House building on the up
THERE is still uncertainty around the outlook for residential construction but sentiment is clearly improving, according to the Housing Industry Association.
This largely reflects new residential construction at the fledgling stage of a recovery at a time when there are an unusually large number of variables influencing future demand and supply.
Heighted uncertainty notwithstanding, there is a brighter starting point for considering the residential construction outlook than earlier in the year, the HIA said.
Housing starts increased by 11 per cent in 2012-13.
This result followed two consecutive years of decline which saw commencements bottom out at their third lowest level of the last 15 years.
At the same time that commence- ments posted this first round recovery, renovations hit a 10-year low, so the recent news hasn’t been all one way.
The first round of new home recovery last financial year was narrowly driven.
Dwelling starts in New South Wales and Western Australia increased by 31 per cent in 2012-13 to deliver the lions share of the 11 per cent growth in commencements nationally. With the netting out of NSW and WA, starts increased by only 1 per cent last year. Key Points: * To date, the recovery in new dwelling commencements has been driven largely by two states – New South Wales and Western Australia.
* Prospects have brightened for a broader-based recovery to emerge, although Victoria will prove a drag on the national outcome in 2013-14.
* New dwelling commencements are forecast to hold largely steady at a little over 160,000 in the short term, before slowly recovering to around 170,000 by 2016-17.
* Meeting the future requirements of Australia’s population will require a minimum 180,000 dwelling starts per year over coming decades.
Relatively strong recoveries in activity in Queensland and SA (of 7.7 per cent and 10.5 per cent, respectively) combined with the increases in NSW and WA, are likely to be insufficient to offset the overall decline.
The net result of this contrasting activity around the key states appears set to provide around 160,500 starts in 2013-14.
Beyond 2013-14, activity levels in NSW, Victoria and WA are forecast to remain at levels comparable with those expected this financial year.
However, the recoveries i n Queensland and SA are forecast to gather momentum and drive a modest increase in dwelling starts nationally in 2014-15.
Further growth of 1.9 per cent is forecast for 2015-16 which would take starts back to a level around 164,000.
After two very weak years in 2011-12 and 2012-13, aggregate detached house starts are forecast to rise steadily over the medium term forecast horizon.
The 2011-12 year saw detached house commencements decline in all states and territories with the exception of the NT, while 2012-13 was only marginally better with five out of the eight states and territories posting declines.
In 2013-14 the HIA forecast this count to drop to three out of eight (Victoria, Tasmania and the NT).
Among the five states forecast to increase in 2013-14 Queensland is expected to be the strongest contributor, followed by WA, SA and NSW. Nationally, detached house commencements are forecast to increase by 3.7 per cent in 2013/14 ahead of a 2.2 per cent increase in 2014-15 and a 6.4 per cent gain in 2015-16.
In terms of the other dwelling segment, we anticipate healthy improvements in 2013-14 in NSW and WA, and modest improvements in Queensland and SA.
Other dwelling startrs are forecast to contract in Tasmania, the NT and the ACT, however a substantial contraction in Victoria is expected to be the determining factor in this dynamic.