Optimistic outlook for Australian residential

Optimistic outlook for Australian residentialSolid activity in the residential housing market is forecast following an unprecedented supply of new homes, according to the latest Australian Residential Development Outlook.The Australian Residential Development Outlook, produced by the Residential Development Council and CoreLogic RP Data, assesses the fundamental indicators underlying the residential development market in macro, fiscal, housing investment and housing activity.The Property Council’s executive director – Residential, Nick Proud, says that while some indicators have softened, the demand for new housing remains positive.”The expectations for low interest rates, reasonable ongoing foreign investment and an increasing population will continue to drive a fundamental demand for new homes throughout 2016,” Proud says.In a vital sign for improving affordability, the indicators show that national residential supply is finally meeting household formation requirements.”However, one good year doesn’t undo 10 years of underbuilding,” Proud warns.Tim Lawless (pictured), CoreLogic RP Data Head of Research, observes that investor loans are winding back, which will affect new housing commencements, particularly apartments.He says the heat is expected to come out of housing price rises over the next year, as record supply “begins to soak up” the excess demand.Growth in both rental and new housing prices are largely focused on Sydney and Melbourne, but this is expected to be tempered.While Lawless says there are “no unique market shifting macro drivers” that will stimulate significantly more housing investment, Proud says that strong levels of dwelling construction activity until mid-2016 is “cause for optimism” – but not complacency.As the economy continues to rely on strong housing construction, it remains important that “the right policy settings are introduced around planning for infrastructure and tax reform to maximise the ongoing positive impact of this industry on the country’s economic wellbeing,” Proud concludes.Download Australian Residential Development Outlook.