KPMG urban economist Terry Rawnsley spoke at the Geelong Chamber of Commerce Economic Breakfast at GMHBA Stadium on August 20. Picture: Alan Barber
Fixing an ailing housing market is key to releasing the handbrake on Geelong’s regional economy by allowing more teachers, nurses and retail workers to buy homes, a leading urban economist said.
KPMG urban economist Terry Rawnsley revealed dwelling approvals in the price bracket between $500,000 and $600,000 had all but disappeared in Geelong over a five-year period.
Rising construction costs wasn’t the only culprit, with an increase in luxury home building contributing to the rising price of housing overall in the region between 2018-19 and 2023-24.
Mr Rawnsley said annual dwelling approvals in Geelong had dropped to around 3000 as the approvals for homes worth between $500,000 and $600,000 dropped from 20 per cent to just 1 per cent.
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They have been overtaken by a big increase in dwellings worth between $1m and $1.2m, according to KPMG analysis of ABS building approval, housing balance and residential land data.
Mr Rawnsley presented the data at a Geelong Chamber of Commerce business breakfast.
“What we’ve seen in the past three or four years is … a pretty big drop in supply coming through,” he said.
“And the price point has shifted as well, so we used to have about 20 per cent of those approvals being between $500,000 and $600,000. That whole segment has disappeared.”
Dwelling approvals fell to almost 3000 in 2024-25 financial year, new data shows.
Mr Rawnsley said while a “super-cycle” in 2020-21 when dwelling approvals peaked at almost 6000 had drawn forward demand for housing with record low interest rates and incentives such as HomeBuilder, approvals in the 2024-25 financial year was half that amount.
“You still want to kind of keep it around 4000 or 5000 (dwelling approvals a year) rather than this 3000 level we’re stuck at,” he said.
The region’s growth areas such as Armstrong Creek delivered most of the affordable housing stock that was perfect for first-home buyers or the rental market.
“But just with construction prices going up so much, it’s push it into the next price bracket.
“Construction inputs are up 30 or 40 per cent so all the projects are harder to stack up.
“At the same time, until recently those interest rates have gone up 13 times, which sort of crimped the purchasing power.”
Developing more affordable townhouses within existing suburbs can contribute to increased housing supply.
But Mr Rawnsley warned pumping up supply wouldn’t bring back cheaper housing, but it would stop the trend of declining affordability.
“The horse has bolted on that front, it’s really about stopping it getting worse,” he said.
“Trying to work on those infrastructure charges for that northern growth corridor, making sure they’re not too excessive.
“Hopefully there’ll be a bit more apartment activity in central Geelong over the coming years, which some of those apartments can be at more affordable price points.
“And also trying to help that salt and pepper development of a couple of townhouses here or there in existing suburbs at the right price point.
“You’ve got to pull different levers to try and stop this big shift to the more luxury end of the market,” he said.
Increasing apartment supply in central Geelong should provide more affordable housing. Picture: Brad Fleet
Mr Rawnsley said more needs to be done to bring build-to-rent or social and affordable housing to market, while costs to build in the city’s northern growth corridor, including proposed developer contributions, need to be kept in check.
State or federal governments would need to get involved to keep a lid on planned developer contributions, whether through direct funding, or loans to councils them to deliver the crucial infrastructure in new growth areas and keep a lid on home prices.
Mr Rawnsley said Geelong’s property sector was important for the region’s economic prosperity, providing housing for the people filling the important jobs.
“Without that affordable supply, it will jack up the median prices. It’ll be harder for teachers, nurses, retail workers to live in Geelong and it will just mean that businesses won’t be able to employ more people.
“They’ll put off expansion plans, the whole economy will grow slower, there will be less vibrancy in the city and a handbrake to economic growth.”
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