New home building activity in Australia is forecast to move back a gear in 2017, from the record highs seen during 2016, according to the latest forecasts presented in the Housing Industry Association National Outlook.
“2016 will long occupy a special place in the history of Australia’s residential building industry. New dwelling starts hit an all-time high of 228,230 during 2016 – the culmination of the longest housing upturn since the end of WWII,” said HIA Senior Economist, Shane Garrett.
“The National Outlook 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,” remarked Shane 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 in 2016.”
“This National Outlook report also explores the issue of housing affordability. With taxation accounting for over 40 per cent 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 in the foreseeable future, 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,” concluded Shane Garrett.
The Summer 2017 edition of the Housing Industry Association 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 per cent during 2016/17 with a further fall of 15.3 per cent anticipated to take place the following year.
A smaller reduction of 5.2 per cent 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 HIA National Outlook report, the volume of renovations work is anticipated to grow by 1.6 per cent 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 per cent) bringing the value of the Australian renovations market to $34.65 billion during 2018/19.