A strong performance from the new home building market in Australia is pushing economic growth, the Winter 2014 edition of National Outlook released by the Housing Industry Association has shown.
HIA chief economist Dr Harley Dale said the report confirms a strong performing new home market, which is delivering gains to the wider economy in terms of growth and employment.
“Australia’s penchant for focusing disproportionately on negative economic news was further highlighted last week, but the national new home building recovery is a positive story of large significance,” he said
“There is also some evidence to suggest renovations investment is mounting a sustained recovery from the decade low reached in 2013.
“New dwelling commencements, the key metric for the sector, are forecast to hit over 184,000 in 2014, which would be the second highest level on record, before maintaining a historically high level next year," Mr Dale said.
Meanwhile, following three years of decline, total investment in renovations is forecast to post modest growth this year and next.
“The current recovery in residential construction still masks considerable differences in conditions across states and territories, and in terms of building type, for both new housing and renovations activity. A further broadening of the recovery would certainly be a desirable outcome,” he added.
Dr Dale said that the government has yet to seize the opportunity to develop strategies for the housing policy reform.
“A shortage of titled land, excessive planning delays, and the re-emergence of skilled labour shortages are just three examples of supply side constraints and will again fail to be addressed if governments just sit back and ride the recovery wave,” Dr Dale said.
New dwelling commencements are forecast to increase by 9.6 per cent in 2014, following growth of 11.1 per cent in 2013, reaching a peak of 184,291.
Commencements are forecast to decline by 4.4 per cent to a level of 176,238 in 2015.
Total investment in renovations is forecast to increase by 3.8 per cent this year and by 1.3 per cent in 2015 to reach a value of over $29.4 billion.