Thursday 28 May 2015
Australia is likely to enjoy another construction boom in the next financial year, which is expected to ease pressure on prices.
New housing starts are expected to remain at 30,000 to 40,000 above long-term averages in 2015/2016, according to a new report by the Residential Development Council and CoreLogic RP Data.
The Housing Industry Association forecast earlier this month that a record 205,500 homes would be built this financial year, compared to the long-term average of 153,000.
The report delivered a similar message, claiming that conditions are in place for a “continued run of unprecedented new housing supply”, which will help moderate price growth.
Nick Proud, residential executive director at the Property Council of Australia, said the addition of tens of thousands of new homes would improve housing affordability.
“But there is significant disparity across the states and territories, with almost 50 per cent of national commencements occurring in Sydney and Melbourne,” he added.
“We need to see these starts better distributed among the states and territories so that all are benefiting from this solid activity.”
Mr Proud said the report also identifies risks to sustaining the forecast high level of new residential construction activity.
That includes new foreign investment fees or any additional tightening of investor lending rules.
CoreLogic RP Data national research director Tim Lawless said the key to better affordability is building more homes rather than first home owner grants or allowing buyers to access their superannuation.
“We are likely to see further stimulus to buyer demand from the low mortgage rate environment,” he said.
“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.”