Housing construction levels will hit their highest since the 2010 spike in 2016, but the rise in activity will be more subdued than in previous upturns. Demographic shifts, such as children living with their parents for longer, and population factors such as overseas migration, will shape the new housing market over the next five years, research group Macromonitor said. The group's latest construction outlook found that growth in the home building industry will slow this financial year after making gains in 2012-13, but will improve in the following years.
In the short term, muted economic growth from the resources slowdown and a reduction in public-sector spending will curb construction. While detached housing is expected to remain the most dominant style for years to come, the make-up of new housing is changing. Detached houses accounted for 68 per cent of all new dwellings built from 2000-2010, but that share fell to 64 per cent in the four years which followed.
Macromonitor senior economist Paul Samter said the types of homes people were living in were shifting because of tight affordability, and because of the ageing population, with older demographics more likely to shift to an apartment or townhouse. The biggest shift in housing choices will be in NSW, where townhouses and apartments will account for 57 per cent of new homes built in the next 10 years, compared to 38 per cent nationally. More people are living alone and fuelling the market for single-occupant dwellings, but more young people are shifting to shared accommodation to reduce their costs. The biggest rise in shared housing was among those aged 25 to 34, boosted by growing numbers of offshore students and employees.
Overseas migration, which rose 21 per cent in 2011-12, is expected to increase and drive up new housing demand, however amounts are variable and depend on the job economy. State by state, NSW will dominate housing starts in the next few years, off a low base after years of underdevelopment. Activity will also rise in Queensland, but Victoria and West Australian construction levels are expected to tail off after booms in recent years.
The latest housing finance data from the Bureau of Statistics showed lending for new homes fell in August. The Housing Industry Association (HIA) said on Monday that growth had stalled in the past six months despite already being at historically low levels. "The patchiness we are continuing to see in areas of the home loans market means that another interest rate cut from the Reserve Bank before the end of 2013 is important in order to ensure that the market recovery fires on all cylinders," HIA senior economist Shane Garrett said.
Source AFR 15/10/13