The construction of new homes is set to face three consecutive years of decline, after peaking in the latest financial year.
According to the Housing Industry Association’s (HIA) National Outlook, a peak of over 232,500 new dwelling commencements is estimated to have been reached in 2015/16. However, the home building sector is now forecast to face three consecutive years of decline, with HIA expecting new dwelling commencements to bottom out at a level of around 166,500 in 2018/19.
“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,” HIA chief economist Harley 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.”
But as new home construction is expected to bottom out, HIA’s national outlook predicts a recovery in renovations work.
“Just as new home building activity seems to be reaching its peak, the recovery in the home renovations market has started to gather pace,” Dale said.
“National renovations investment got off to a great start in 2016, growing by 2.2% in the March quarter. HIA expects that renovations activity grew by 4.2% 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.”