Australia’s new home building recovery looks like it could run out of steam.
According to the Housing Industry Association’s (HIA’s) Winter 2013 National Outlook, the building recovery does not look as though it will be sustainable.
“A strengthening in the new home building markets of New South Wales and Western Australia has driven a promising first round recovery in national housing starts,” HIA chief economist Harley Dale said.
“Ensuring the recovery is sustainable is the key, but that looks unlikely based on current policy settings.
“There is not enough policy focus on housing reform at a state as well as federal government level. Consequently, a first round of new home building recovery looks set to be stopped in its tracks.
“Such an outcome would be detrimental to an improvement in housing affordability, a faster pace of economic growth and a lift in the nation’s productivity performance.”
The HIA estimates that housing starts increased by 8.3 per cent last financial year to a level of 157,108, following two consecutive years of decline.
A fall of 4.2 per cent is forecast for 2013/2014 as growth in NSW and WA temporarily runs out of steam before a geographically broader-based recovery takes sufficient hold.
The HIA estimates that total investment in renovations fell by 6.6 per cent in 2012/2013 to reach a decade low. Growth of 3.5 per cent is forecast for this financial year, which would take investment to a level of $28.9 billion. This would be $1.8 billion short of the record achieved in 2010/2011.