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Melbourne, Vic 3000
Australia
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News & Editorials
Every week Central Equity writes a number
of news editorials which appear in Melbourne newspapers. This weeks article is posted below.
Click here
to access our archive of news editorials
8/06/01
Laying down the Budget: Costello points to solid growth in the domestic housing and construction industries
The Federal Government has just unveiled its latest Budget for 2001
and forecasts a return to strong economic growth in the second half
of 2001-02, underpinned by an upswing in housing activity in the building
and construction sector.
Extract from the Treasurer’s Budget Speech (22/5/01). The Treasurer,
Mr Peter Costello, said:
“We think that the fundamentals of the Australian economy are
sound. We’ve got a good Budget position, a good debt position
– we’ve got a low interest rate regime and a competitive
tax system.
We’ve had a transitional effect in relation to housing, which
I believe in the orders to come will power growth….”
At a recent Post Budget Lunch in Melbourne, which was attended by
leading business groups from around Australia including leading inner
city residential developer Central Equity Limited, Costello pointed
to the expectation of a solid economic recovery, defending the Budget
forecast for GPD growth of 3.25 per cent in 2001-02 as eminently “achievable”.
According to the Howard Government’s 2001 Budget forecasts, Australia’s
housing and construction industries are expected to show strength
in 2001-02, fuelled by lower interest rates, increased home affordability
and the increased First Home Owners' Scheme. Specifically, there are
a number of key factors that will underpin activity turnaround for
2001-02:
- Economic growth is expected
to rebound to 31û4 % in 2001-02.
- Inflation will continue to
be held down – around 2%.
- Lower interest rates making
Home Mortgage Loans more affordable for Australians.
- The more generous First Home
Owners Scheme (increased from $7,000 to $14,000 for new homes) will
help kick-start the building industry, creating more jobs.
- Employment growth is expected
to strengthen in the second half of the year and unemployment is expected
to remain around 7%.
- Exports will continue to build
Australia’s economy, with solid growth expected throughout 2001-02.
- The current account deficit
is expected to be around its lowest level for the last decade as a
percentage of GDP.
-Source: Budget Overview 2001-02
In Victoria, the Federal Budget forecasts only confirm the state’s
strong economic position. Last year, Victoria’s building industry
defied the national downturn to post almost record activity. Australian
Bureau of Statistics figures showed that for the year 2000, the value
of building approvals in Victoria rose 10.2 per cent. Housing Industry
Association figures also show that new home sales in Victoria accounted
for 30% of sales across Australia.
Figures released by the Building Control Commission further suggests
the Victorian building sector is buoyant – building activity
from July to December 2000, compared with the corresponding period
in 1999, was 6 per cent higher in residential, 10 per cent higher
in commercial, and 19 per cent higher in retail. The value of building
work in Victoria last December totalled $685.5 million, based on 6491
permits. This consisted of:
- $385.3 million on new houses
- $93 million on residential
dwellings (apartments, guest-houses)
- $86.8 million on commercial
offices
- $44.4 million on retail building
- $35.9 million on public buildings
- $19.6 million on factories,
and
- $20.5 million on hospitals
and health.
In the residential (non-house) building category, in particular, the
Building Control Commission’s figures show Inner Melbourne being
the focus of an apartment and housing boom. Melbourne’s inner-city
apartment boom in the Central Business District includes Southbank,
Docklands and South Melbourne, outranking other outer suburban municipalities.
Leading inner city residential developer Central Equity Limited recently
released its newest apartment project “Southpoint” at 22
Kavanagh Street in the prestigious Southbank precinct, boasting a
31-level tower to house a wide range of 1, 2 and 3 bedroom and penthouse
apartments. Apartments are being pre-sold off-the-plan at “Southpoint”,
and the developer reports they have been busy trying to keep up with
the huge demand. Central Equity has completed approximately 70% of
the total residential development in Southbank and Melbourne Inner
City Management, Central Equity’s wholly owned subsidiary, reports
that Southbank is booming with very buoyant rental demand.
According to a recent government media release The Victorian Treasurer,
Mr John Brumby, said: “This is good news for Victoria. At a time
of a slowing national economy these are the latest in a series of
good figures for Victoria that show that we are well positioned and
going forward. The rise in new home sales is a sign of the continued
confidence in the Victorian economy under the Bracks Government.”
Underpinning the handing down of the 2001 Federal Budget by the Treasurer,
Mr Peter Costello, for the property market and leading developers
such as Central Equity, this brings welcomed news. As the Australian
economy continues to show strength, investing in real estate becomes
an appealing proposition for prospective buyers, in particular new
Melbourne inner city apartments.
Disclaimer: Central Equity and its subsidiaries (including Melbourne
Inner City Management) are in the business of building and selling
accommodation, including apartments, in Melbourne. Readers should
obtain their own independent financial and legal advice.
Click
here
for the archive of Central Equity editorials
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