Housing Construction Will Smash Record Highs: BIS 1

Monday, July 21st, 2014
liked this article
Karabiner – 300 x 250 (expire August 31 2017)
Australian housing starts
FavoriteLoadingsave article

The volume of residential construction activity in Australia is set to smash record highs as the nation prepares for two more years of a home building boom, a key industry research firm suggests.

In its latest report, BIS Shrapnel says the number of dwelling unit commencements has already bounced back from a shocking low of 145,300 in 2011/12 following the end of federal government stimulus measures to reach an estimated 184,350 in 2013/14.

Moreover, going forward, the forecaster expects ground to break on construction of 190,000 houses and apartments in 2014/15 (breaking the previous record of 187,000 set in the mid-1990s), and for this to be followed up by a further strong year of 186,850 starts in 2015/16.

Still, BIS says the nation has a shortfall of around 100,000 homes and does not expect this to be eliminated in the short term notwithstanding the rise in activity and an anticipated slowing in population growth.

“Home building has been punching below its weight for about a decade, and has not kept pace with population growth for some time now,” BIS Associate Director Dr Kim Hawtrey says.

”We estimate that it will take the next five years to eliminate the unmet demand for housing. We therefore do not see this housing shortfall closing until 2018.”

Importantly, BIS says the recovery in home building activity is spreading beyond high-rise apartments through to the detached housing segment (in which starts are expected to grow by eight percent in 2014/15) and beyond cities into regional areas, with growth largely being driven by investors, upgraders and downsizers.

Still, the forecaster notes there are few signs of significant recovery in renovations activity, whilst the apparent absence of first home buyers remains a concern.

Outside of the residential sector, BIS expects growth in the value of non-residential building activity of five percent in 2014/15 following an estimated five percent in 2013/14 as strength in commercial building (offices) and industrial building offsets lower spending levels on social and institutional buildings, but warns activity in that sector will contract for three years thereon after as the volume of major public sector building contracts eases back.

In terms of major states (residential building), according to BIS:

  • A combination of strong investor demand and underlying stock deficiencies will see New South Wales and Queensland, with growth rates of nine percent and three percent expected in these states respectively.
  • Victoria (growth of three percent in 2014/15) will see another twelve months of strong activity as investor demand prolongs strong market conditions but will see a contraction thereon after as oversupply associated with strong home building levels of recent times catches up with the market
  • Having ridden high on the mining boom, activity in Western Australia will contract by five percent in 2014/15 and continue to drop back thereon after until growth resumes in 2018/19.
FavoriteLoadingsave article


 characters available
*Please refer to our comment policy before submitting
  1. Julian P

    Doubt this will do much to drag down those exorbitant housing prices in the big cities – everyone still wants to live close to the centre.