Home building heading down
Home building is set to decline over the coming years, though it remains strong.
The Housing Industry Association’s (HIA) latest National Outlook has forecast three consecutive years of decline for new home building. The group has claimed new dwelling commencements hit their peak in 2015/16 at more than 232,500.
“The current new home building boom is unlike any other that has come before it. It is the longest and largest in Australia’s history and has provided an unprecedented economic boost to the nation, without which domestic demand would be in or close to recession,” HIA chief economist Harley Dale said.
Dale said the current boom has been marked by “substantial regional divergences” in activity levels, as well as a shift in the mix of dwelling types being built.
“As the down cycle in new home building unfolds, the record pipeline of medium/high density dwellings in particular creates considerable uncertainty as to the timing and magnitude of the decline in construction,” Dale said.
The HIA has predicted new dwelling commencements will finally bottom out in 2018/19 at a level of around 166,500, but admitted that there was downside risk to their forecast.
While new dwelling commencements may fall, Dale said a recovery in the home renovations market was beginning to gather pace.
“National renovations investment got off to a great start in 2016, growing by 2.2% in the March quarter. HIA expects that renovations activity grew by 4.2% in 2015/16, the fastest rate of increase in over a decade. Further growth over subsequent years is forecast to take renovations activity to a value of nearly $33.2 billion by 2018/19,” Dale said.