A touch of the cold weather blues

WITH GARETH KENT, DIRECTOR PRESTON ROWE PATERSON GEELONG

Angry, relieved? I must admit I was not surprised at all by the CFMEU report broadcast on the Nine Network last week.

There isn’t a soul in the building or property sector, or even in small business that hasn’t born witness in some form. If you think you haven’t been personally affected by their behaviour, you are wrong.

The ripple effect of paying unsustainably high wages to unskilled workers on CFMEU enterprise agreements, with 30 per cent inflated project costs, affects us all. It’s not just our tax money, it’s the competitive costs that small businesses are forced to compete with, and they have been going broke trying. The examples are there for all of us to see. Hospitality venues closing down because they cannot find staff to work at normal hospitality wages, building companies going bust because labour costs have exploded. I mean why would you work for your local employer when you get nearly double working on the tunnel, as an unskilled labourer or lollipop person? A local company (whose name I won’t reveal) services motorbikes and small engines. They lost six mechanics within a week, all went to the tunnel, and the generational business could no longer offer services. The list of affected businesses goes on. The problem is: where will these people seek employment when the music stops and the Big Build falters? The businesses that provided income for generations are gone.

I heard someone call Victoria the new Greece – a land of corruption, public debt and poor economic management. What I find quite intolerable is the state government ministers haven’t quite realised the game is up, by denying accountability and claiming they did not know. I will call it what it is – rubbish! But I did experience a huge relief that this issue is finally being exposed. We need to keep talking about it, and as a community, not let it continue.

The property market has certainly turned on the cold weather blues of late with listings numbers down 8.3 per cent in the June month. This has been largely met with a decrease in demand. The current supply is -23 per cent below average, over five years. Talk of another increase in interest rates has also had a dampening impact on buyers, and demand, keeping prices static. Unfortunately, our inflation number went the wrong way last month, up to 4 per cent from 3.6 per cent. And employment is still buoyant. We need the numbers to be a bit more depressing to get our RBA to drop the rates, which won’t happen now till next year at best.

There have still been some impressive sales over the past few weeks. Darcy Jarman Sold 402 Thompson Road, North Geelong this week for an amazing $4.5 million, or $509psm over what is essentially an infill industrial development site. This is a further confirmation that the industrial market remains strong. 170-172 Ryrie Street was also sold in July for $1.25 million. This was a great purchase, securing a 327 sqm building area with two ground-floor retail tenants and a large first floor with separate entrances. It’s indicative of where the market is at for Retail, and buyers certainly have opportunities right now. Another big sale was 97 Hendy Street, Corio, a large infill residential development site of 7.3 hectares, selling for $11.765 million, equating to approx. $180 psm. A substantial sale, but not overwhelming for a site that will provide 124 residential lots.

This leads me back to construction. Many of the major banks and industry groups are predicting a large increase in residential buildings throughout our region over the next 12 months. This comes from the announcement by Premier Jacinta Allen, for the draft housing targets for local councils, with an expectation to build 2.5 million homes by 2051. The City of Greater Geelong has been assigned the largest single target by LGA of 139,800 new homes to be added to the current housing stock. To put this in context, this will grow our lovely town by 50 per cent in 27 years, or 5,177 per year. That is the equivalent of building the township of Lara every year.

To achieve this, we are going to need some real emphasis on the release of land. Areas such as the Northern and Western Growth Areas will need to be fast-tracked and made ready for development as soon as possible, or these numbers are just fanciful. Submissions are open for public comment until August 30, so fingers crossed that this initiative leads to some activity.