Sustainable housing recovery proves elusive in oz

The HIA’s Winter 2013 forecast warns that a new home building recovery is at risk of running out of steam and highlights  a gradual improvement in renovations investment from a ten year low.

“A strengthening in the new home building markets of New South Wales and Western Australia has driven a promising first round recovery in national housing starts,” said HIA Chief Economist, Dr Harley Dale. “Ensuring the recovery is sustainable is the key, but that looks unlikely based on current policy settings.”

HIA estimates that housing starts increased by 8.3 per cent last financial year to a level of 157,108, following two consecutive years of decline. A fall of 4.2 per cent is forecast for 2013/14 as growth in NSW and WA temporarily runs out of steam before a geographically broader-based recovery takes sufficient hold.

HIA estimates that total investment in renovations fell by 6.6 per cent in 2012/13 to reach a decade low. Growth of 3.5 per cent is forecast for this financial year, which would take investment to a level of $28.9 billion. This would be $1.8 billion short of the record achieved in 2010/11.

In May this year HIA launched its Federal Election 2013 policy platform - Housing Australians. HIA’s 50 policy actions provide a blueprint for a future federal government to address the growing housing affordability challenge facing Australia and to ensure a sustainable residential construction recovery commensurate with the needs of the Australian economy and its growing population.

“There is not enough policy focus on housing reform at a state as well as federal government level. Consequently, a first round new home building recovery looks set to be stopped in its tracks,” added Harley.

“Such an outcome would be detrimental to an improvement in housing affordability, a faster pace of economic growth, and a lift in the nation’s productivity performance.”