Why the decline in new residential building activity?

University of South Australia
Publication Type:
Conference Proceeding
34th AUBEA Annual Conference Proceedings, 2009, pp. 1 - 15
Issue Date:
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The phenomenon of cycles with peaks and troughs is a normal feature of a market economy and despite similar phases, each specific cycle varies in duration and intensity. In the decade to 2003 - 4 in Australia, housing prices have had a sustained growth in most capital cities but the supply of new dwellings has a downward sloping trendline. At the same time there has been a steady increase in population underlying the need for more dwellings. So why is there a decline in new residential building activity? This paper undertakes an empirical study to investigate the factors that influence the residential building cycle and how they applied to the Sydney residential market over the past 25 years. The results show that whilst real price and GDP have some influence in the fluctuation of building approvals, it is the costs of development, in particular GST and BASIX which have influenced the downward movement of residential building activity over the past few years.
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