Australian new home building forecast to reach second highest level on record in 2014, renovations activity to begin recovering from 10-year low; new dwelling starts expected to rise 7.1% this year before declining in 2015, 2016: Housing Industry Assn.

CAMPBELL, Australia , June 16, 2014 (press release) – The Housing Industry Association, the voice of Australia’s residential building industry, today released the latest edition of its National Outlook, Australia’s most comprehensive housing report card.

“New home building is forecast to reach its second highest level on record in 2014, while renovations activity will begin recovering from a ten year low,” commented HIA Chief Economist, Dr Harley Dale.

“Residential construction investment will make strong contributions to Australia’s economic growth this year and next, and will boost demand across significant parts of the manufacturing, retail and supply/distribution sectors,” predicted Harley Dale.

“Residential construction is making a vital contribution to the rebalancing of growth in the nation’s economy,” noted Harley Dale.

“The challenge for policy makers is to look beyond the cyclical recovery and address the large and highly inefficient tax and regulatory barriers afflicting Australia’s new home building sector,” Harley Dale said. “A failure to do so will see Australia fail to adequately house its growing and ageing population in the decades ahead, to the detriment of living standards, productivity gains, and budgetary savings for federal and state governments.”

New dwelling commencements are forecast to increase by 7.1 per cent in 2014, following growth of 10.9 per cent in 2013, reaching a peak of 180,000. Commencements are forecast to decline in 2015 and 2016 to a level just under 170,000. On a fiscal year basis, commencements are expected to increase by 10.3 per cent in 2013/14 to a peak of around 178,700. Modest reductions over the subsequent three years are forecast to see commencements
bottom out at around 170,700.

“After dropping to decade lows in 2013 there is huge upside potential for renovations activity,” Harley Dale explained. “Two consecutive quarters of growth through to March 2014 provides confidence for our forecast of 1.0 per cent growth in the total value of renovations investment in 2013/14.”

“Momentum in renovations activity is forecast to build in coming years with growth of 1.2 per cent, 2.3 per cent, and 2.5 per cent over the three years to 2016/17. This profile would
see investment exceed $30 billion for the first time since 2011/12,” concluded Harley Dale.

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