Units boost record-breaking home building

Units boost record-breaking home buildingDwelling building activity has reached record-breaking momentum that will likely continue through 2015-16, according to BIS Shrapnel’s new Building in Australia 2014-2029 report.Strong population growth, cheaper mortgages and the lowest interest rates in years have led to a record-breaking recovery in building activity. Home construction, in particular, appears to be responding exceptionally well to the sudden surge in demand.The report anticipates housing starts will reach 190,000 nationwide in 2014-15, up 3 per cent since last year. This number would exceed the previous peak of 187,000 during the housing boom of 1994. BIS Shrapnel said the upturn would likely tilt the Australian lifestyle even further towards apartment accommodation.There are now two high-rise apartments built for every five detached houses – a figure that’s double the historical rate.According to BIS Shrapnel, the emphasis on high-rise units will likely intensify for the next two years.BIS Shrapnel attributes the rising demand to Australia’s population growth, which, at 1.7 per cent per annum, is one of the fastest growth rates in the developed world. Nevertheless, there is a national stock deficiency of about 100,000 dwellings, and this shortfall is expected to continue until 2018.According to BIS Shrapnel, investors, upgraders and downsizers are each doing their part to boost demand for residential construction. First homebuyers are still left on the sidelines, but residential recovery has finally spread to regional areas.BIS Shrapnel expects detached house starts in the private sector to grow by 8 per cent in 2014-15, following growth of 14 per cent in 2013-14. Housing construction will also remain high in 2015-16 with 186,8 new commencements.Nine per cent growth in house starts is forecast for NSW in 2014-15, while growth in Queensland and Victoria is forecast at 3 per cent. Western Australia is expected to experience a decline of 5 per cent.The non-residential sector will also witness growth. Non-dwelling commencements are expected to rise by 5 per cent in 2014-15 (although declines are expected from 2016-2018) and commercial and industrial building is forecast to experience 11 per cent growth.According to the report, the total value of all national building commencements is forecast to grow by 5 per cent in 2014-15, but will decline in 2015-16 (-3 per cent), 2016-17 (-6 per cent) and 2017-18 (-7 per cent) and pick up again in 2018-19 (8 per cent).