Housing now a key source of growth for most states

by Julia Corderoy24 Nov 2014
Figures released by the Australian Bureau of Statistics show that residential construction became a key source of growth for most state economies.

Six out of the eight states and territories recorded a strong recovery in residential construction over the 2013/14 financial year. This recovery follows a relatively weak year in 2012/13, according to an economist for the Housing Industry Association.

“These 2013/14 results follow quite a weak year for residential construction in 2012/13, when seven of the eight states and territories recorded declining levels of activity,” HIA economist Diwa Hopkins said.

“Furthermore, where there were declines, closer inspection shows that in these instances the overall situation remains healthy. In Victoria, the decline in dwelling investment was a marginal 0.1 per cent, with activity still at a near-record level. In the ACT, the decline was a non-trivial 9.0 per cent, but this is still more than 20 per cent higher than the average level during the 2000s,” she said.

“Today’s results also show the important role that new home building and home renovating activity is starting to have for state economies.”

Low interest rates are helping drive the recovery as it helps address pent-up demand for new home building. According to HIA Economics forecasts to be released today, residential construction will experience further growth in 2014/15.

However, Hopkins says there is still some way to go if we are to make material progress in addressing entrenched housing shortages.

“The effects of excessive taxation and restricted land supply are stifling the industry’s ability to respond to increases in demand. These issues require all levels of government to take action and the coming federal reviews on taxation and the federation are the obvious starting point to make real progress,” she said.

 

COMMENTS

  • by Jessica 24/11/2014 11:17:29 AM

    ... This isn't a good thing...

    Houses aren't exportable, you cant trade them in for food if you need it, they don't offer new technology or development...

    Over the last 6 years since 2007-2008 if ever single other economy on the planet has told us anything its that when an economy is exposed to low rates and housing becomes a 'source of wealth' you know its scraping the bottom of the barrel and the aforementioned economy is on its last legs.

    Hats off to anyone who made their money and left before the cluster-fluff that is Australia hits.

    Just like every other country where low rates and no tools were in place to stop an asset bubble appearing, Australia is about to fall into the same trap.

    We had years of international experience and dozens of examples of how not to let housing get out of control but alas no one listened. All they heard was the jingle jingle of speculative capital growth. Typically the end result will be the government stepping in and 'bailing-out' housing by introducing a 50k first home owner grant which does nothing but cause prices to go up 50k or a 'investor double negative gearing tax break. Get back what you lose and then we'll match it again.' Or the bank deposit freeze and 10% haircut to pay for negative gearing tax returns.

    No wonder 50% of people under 30 dont have jobs and skilled migration of locals is out of the country. Why would anyone want to live here. 300m2 house 1 hour from a city for a dual income 30 year loans that have negative wage growth with rates that can only go up in jobs to service baby boomers who get to retire at 65 instead of 70. Or move overseas for a 15 year single income loan that grows with rates that are 15 year locked in at 3-4%!!! on a 1000m2 block 15 minutes from a city and retire at 58... All for the cost of a plane ticket.

    Pretty easy choice.

    Thats Australia!

  • by Tom 25/11/2014 9:36:01 AM

    Jessica, may I ask where you got your facts from? The facts don't support your comment of 50% unemployment in the under 30 age group.