Following a trough in recent years, southeast Queensland is set for a significant recovery in home building activity and will lead the nation in terms of growth in housing construction starts in 2014, a new forecast suggests.

Releasing its Summer 2014 National Outlook report last week, the Housing Industry Association (HIA) said it expected ground to break on 165,590 houses and apartments throughout Australia in the current calendar year – up only one per cent on current estimates for 2013 but only the second time since 2004 the nation has commenced more than 165,000 dwellings in any given year.

While strong activity in Sydney and Perth is likely to continue, Queensland is expected to be the big comeback story, with commencements throughout the state tipped to rise 13 per cent off an extremely low base in 2014 followed by a further eight per cent rise in 2015 – by which time housing start numbers (38,142) are expected to have returned to historically respectable levels.

Housing starts Queensland

The HIA’s Queensland executive director, Warwick Temby, says growth will be concentrated primarily in the state’s southeast.

“It’s been the southeast of the state that has led the charge in the last six months or so, including the Gold and Sunshine Coast”, Temby said, adding that the comeback in the region was being fuelled by a combination of low interest rates, improving confidence and affordability, strong population growth and a significant volume of pent-up demand following several years of low building activity.

The forecasts follow a broader Master Builders Association of Queensland survey released last month which showed that builder sentiment was at its highest in the southeast of the state, with the region set to benefit not just from a housing recovery but also from developments such as Commonwealth Games facilities on the Gold Coast and the Underground Bus and Train project in Brisbane.

Meanwhile, strong housing construction conditions are expected to continue in Sydney and Perth, with starts in New South Wales and Western Australia expected to come in at decade highs of 45,969 (up five per cent) and 26,604 (up one per cent) in calendar 2014 respectively.

Elsewhere, new dwelling commencements will pick up but remain at low levels in South Australia, while those in Victoria will drop 14 per cent to their lowest level since 2007 and those in Tasmania will remain at 10-year lows.

 housing starts australia

Overall, HIA senior economist Shane Garrett predicts the new housing sector will be one of the nation’s ‘good news’ stories over the next twelve months.

“We believe the RBA will leave its interest rate unchanged for the remainder of this year at least,” he said. “This will underpin strengthening activity in housing, and arrest the deterioration in housing undersupply experienced over the past decade.”