Residential building activity is set to continue its weak run for the next couple of years as consumer confidence nosedives and credit activity tightens across the nation.
According to the Housing Industry Association’s National Outlook report, residential building activity will decline by 13 per cent over the next two years.
HIA chief economist, Dr Harley Dale said a lack of government stimulus and poor consumer confidence will lead to a decline in the construction of new housing over the next 24 months.
"Housing starts are forecast to decline over 2010/11 and 2011/12, reaching a low of 143,770,” Dr Dale said,
"Sentiment and activity in the new housing industry has been buffeted by higher interest rates, continuing tight credit conditions, incessant chatter about a fictitious property bubble, an astoundingly high taxation burden, and a complete lack of progress on policy reform to reduce unnecessary new housing costs.
"Instead of taking real steps to remedy a range of housing supply problems, governments seem happy to extract ever-increasing amounts of tax, fees and charges from the new home industry.”
In contrast to new home building, renovation activity is expected to rise.
“Growth of 2.7 per cent is forecast in 2011/12 and 4.6 per cent in 2012/13, which would take annual renovations expenditure to just over $33 billion,” Dr Dale said.
“This level would be close to the record high for expenditure on renovations, which under ABS revisions is now recorded as having occurred in 2004/05.”