenges facing the apartment sector, which needs further support.
UDIA NSW will be continuing advocacy for a stimulus package that will provide a housing-led economic bounce back. Our industry employs a quarter of the State, with every new home creating at least 9 new jobs. We are optimistic that the newly formed Planning Delivery Unit will be able to further their efforts to restocking the dwelling supply pipeline in Greater Sydney and our regional cities. As an industry deemed essential to the economy we don’t want to see another short-term “sugar hit”, instead we are calling for a full commitment to our industry to power sustained economic recovery in NSW.
The key stats and figures from the Federal Economic and Fiscal Update are:
- The economic support package for workers, households and businesses is estimated at $289 billion or the equivalent of 14.6% of GDP.
- The underlying cash balance is forecast to decrease from balance in 2018-19 to a $85.8 billion deficit in 2019-20 and a $184.5 billion deficit in 2020-21.
- Debt levels have increased significantly as a result of the COVID-19 pandemic, however Australia continues to have a low level of debt-to-GDP compared to other countries. Net debt is expected to be $488.2 billion (24.6% of GDP) at 30 June 2020 and increase to $677.1 billion (35.7% of GDP) at 30 June 2021.
- On a calendar-year basis, real GDP is predicted to grow by 2.5% in 2021, after a fall of 3.75% in 2020.
- As a result of the pandemic around 709,000 jobs were lost across the country in the June quarter.
- The unemployment rate is forecast to peak at around 9.25 % in the December quarter although labour market conditions are expected to strengthen beyond 2020.