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Cheap money delivered via Australia’s lowest interest rates in 50 years, and pent-up demand, is reported to be driving this recovery.
In the report Building in Australia 2014-2029, BIS Shrapnel associate director Kim Hawtrey forecasts that housing starts will reach 190,000 nationwide in 2014/15.
This would surpass the previous peak of approximately 187,000 in the 1994 building boom.
New South Wales and Queensland have been highlighted as key drivers of this upswing, with New South Wales expected to account for more than nine per cent growth in housing starts for the next two years, and Queensland for more than three per cent.
“Home building has been punching below its weight for about a decade, and has not kept pace with population growth for some time now,” says Hawtrey, who still acknowledges that population growth is expected to slow from its recent highs to 1.18 per cent by 2017/18 as net overseas migration declines.
BIS Shrapnel reports that residential building is predominantly being driven by pent-up demand, and estimates the national dwelling stock deficiency is currently around 100,000 dwellings.
“We estimate that it will take the next five years to eliminate the unmet demand for housing, therefore do not see this housing shortfall closing until 2018,” says Hawtrey.
Building in Australia 2014-2029 reports that first home buyers are in the backseat of this housing boom, while investors, upgraders and downsizers are taking the steering wheel.
Apartment living in particular has been labelled one to watch, smaller dwellings perhaps attractive for an ageing population.
The report also discussed areas of building in Australia that have stagnated or are on the decline.
“The improved conditions in residential and home building are yet to either stimulate significant gains in alterations and additions activity, or gather up first home buyers, and these segments of the market remain a concern,” says Hawtrey.
The Building in Australia report is an independent medium-term assessment by BIS Shrapnel of the nation’s building industry outlook.
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