Having already strengthened over the past 12 months, activity in new residential construction throughout Australia is set to remain strong in coming years as the number of housing starts returns to its post-GFC stimulus peak by 2016/17, according to the latest forecasts.

Furthermore, renovations activity is likely to recover over the next 12 months and keep growing thereafter.

Releasing the spring edition of its National Outlook report, the Housing Industry Association (HIA) says following a strong recovery last year, the overall number of dwelling commencements throughout the country is set to remain at healthy levels of just over 160,000 in 2013/14 and 2014/15 before taking off and reaching 170,000 by 2016/17.

Meanwhile, having shrunk to decade lows, renovations work is set for a modest recovery with the dollar value of activity rising 3.5 per cent this year and growing from a shockingly low $27.878 billion in 2012/13 to reach more respectable levels of $30.333 billion by 2016/17.

Having already experienced surges of 29 per cent and 35 per cent in 2012/13 respectively, New South Wales and Western Australia will continue to lead the way in terms of new residential starts in 2013/14.

Start numbers in New South Wales are set to grow by a further 11 per cent to reach 10-year highs of 44,130. Those in Western Australia will rise by a further eight per cent to reach 26,090, the highest level on record in more than a decade.

Commencements in South Australia will also bounce 11 per cent of catastrophic lows of 8,700 but will remain at woeful levels by historic standards.

Together with the Northern Territory meanwhile, those three states are also expected to lead a more broadly based recovery in renovations work, with the dollar value of investment in repairs, additions and alterations set to rise by more than a quarter (25.4 per cent) in Western Australia and by 16.1 per cent, 12.2 per cent and 11.2 per cent in the Northern Territory, New South Wales and South Australia respectively.

“The improving level of dwelling commencements achieved in 2012/13 will be consolidated this year before moving up a further leg in 2014/15,” HIA senior economist Shane Garrett said, adding that demand for housing was being driven by a combination of strong population growth and record low interest rates. “Meanwhile, renovations investment is expected to grow in a majority of states and territories after falling to a ten year low during 2012/13.”

Australia Renovations ForecastsGarrett cautioned, however, that a number of bottlenecks remained around land supply, infrastructure and building approval times, and reiterated calls for further reform in these areas.

The latest forecasts follow earlier comments by HIA chief economist Harley Dale, who said benefits from the pickup in housing construction would flow through to almost all residential construction tradespeople as early gains experienced by those involved in site preparation, carpentry, bricklaying and general building as new housing activity picks up. He said the new work will subsequently flow through to finishing trades such as plastering and painting, while tradespeople in areas such as joinery and tiling will also benefit once a recovery in as kitchen and bathroom renovations takes hold.