The Housing Industry Association quoted ABS figures to show that residential construction was a significant contributor to growth for several state economies during 2013/14.

HIA Economist Diwa Hopkins explains that the 2013/14 financial year recorded a strong and widespread recovery in residential construction, with six out of the eight states and territories enjoying increasing activity. This performance followed a weak year for residential construction in 2012/13, when seven of the eight states and territories recorded declining levels of activity.

Though there were declines in 2013/14, the overall situation remained healthy. For instance, the decline in dwelling investment in Victoria was a marginal 0.1 per cent, with activity still at a near-record level. In the ACT, the decline was a non-trivial 9.0 per cent, but the activity was still more than 20 per cent higher than the average level during the 2000s.

The ABS results underline the important role that new home building and home renovating activity are starting to have for state economies.

According to Diwa Hopkins, residential construction in previous years had been a drag on overall state economic activity. However, activity in residential construction in 2013/14 contributed to overall growth. For instance, Gross State Product (GSP) in New South Wales grew by 2.1 per cent, with 0.2 percentage points directly attributable to residential construction. Similar developments were evident in Queensland, Western Australia and Northern Territory.

Diwa Hopkins notes that the very low and stable interest rate settings characterising the current cycle are having the desired effect of realising much pent-up demand for new home building. However, there is still a long way to go to make material progress in addressing entrenched housing shortages.

Observing that the effects of excessive taxation and restricted land supply are stifling the industry’s ability to respond to increases in demand, Diwa Hopkins adds that the issue requires all levels of government to take action.

During 2013/14, GSP expanded strongest in the Northern Territory (+6.5 per cent), followed by Western Australia (+5.5 per cent), Queensland (+2.3 per cent) and New South Wales (+2.1 per cent). Elsewhere GSP increased at slightly slower rates: +1.7 per cent in Victoria; +1.3 per cent in South Australia; +1.2 per cent in Tasmania and +0.7 per cent in the Australian Capital Territory.

Total dwelling investment grew most strongly in the NT (+39.4 per cent), followed by SA (+13.3 per cent), WA (+11.1 per cent), NSW (+5.6 per cent), Queensland (+4.0 per cent) and Tasmania (+0.4 per cent). There were declines in the ACT (-9.0 per cent) and Victoria (-0.1 per cent).