Record levels of home building to continue
“NEW HOME building activity in Australia remains at elevated levels,” HIA’s Senior Economist Shane Garrett told the HIA’s Industry Outlook Forum in Canberra.
“Solid population growth, very low interest rates and consistent gains in employment do mask some concerning trends with respect to underemployment and decelerating GDP growth. Combined with another layer of obstacles to foreign investor participation in the housing market, new home building volumes are set to move downwards over the next couple of years.
“Having achieved record levels early in 2016 new home building starts are clearly in a downward cycle.
“This down-cycle is unique because we expect that the bottom of this current cycle will be in 2019 when building activity will still be higher than at the peak of the previous boom in 2010.
“The peak of activity in 2015/16 dwarfed all previous peaks and has resulted in a significant backlog of work which will ensure that the industry is busy through 2017 and into 2018,” Mr Garrett said.
“The housing boom was not consistent across Australia and now, with NSW and Victoria cooling, all indicators are that the market is well past its 2016 peak when over 231,000 new homes were commenced.
“Even though new dwelling starts will decline over the next couple of years, the annual volume of new home starts is not likely to fall below 170,000 at any stage. By any standard, this is still a very elevated level of activity.
“The investor side of the market has also been hit by tighter lending finance due to APRA’s recent restrictions on interest-only mortgages,” he said.
HIA’s Housing Outlook Report estimates that 221,500 new dwellings were started in 2016/17, a decline of 4.5 per cent compared with the previous year. A further reduction of 10.7 per cent is forecast for 2017/18 before new home starts reach a trough of 176,670 during 2018/19.
“The multi-unit side of the market is expected to drive the downturn in residential building, with commencements on this side of the market projected to fall by 41 per cent from peak to trough,” said Mr Garrett.
HIA's National and State Outlooks are Australia's most comprehensive housing report card, encompassing forecasts of new dwelling construction volumes and renovations activity. The report also includes policy updates, analysis of global and domestic economic issues, as well as dedicated state and territory housing databases. For further information or for copies of the publication (media only) please contact: Kirsten Lewis on firstname.lastname@example.org