Geelong: Teachers, nurses, shop staff affected as approvals for Home Autumn – Realestate.com.au

Repairing a distressed housing market is the key to releasing the handbrake on the regional economy of Geelong by allowing more teachers, nurses and shop workers to buy houses, said a leading urban economist.

KPMG Urban Economist Terry Rawnsley revealed home approvals in the price bracket between $ 500,000 and $ 600,000 had almost disappeared in Geelong for a period of five years.

Rising construction costs were not the only culprit, with an increase in luxury residential construction that contributed to the rising price of homes in the region between 2018-19 and 2023-24.

Mr. Rawnsley said that the annual home approvals in Geelong had fallen to around 3000 because the approvals for houses worth $ 500,000 and $ 600,000 decreased from 20 percent to only 1 percent.

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They have been overtaken by a large increase in homes worth $ 1 million and $ 1.2 million, according to KPMG analysis of ABS approval, residential balance and data from the country of residence.

Mr. Rawnsley presented the data in a business breakfast by Geelong Chamber of Commerce.

“What we have seen in the past three or four years is … A pretty big decrease in the offer that comes through,” he said.

“And the price has also shifted, so we always had about 20 percent of those approvals between $ 500,000 and $ 600,000. That entire segment has disappeared.”

The home approvals fell to almost 3000 in the financial year 2024-25, according to new data.

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Mr. Rawnsley said that while a “super cycle” in 2020-21 when the home had approved at nearly 6,000 peaks, the demand for homes with record low interest rates and stimuli such as homebuilder, had approved in the 2024-25 financial year, in the 2024-25 financial year.

“You still want to keep it around 4000 or 5000 (home approvals per year) instead of this 3000 level where we are stuck,” he said.

The growth areas of the region such as Armstrong Creek supplied the most affordable housing stock that was perfect for buyers from the first house or the rental market.

“But only with the construction prices that rise like this does it push it into the next price bracket.

“The construction entries have risen 30 or 40 percent, so all projects are more difficult to stack.

“At the same time, until recently, those interest rates have risen 13 times, which shrinks the purchasing power.”

The development of more affordable mansions in existing suburbs can contribute to an increased housing stock.

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But Mr. Rawnsley warned that pumping the offer would not reduce cheaper homes, but it would stop the trend of decreasing affordability.

“The horse is on that front, it is really going to prevent it from getting worse,” he said.

“Trying to work on those infrastructure costs for that northern growth gang, which means they are not too exaggerated.

“Hopefully there will be some more apartment activity in Central Geelong in the coming years, which some of those apartments can have more affordable price points.

“And also try to help the salt and pepper development of a few mansions here or there in existing suburbs for the right price.

“You have to pull different levers to try to stop this great shift to the luxury end of the market,” he said.

Increasing the apartment supply in the center of Geelong should offer more affordable homes. Photo: Brad Fleet

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Mr. Rawnsley said that more should be done to market build-to-to-to-rental or social and affordable homes, while the costs to build in the northern growth course of the city, including proposed developer contributions, must be kept under control.

State or federal governments should be involved to maintain a lid on planned developer contributions, either through direct financing or loans to guess them to deliver the crucial infrastructure in new growth areas and to maintain a lid on house prices.

Mr. Rawnsley said that Geelong’s ownership sector was important for the economic prosperity of the region and offered homes for the people who perform the important jobs.

“Without the affordable offer, it will increase the median prices. It will be more difficult for teachers, nurses, store employees to live in Geelong and it simply means that companies cannot employ more people.

“They will postpone expansion plans, the entire economy will grow slower, there will be less liveliness in the city and a handbrake to economic growth.”