Residential construction activity tends to take a disproportionately large hit during economic downturns, according to a new report released by the Housing Industry Association (HIA).
The HIA report reviewed the performance of the housing industry during four economic downturns since the early 1980s.
The report also identified that the renovations side of the market tends to recover more quickly than detached house construction and the magnitude of its recovery appears dependent on house price growth.
The findings highlight the importance of strong policy support for the housing sector during cyclical downturns in the economy, the HIA said.
According to the report, “In addition to the weak economic environment, there are a range of structural factors currently obstructing a sizeable and sustainable recovery in residential construction, related to land supply, taxation, planning, regulation, and a squeeze on credit.
“A focus on reform measures to lift residential construction activity is a crucial area for policy development across all levels of government, and obviously needs to be led at a federal level.”