Study pre­dicts new homes slump to hold back GDP

Townsville Bulletin - - NEWS - PAUL GILDER

AUS­TRALIA’S over- re­liance on home­build­ing as a ma­jor growth en­gine will be put to the test, econ­o­mists say, with the res­i­den­tial con­struc­tion mar­ket lurch­ing to­wards its sharpest slide in 16 years.

The num­ber of homes be­ing built is fore­cast to fall 31 per cent dur­ing the three years to 2019- 20, ac­cord­ing to a re­port from in­dus­try re­searcher BIS Ox­ford Eco­nom­ics.

Its prog­no­sis is even worse for high- den­sity apart­ments, where BIS ex­pects the de­cline to be closer to 50 per cent.

The pull­back will see the num­ber of new res­i­den­tial starts slide from 233,600 at present to about 160,200, BIS says in the re­port to be re­leased to­day.

That would rate as the heav­i­est drop since the in­tro­duc­tion of the GST in 2000.

BIS also pre­dicts the value of all new builds – in­clud­ing com­mer­cial prop­erty – will slide from about $ 107.2 bil­lion at present to $ 88.9 bil­lion by June 2020.

That is the low­est com­bined level since June 2013, just as the prop­erty mar­ket was start­ing to take off.

BIS as­so­ciate di­rec­tor Adri- an Hart said the de­cline would present a huge chal­lenge to the Fed­eral Bud­get and Re­serve Bank’s pre­dic­tions of gross do­mes­tic prod­uct growth in ex­cess of 3 per cent.

BIS pre­dicts the value of new builds in that mar­ket will slip to a eight- year low of $ 44.8 bil­lion by 2019- 20.

It com­pounds the fears of the RBA, which has warned of a rise in the num­ber of east coast apart­ments drop­ping in value.

The re­port comes as of­fi­cial fig­ures show the value of home loans of­fered to in­vestors in June was $ 33.3 bil­lion – up 0.8 per cent on the pre­vi­ous month.

The tally was boosted by a 1.6 per cent jump in the value of in­vestor loans, to $ 12.5 bil­lion, the Aus­tralian Bureau of Statis­tics fig­ures show.

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