The latest HIA National Outlook released today has recognised the unprecedented uncertainty facing the new home construction outlook, despite the vital economic role that new housing activity continues to play.
“National new home building activity remains very strong in 2016/17 as a recovery in renovations investment continues to take hold,” said Housing Industry Association Chief Economist Dr Harley Dale.
“The current new home building boom is unlike any other that has come before it.
"It is the longest and largest in Australia’s history and has provided an unprecedented economic boost to the nation, without which domestic demand would be in or close to recession,” he said.
HIA’s forecasts are for a peak of over 232,500 new dwelling commencements to have been reached in 2015/16, which will be followed by three consecutive years of decline.
New dwelling commencements are forecast to bottom out at a level of around 166,500 in 2018/19, but there is downside risk to this forecast under current economic and political settings.
“This cycle is marked by substantial regional divergences in the levels of activity in various markets around the country, and the mix of dwelling types being built has changed dramatically," Dr Dale said.
"As the down cycle in new home building unfolds, the record pipeline of medium/high density dwellings in particular creates considerable uncertainty as to the timing and magnitude of the decline in construction.
“Just as new home building activity seems to be reaching its peak, the recovery in the home renovations market has started to gather pace,” he noted.
Dr Dale said national renovations investment got off to a great start in 2016, growing by 2.2 per cent in the March quarter but HIA expects that renovations activity grew by 4.2 per cent in 2015/16 – the fastest rate of increase in over a decade.
"Further growth over subsequent years is forecast to take renovations activity to a value of nearly $33.2 billion by 2018/19.”