Residential construction vibe improving: HIA

There is still uncertainty about the future of residential construction but the vibe is improving, with the recovery in new dwelling commencements driven by two states, New South Wales and Western Australia, according to the Housing Industry Association.

New dwelling commencements increased by 11% in 2012/2013m with dwelling commencements increasing in New South Wales and Western Australia by 31%, accumulating for most of the growth.

HIA says the slight increase in dwelling commencements follows two consecutive years of decline.

There are a range of variables affecting new home building and renovation, including significant increase in taxation and regulatory burden on new home building over the last 15 years, tight credit conditions and the largest household deleveraging process Australian households have undertaken in many decades.

Dwelling commencements in Western Australia reached 24,052 in the last financial year. Excluding 2009/2010, HIA says this is the highest level of commencements since 2006/2007.

New South Wales dwelling commencements grew by 29% in the last financial year to 39,715 – the highest level reached since 2003/2004.

HIA says building approval figures for the September 2013 quarter signal further upward momentum in dwelling commencements for both Western Australia and New South Wales.

During the September quarter, Western Australia increased by 7.7% and New South Wales increased by 25.2%.

However, HIA says dwelling commencements look set to be largely flat in the short term with little over 160,000, with Victoria continuing to decline, but will slowly recover to around 170,000 by 2016/2017.

Victoria dwelling commencements are forecast to decline by 17.5% to 41,630 in 2013/2014, driven primarily by a 33.3% fall in other dwelling commencements.

Queensland and South Australia are forecast to gather momentum and drive the modest increase in dwelling commencements in 2014/2015.

HIA says meeting the future housing requirements of Australia’s population will require a minimum 180,000 new dwelling commencements per annum over the coming decades.