Australian housing sector activity expected to grow 2.8% in 2013-2014, with new home starts expected to exceed 165,000 over next 12 months; housing starts forecast to rise to more than 170,000 by 2016-2017: Housing Industry Assn.

CAMPBELL, Australia , February 28, 2014 (press release) – The Housing Industry Association, the voice of Australia’s residential building industry, today released the Summer 2014 edition of its National Outlook, Australia’s most comprehensive housing report card.

The HIA’s National Outlook report is the most comprehensive review of latest developments in housing construction, and provides forecasts of both new dwelling commencements and renovations activity across the national market as well as each state market.

“Today’s report outlines the continuing, albeit gradual broad based recovery in residential construction and the challenges that are likely to hold it back,” commented HIA Senior Economist, Shane Garrett. “Residential construction investment will account for a growing share of the economy in 2014, and should fill some of the gap left by the decline of mining investment,” Shane Garrett predicted.

“Our latest set of forecasts suggests that the housing industry will be one of Australia’s good news stories over the next twelve months,” added Shane Garrett. “New dwelling commencements are forecast to break the 165,000 threshold for only the second time in a decade,” explained Shane Garrett. “This will be driven by much stronger activity in markets like NSW, Queensland and Western Australia. However, challenges will remain in other states, more notably Victoria and Tasmania,” Shane Garrett said.

“We believe the RBA will leave its interest rate unchanged for the remainder of this year at least. This will underpin strengthening activity in housing, and arrest the deterioration in housing undersupply experienced over the past decade,” Shane Garrett added.

“Renovations activity has struggled over the past five years, but we see light at the end of the tunnel here also,” Shane Garrett explained. “Stronger prices will speed the accumulation of home equity, facilitating more home renovation loans,” Shane Garrett predicted.

“In advance of the federal Budget in May, we intend to emphasise the role a stronger housing industry can play in supporting economic growth at this time. Reforms targeting planning, infrastructure charging and taxation of the sector will enable housing to make a larger contribution to boosting the economic outlook,” concluded Shane Garrett.

Housing starts increased by 11.7 per cent to 161,970 during 2012/13, following two consecutive years of decline. Activity is forecast to rise again in 2013/14 by 2.8 per cent, going on to reach over 170,000 by 2016/17.

On the renovations side of the market, the volume of activity fell by 8.9 per cent in 2012/13 to $28.3 billion. This represents a low point for the sector, with activity expected to expand by
1.9 per cent in 2013/14. Further increases will occur each year to 2017/18, bringing the value of renovations to $32.6 billion.

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