Housing figures; Point Nepean

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Review Of the Commonwealth Government Securities Market
October 30, 2002
Environment, Victorian election
November 5, 2002
Review Of the Commonwealth Government Securities Market
October 30, 2002
Environment, Victorian election
November 5, 2002

Housing figures; Point Nepean



Dunkley FEC Lunch


Thursday, 31 October 2002


SUBJECTS: Housing figures; Point Nepean


I just need to ask you a question about housing starts. I gather that the figures

for August reversed the trend of the previous month pretty significantly. What

do you think is going on there?


Well, the September figures show a decline in building approvals, particularly

in the medium density housing units. This is not unexpected. There has been

a great deal of supply and there have been reports that oversupply has now taken

hold in the market – as you would expect – with oversupply approvals for new

constructions coming off. We have been saying for some time now that you would

get a mismatch between supply and demand. It looks as if supply is now coming

off to meet demand. Not wholly unexpected and probably you are seeing a correction

in the market.


So what is the next step? Is the bubble going to burst?


Well, you actually, where you have more construction going on than the number

of people to rent it is actually a good thing to see a decline in approvals

because what it is showing you is that the supply of new dwellings is coming

back to meet the demand and you are not having this mismatch between oversupply

and under-demand.


Expect to see some further corrections in the next few months?


Well, we have been saying that there, for some time now, that there would be

corrections, we are not surprised that it has happened. If that means that people

aren’t building units particularly, that there isn’t the demand for it, it is

probably a wise decision and it is probably a correction in the market that

had to occur.


And the big change around was flats and units, I think from 60 to 30 back…


Medium density housing fell about 30 per cent in terms of approvals for the

month. And this is not surprising because you can see even in Melbourne the

huge numbers of high rise flat construction that has been going on. We have

been warning for some time that there would not be the demand for continuing

construction at that rate. Construction is coming back, that is what you would

expect, supply will come back to meet the demand. And this is probably something

has been overdue in the market.


So just a correction, nothing, no harbinger of anything?


A correction.


Thank you.


Do you want to ask any questions?


Yes, I would love to. In regards to the Point Nepean sale, or the disposal

of that site, it has recently been revealed that the Federal Government did

offer it to the Bracks Government for free as a State asset. However, it was

declined on the basis that clearing out the ordinances and the land, and cleaning

up asbestos would far too expensive. How do you feel the Federal Government

should approach cleaning out those things before either selling it or giving

it away?


Well we have always indicated that the bulk of Point Nepean can and should

be retained as a national park. We have actually offered that to the State Government.

Now, if there is a clean up cost somebody is going to have to meet the clean

up cost. It may be that by utilising a small area, which currently is not part

of the park, can raise the funds for the clean up of the majority of the area.

That may be one alternative. But the Defence Minister and the Parliamentary

Secretary, Fran Bailey, are consulting on that at the moment. The Commonwealth

stands ready to offer that land as a park, it would be a great park, and we

hope that the State Government changes its position.