Australia's embrace of high-rise living has short-term cost
By Wayne Cole
SYDNEY (Reuters) - Australia is enjoying a long-desired housing renaissance as a record amount of new building gets under way, and a shift in fashion toward high-rise living should lengthen its life span even if it tempers its immediate benefits.
In the past, the focus was all on detached houses which gave a concentrated burst to economic growth of 1 to 2 percentage points over 12-18 months. Apartment towers take far longer to get approved and built, spreading the gains over several years.
That's inconvenient for the Reserve Bank of Australia (RBA), which had hoped housing would be running hotter right now to help offset a cooling mining sector, and only adds to the case for it keeping interest rates at a record low of 2.5 percent for longer.
The wait has already been interminable. While the central bank began cutting rates in late 2011, it took until the start of this year for home construction to come to life.
There is no doubt a revival is finally under way. The value of home building done in the first quarter hit a four-year high of A$11.3 billion ($10.61 billion), while the number of new homes started was up 22 percent on a year earlier at a record 48,964.
Starts are running at an annual 190,000, heights not seen since 1994. The difference now is the emphasis on apartments.
”Currently, two high-rise apartments are being built for every five detached houses, which is double the historical rate," said Kim Hawtrey, associate director with BIS Shrapnel.
"In the next two years we’ll also see the recent emphasis on high-rise units continue." Continued...