Activity in new residential building throughout Australia is set to remain well above levels experienced in the past decade for at least several years whilst that in renovations of existing homes has bottomed out and will recover from here going forward a key industry association says.

Releasing the Autumn-Winter version of its National Outlook, Housing Industry Association (HIA) reiterated previous forecasts in its recent May update that following growth of 10.9 percent in 2013, the overall number of new dwelling commencements in Australia would rise again by 7.1 percent to reach almost 180,000 (179.953) in calendar 2014 and remain at annual levels almost at or above 170,000 for the three years thereon after until at least 2017.

By historical comparison, the only year during which commencements topped 170,000 in the past decade was in 2010 as activity surged following federal government stimulus measures in 2009.

Having hit decade lows in 2012/13, meanwhile, the level of investment in renovations of existing homes will rise by modest levels of 1.0 percent, 1.2 percent, 2.3 percent and 2.5 percent over the four years to 2016/17, HIA says.

Australia housing starts

HIA Chief Economist Harley Dale said the benefits of the boom in new residential construction will spread to a range of sectors in manufacturing, retail and supply/distribution, and that there was ‘huge upside potential’ for the renovations sector.

Bur he reiterated calls for further action to stimulate housing supply.

“The challenge for policy makers is to look beyond the cyclical recovery and address the large and highly inefficient tax and regulatory barriers afflicting Australia’s new home building sector,” Dale said.

“A failure to do so will see Australia fail to adequately house its growing and ageing population in the decades ahead, to the detriment of living standards, productivity gains, and budgetary savings for federal and state governments.”

Australia renovations

On a state by state basis, the prognosis for new housing starts is as follows.

  • Described as the ‘king maker’ of the current recovery, New South Wales will see starts of more than 50,000 in calendar 2014 for the first time in more than a decade, with commencements set to remain at elevated levels of more than 45,000 over the forecast period.
  • Commencements in Western Australia will peak at 26,881 in 2014 before dropping progressively back to still respectable levels of 23,227 by 2017.
  • Driven by increasing momentum in the state’s south-east, Queensland will see starts hit six year highs of 38,062 this year with commencements rising above 40,000 by 2017.
  • South Australia will see commencements rise above 10,000 for the first time in two years in 2014 and will see starts hit moderately respectable levels of 11,345 by 2017.
  • Despite high levels of building activity, Victoria (46,970) will experience another reasonably good year in 2014 before activity bottoms out at a low but respectable 42,449 starts in 2016.
  • After another year of near decade low starts in the order of 1,764 in 2014, activity in Tasmania will bottom out but commencements will still only reach modest levels of 2,118 by 2017.
  • Starts in the Northern Territory will ease back 7.0 percent off sky-high levels of recent years but will remain at historically strong levels of between 1,750 and 2,000 over the next three years.
  • Likewise, commencements in the ACT will continue to drop back from unprecedented levels of recent times but will remain at levels of between 3,200 and 3,600 over the forecast period – well above the 2,200-2,500 levels experienced prior to the GFC.