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Thursday, 15 December 2016

Some LGAs more equal than others

Uneven growth

At $6.2 trillion, Australia's dwelling stock is now worth more than 3.7 times annual GDP - if measuring a stock versus a flow means anything worthwhile, that is.

Of course, it's well known that dwelling price growth has been uneven in Australia, with Sydney and Melbourne leading the way over the last four years. 

And economic growth has been unevenly spread too, with contributions to growth being generated overwhelmingly by Sydney and Melbourne this year and last.

In fact, Australia's capital cities have seen house prices rise at a faster rate than their respective regions in every state except for Queensland since 2003 (as you can see in the chart below, Brisbane experienced quite a lull after flooding in the city). 

If you drag the data back to before 2000 the gap becomes even more pronounced between Sydney and regional New South Wales.

Building boom

Sydney's supply response is in full swing now. 

As nicely displayed in the half yearly budget review for New South Wales, over the year to 31 October building approvals have been focused heavily on LGAs such as Parramatta and Blacktown, as well as in the Hills District, Penrith, Liverpool. Camden, Ryde, and Auburn (all of which saw more than 2500 dwellings approved for construction).

Not surprisingly, comparatively speaking very little is being built in the affluent eastern suburbs, inner west, or on the lower north shore and the desirable suburbs of the northern beaches.

Very few dwellings indeed were approved in upmarket Randwick or Waverley (east), or Mosman and Manly, for example (north). 

Out west is another matter entirely, with thousands of approvals being waved through.

NIMBYism in plain sight!

I looked at the Sydney approvals and completions figures by LGA in a bit more detail here back in August, and drew exactly the same conclusion.

The bottom line figures reported that the New South Wales budget swung into a huge surplus, revised up to $3,973 million, with four more years of surplus forecast.

Thanks to a record boom in stamp duty receipts the NSW State Government has moved into a cash positive net debt position for the first time on record.

It would not be a surprise to see stamp duty concessions offered to struggling first homebuyers.