HIA senior economist Shane Garrett said the report suggests the housing industry will be one of Australia’s ‘good news’ stories over the next 12 months.
“Today’s report outlines the continuing, albeit gradual, broad-based recovery in residential construction,” he said.
“New dwelling commencements are forecast to break the 165,000 threshold for only the second time in a decade. This will be driven by much stronger activity in markets like NSW, Queensland and Western Australia.
“However, challenges will remain in other states, more notably Victoria and Tasmania,” Mr Garrett warned.
HIA predicts the official cash rate will remain unchanged in 2014 and expects the continued low-interest rate environment to drive growth in the housing industry.
“We believe the RBA will leave its interest rate unchanged for the remainder of this year at least. This will underpin strengthening activity in housing, and arrest the deterioration in housing undersupply experienced over the past decade,” Mr Garrett said.
While predicting a strong year for the industry, Mr Garrett added that HIA would continue to emphasise the importance of the housing industry to Australia’s transitioning economy.
“In advance of the federal Budget in May, we intend to emphasise the role a stronger housing industry can play in supporting economic growth at this time. Reforms targeting planning, infrastructure charging and taxation of the sector will enable housing to make a larger contribution to boosting the economic outlook,” Mr Garrett concluded.
Housing starts increased by 11.7 per cent to 161,970 during 2012/2013, following two consecutive years of decline. Activity is forecast to rise again in 2013/2014 by 2.8 per cent, going on to reach over 170,000 by 2016/2017.
On the renovation side of the market, the volume of activity fell by 8.9 per cent in 2012/2013 to $28.3 billion. This represents a low point for the sector, with activity expected to expand by 1.9 per cent in 2013/2014. Further increases will occur each year to 2017/2018, bringing the value of renovations to $32.6 billion.