Dwelling commencements set to break 165,000 threshold for second time in decade: HIA

The new summer 2014 National Outlook from the Housing Industry Association points to residential construction to be one of the pieces of good news over the year.

The housing report, which reviews latest developments in housing construction and provides forecasts, did point to challenges, however said it would be a gradual broad based recovery over the year, noted HIA senior economist, Shane Garrett.

“Residential construction investment will account for a growing share of the economy in 2014, and should fill some of the gap left by the decline of mining investment,” he forecasted.

“New dwelling commencements are forecast to break the 165,000 threshold for only the second time in a decade,” said Garrett.

“This will be driven by much stronger activity in markets like NSW, Queensland and Western Australia. However, challenges will remain in other states, more notably Victoria and Tasmania".

Pointing to their belief that the Reserve Bank will leave the interest rate unchanged for the remainder of the year, he said that this will help strengthen housing activity.

Renovation activity, which has struggled over the past five years, is also expected to see an uptick. This will be fuelled by stronger prices speeding up the accumulation of home equity and therefore facilitating more renovation loans. This, in turn, might see an injection into capital gains for some areas as properties are brought up in their standard.

“In advance of the federal Budget in May, we intend to emphasise the role a stronger housing industry can play in supporting economic growth at this time. Reforms targeting planning, infrastructure charging and taxation of the sector will enable housing to make a larger contribution to boosting the economic outlook,” he said.

During 2012/2013, housing starts increased 11.7%. This was after two consecutive years recording declines for the industry. The 2013/2014 forecast is for a 2.8% increase, to reach over 170,000 by 2016/2017.

jduke@propertyobserver.com.au