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There is no evidence to suggest that Australia is facing an oversupply problem, a new outlook by the Housing Industry Association (HIA) has found.
The Spring 2017 edition of the HIA’s National Outlook report shows that Australia’s housing sector is performing well, highlighting solid population growth and mixed results from government influence in the sector.
“There is no evidence to support claims that there is an oversupply in the housing sector,” said Tim Reardon, HIA’s principal economist.
“In fact, we have upgraded our forecasts for new home building activity upwards, to account for the ongoing strong sales. We have seen stronger than expected building approvals results now justify upward revisions to our forecasts.”
The revised forecasts predict the number of approvals from 184,000 up to 195,000 in 2018.
“New residential building has been moving back from record highs, but the slowdown is very modest,” Mr Reardon said.
“Dwellings under construction are down by less than 1 per cent from the level a year ago. The downturn in apartment building has been much less significant than we anticipated.
“Strong growth in the population has kept demand for housing at elevated levels, while low interest rates and a willingness to invest has enabled the supply of housing to respond.”
Mr Reardon also said that, with new incentives, there has been a new wave of first home buyer activity Australia-wide, not just in NSW and Victoria.
“This appears to be as a consequence of the APRA changes resulting in first home buyers incurring a lower effective interest rate than investors,” the economist said.
“First home buyers are also likely to be benefiting from the record number of apartments that are now becoming available.
“The strength and longevity of the housing upturn points to the resilience of the industry, given the challenges posed by the regulatory [changes] in an environment beset with uncertainties.”
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