Housing starts posted a modest rise in the March 2011 quarter, new data has revealed.
According to the latest research by the Australian Bureau of Statistics, total housing starts increased by 3.1 per cent in the March 2011 quarter thanks to lift of 11.5 per cent in ‘other dwellings’.
Detached house starts fell by 1.8 per cent to be running at an annual level 9 per cent lower than the long term average.
“It is good to see a rise in one component of housing starts, dwellings other than detached houses, in early 2011,” HIA chief economist Harley Dale said.
“However, an overall downward trend persists and has now extended into a second year, and that should be of considerable concern to policy makers in an environment of stalled progress on housing supply reforms and heightened uncertainty over future interest rate moves.
“Leading indicators point to further weakness ahead for housing starts and the 2010/11 financial year is set to fall nearly 20,000 dwellings short of what was achieved last year.
“When underlying demographic demand is running at around 175,000 dwellings per annum and the number of homes started is heading in the wrong direction towards 150,000 in 2010/11 and then lower still, that‟s hardly a recipe for cheer.”
Mr Dale said the weak new home building profile is a recipe for steady interest rates and a reinvigoration of the stalled reform process to reduce the excessive costs of new housing, including the debilitating impact the on-going credit squeeze is having on residential development.
“Continued weakness in new home building reflects both softer demand conditions and the very high supply side obstacles which include the incessant credit crunch,” he said.
“A dire lack of available finance for what are commercially viable residential projects is imparting significant weakness on the housing industry and considerable pain on numerous small and medium sized businesses.”