Record housing construction forecast to continue for F2016
New analysis of key residential development market indicators released this May points to continued record levels of housing construction into the 2016 financial year.
The latest Australian Residential Development Outlook finds that conditions are suitable for a continued run of unprecedented new housing supply, which will help moderate house price growth and bolster jobs and the economy more broadly.
Produced by the Residential Development Council and CoreLogic RP Data, the Outlook is a comprehensive report examining core indicators across macro, fiscal, housing investment and housing activity in the residential development market.
Property Council of Australia Executive Director Residential, Nick Proud, said the data suggests new housing starts will remain at 30-40,000 homes above long-term averages into F2016.
“Residential development has emerged as one of the main drivers of economic activity across the country,” Mr Proud said.
“Recent improvements in new housing supply are expected to continue, adding tens of thousands of homes for Australian families and easing pricing pressures to improve affordability.
“But there is significant disparity across the states and territories, with almost per cent of national commencements occurring in Sydney and Melbourne. We need to see these starts better distributed among the states and territories so that all are benefiting from this solid activity.
“The Outlook also identifies a number of risks to sustaining the forecast high level of new residential construction activity. New foreign investment fees or any additional tightening of requirements around housing finance for investment purposes could dampen investment demand and negatively effect the outlook across the housing market.
“Maintaining a strong housing supply pipeline also requires the three tiers of government to work together to progress taxation and planning reform in the next 24 months.”
Tim Lawless, National Research Director of CoreLogic RP Data said the Australian housing market is well into a strong growth phase with dwelling values moving 24 per cent higher over the cycle to date.
“There is an increasing focus on the level of investment across the Australian housing market, with the value of investor housing finance commitments growing rapidly and now outweighing owner occupier commitments,” Mr Lawless said.
“First home buyers remain a smaller portion of the owner occupier market than they have historically been, but it is less clear the extent to which first-time buyers are actively choosing to invest in the housing market rather than purchase a home for owner occupation.
“The key to better affordability is likely to be found in a supply side response rather than stoking housing demand via grants or concessions or by allowing access to new funding sources such as superannuation.
“We are likely to see further stimulus to buyer demand from the low mortgage rate environment. With mortgage rates at historic lows, and potentially moving even lower later in the year we may see transaction numbers rebound after the number of home sales slowed in late 2014.”
Media contact: Fiona Benson | M 0407 294 620 | E [email protected]
Mitch Koper | P (07) 3114 9999 | E [email protected]