APARTMENT BUILDING BOOM HAS PEAKED, SAYS BIS SHRAPNEL

Written on the 1 August 2016

APARTMENT BUILDING BOOM HAS PEAKED, SAYS BIS SHRAPNEL NEW apartment commencements will decline by 50 per cent in the next four years from today's "unsustainable" level of 107,000, says today's BIS Shrapnel Building in Australia 2016-2031 report.

Total dwelling starts reached 220,100 in 2015/16, an all-time high, but the decline is expected to start this year and this will mostly be felt in the apartment building sector.

"While we are forecasting a fall in activity from its current peak, this will mostly be felt in the higher density segment of the market," says Associate Director at BIS Shrapnel, Dr Kim Hawtrey.

Attached dwelling starts are expected to fall from around 107,000 currently to just 53,800 by 2019/20.

Hawtrey says low interest rates have unlocked pent up demand and underpinned the current boom in activity, but with population growth slowing and a strong backlog of dwellings due for completion, new supply will outpace demand following the past couple of years of booming construction.

"This will see the national deficiency of dwellings gradually eroded and most key markets will begin to display signs of fatigue," says Dr Hawtrey.

Not even the continued undersupply in housing and strengthening economies in Sydney and Melbourne will be able to stop the slowdown. The national dwelling stock deficiency reached a peak of around 117,000 by June 2014, but this halved in the following two years to 58,000.

It is expected that investors will no longer fuel the market as they once did because of finance restrictions and first home buyers remain sidelined.

Victoria is expected to experience the most significant reversal of the eastern states of 17 per cent in the coming financial year, but Western Australia will fare worst as its residential construction contracts 19 per cent due to the end of the mining boom and softening population growth.

Non-residential building is expected to remain flat, with activity fluctuating between $30-$35 billion over the next four years.

Latest News

CRITICS CALL FOR MORE INDEPENDENT DIRECTORS ON BLUE SKY BOARD

BLUE Sky Alternative Investments (ASX: BLA) has defended its governance and valuation processes in response to severa...

BEGA PAYS $460 MILLION FOR VEGEMITE TO BRING THE ICONIC BRAND BACK UNDER AUSTRALIAN OWNERSHIP

VEGEMITE is back under Australian ownership after Bega Cheese (ASX: BGA) agreed to buy Mondelez International's A...

GUVERA ESCAPES WIND-UP ORDER

GUVERA has avoided being wound up after a claim for a $1.78 million debt by Kwong Properties was dismissed at the ...

CONSUMERS PESSIMISTIC ENTERING 2017

CONSUMER confidence remains at its weakest point since April 2016, according to the latest Westpac Melbourne Institut...

Related News

CONSUMERS PESSIMISTIC ENTERING 2017

CONSUMER confidence remains at its weakest point since April 2016, according to the latest Westpac Melbourne Institut...

RISE OF STARTUP SUPPORT PROGRAMS NOT AS ROSY AT IT SEEMS

ENTREPRENEURIAL cultivation companies in Australia are appearing quickly, but questions have been raised about whe...

SMES TAKE RETAIL MARKET SHARE AS CONSUMERS CHOOSE PERSONALISATION

IN a battle for the hearts and wallets of Australian consumers, it appears that small and medium retail businesses...

KNOWLEDGE WORKERS AMONG MOST SOUGHT AFTER IN 2017

BUSINESSES searching for efficiencies and improved systems are in search of knowledge workers early this year, say...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter