The Housing Industry Association (HIA) has released the Summer 2014 edition of its National Outlook, Australia’s most comprehensive housing report card. HIA represents Australia’s residential building industry.
Presenting a comprehensive review of the latest developments in housing construction, HIA’s National Outlook report provides forecasts of both new dwelling commencements and renovations activity across the national market as well as in each state market.
According to HIA Senior Economist, Shane Garrett, the report outlines the continuing, albeit gradual broad based recovery in residential construction and the challenges that are likely to hold it back.
Observing that 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 adds that HIA’s latest forecasts suggest the housing industry will be one of Australia’s good news stories over the next twelve months.
Shane Garrett explains that new dwelling commencements are forecast to break the 165,000 threshold for only the second time in a decade, and will be driven by much stronger activity in markets such as NSW, Queensland and Western Australia. However, other states, notably Victoria and Tasmania will present challenges.
The RBA is expected to leave its interest rate unchanged for the remainder of this year, which will underpin strengthening activity in housing, and arrest the deterioration in housing undersupply experienced over the past decade.
Though renovations activity has struggled over the past five years, stronger prices will speed the accumulation of home equity, facilitating more home renovation loans.
Ahead of the Federal Budget in May, HIA intends to emphasise the role of a stronger housing industry 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.
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.