New home building activity in Australia is forecasted to move back a gear in this year from the record highs seen in the past 12 months, said Housing Industry Association latest national outlook report which was released yesterday.
“New dwelling starts hit an all-time high of 228,230 during the year – the culmination of the longest housing upturn since the end of World War 2,” HIA Senior Economist Shane Garrett said.
“Last year (2016) will long occupy a special place in the history of Australia’s residential building industry.
“The report examines how the combination of acute residential land shortages in key markets, along with restrictions on investor financing and a slowdown in population growth will combine to ease residential building activity over the forecast period – particularly on the high-rise apartment side,” said Garrett.
“Even though we saw new dwelling starts reach record levels during 2016 on a national basis, the geographic pattern of activity is still strikingly uneven. Four of the eight states actually experienced falls in new home starts last year.”
“The report also explores the issue of housing affordability. With taxation accounting for over 40 percent of the price of a new house in several key markets, the long-term solution to the affordability challenge has to involve root and branch changes to the way is which new housing is taxed.”
“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 173,000 at any stage. By any standard, this is still a very robust level of activity.
The latest edition of HIA’s national outlook report discusses how the number of new dwelling commencements nationally is likely to have peaked at 231,803 during 2015/16.
New dwelling starts are projected to decline by 6.9 percent during 2016/17 with a further fall of 15.3 percent anticipated to take place the following year.
A smaller reduction of 5.2 percent is expected to bring new dwelling starts to a cyclical low point of 173,169 in the 2018/19 financial year before growth resumes in 2019/20.
According to the report, the volume of renovations work is anticipated to grow by 1.6 percent during 2016/17 and by 2.0 per cent in 2017/18.
The pace of growth is expected to pick up the following year (+2.7 percent) bringing the value of the Australian renovations market to $34.65 billion during the coming 2018/19.