Changing living habits suggest less demand for detached housing: Adelaide Brighton

A mild upturn rather than a boom is on the cards for the struggling new housing sector, according to the chief executive of one of Australia’s oldest building materials providers, Adelaide Brighton.

Adelaide Brighton provides cement, lime, concrete and masonry products to the construction industry and dates back to 1882.

Speaking at a Citi Investment conference in Sydney, Adelaide Brighton chief executive and managing director Mark Chellew said anecdotal evidence from across the building industry suggests a boom is not coming.

Chellew pointed to changing living preferences as impacting on demand for new housing with less demand for detached houses and a greater willingness for families to live in smaller apartments.

“I think younger people are deciding to have children much later; they are deciding to stay in apartments and they are staying at home longer,” he said in a speech reported by the Australian Financial Review.

According to Chellew, Australia has fundamentally changed “from having large nuclear families to smaller units in smaller-sized apartments”.

His comments match up with research firm BIS Shrapnel, which is forecasting residential building to “tentatively return to modest growth” over the next two years.

BIS Shrapnel is forecasting 133,400 dwelling completion for the year to June 2013 – well below a requirement of 169,600 dwellings.

It forecasts this to rise to 144,700 dwellings by June 2014 – well below a requirement of 174,500.

BIS Shrapnel says a dwelling stock deficiency of around 57,500 dwellings exists as of June 2012.

“As migration and population growth picks up over the forecast period, dwelling commencements re not initially forecast to keep pace with aspirations,” says BIS Shrapnel in a September forecast report.

NSW is forecast to have a dwelling stock deficiency of 52,800 dwellings by June 2014, followed by Western Australia, with a 46,000 shortfall, and Queensland, with a 45,400 deficit.

In contrast, Victoria will be oversupplied by around 15,000 dwellings by June 2014.

Deutsche Bank is forecasting Australian housing starts to increase by 1% in the 2013 financial year to 138,000 and 6% the 2014 financial year to 155,000 provided interest rates continue to be cut.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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