Record supply of new houses for sale set to continue
Australians across the country are looking to their local construction industry to provide new housing that would increase supply and sate the high demand that characterises the current market. While there are more forces at play, including the availability of land for sale and monetary and political barriers to entry, builders are the face of the industry.
Fortunately, according to the latest release from the Property Council of Australia, these same builders will be kept very busy over the next few months. The latest Australian Residential Development Outlook, produced in partnership with CoreLogic RP Data, predicts that record levels of housing supply will continue into the new financial year.
“Residential development has emerged as one of the main drivers of economic activity across the country,” said Nick Proud, executive director of the Property Council..
“Recent improvements in new housing supply are expected to continue, adding tens of thousands of homes for Australian families and easing pricing pressures to improve affordability.”
The Property Council predicts that housing starts will continue at 30,000 to 40,000 dwellings above long-run averages into 2015-16. However, the report does indicate there are areas of concern that could hinder this level of predicted activity.
“New foreign investment fees or any additional tightening of requirements around housing finance for investment purposes could dampen investment demand and negatively effect the outlook across the housing market,” continued Mr Proud.
It was also noted that the interest in property development is disproportionately concentrated in Melbourne and Sydney, with those two cities claiming almost half of the nation’s new building starts.
In fact, the Housing Industry Association (HIA) reports that New South Wales is currently the strongest economy in the country – with home building forming a large part of the impetus driving that growth.
“New dwelling construction forecast to reach 54,061 during 2015 in NSW, which would be the highest level over the last 20 years,” said David Bare, HIA executive director, New South Wales.
However, the HIA anticipates that the level of activity in NSW will peak this year, with declines to follow. This sobering prediction highlights the need for our country to diversify its investment to areas outside of real estate in Sydney or Melbourne. With many of the other states sitting at a fairly flat level of growth compared to these two powerhouses, the value for money could be enough of a draw card for those serious about building rental properties or owner-occupier housing in the near future.