Study predicts new homes slump to hold back GDP
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.