According to the Residential Development Outlook Spring Edition, compiled by CoreLogic RP Data and the PCA’s Residential Development Council, the construction of new homes in Australia will not reach its peak until mid-2016.
PCA residential executive director Nick Proud said the continued strong construction levels will remain despite the sector facing some challenges.
“Although there are some indicators that have softened, the demand for new housing remains positive following rising household wealth, competitive financing costs and increasing population,” Proud said.
“The expectations for low interest rates, reasonable ongoing foreign investment and an increasing population will continue to drive a fundamental demand for new homes to be built through 2016,” he said.
According to the report, a record 226,400 homes were approved for construction in the 12 months to the end of August 2015.
Over the 2014/15 financial year, work was started on 211,976 homes, with 189,239 being completed.
While the last 12 months hasn’t solved the nation’s supply issues, Proud said the strong construction has helped and CoreLogic research head Tim Lawless said it would continue to improve affordability.
“In a welcome change for those looking to buy a home, the heat is expected to come out of housing price rises over the next year, as record supply begins to soak up the excess demand that has been there for some time,” Lawless said.
“Rental prices aren’t expected to see any massive spikes, and with good levels of new rentals coming on line there will be greater options for those looking to rent,” he said.
The report estimates Australia needs around 180,000 homes per year over the next 30 years to keep up with demand, and Proud has called for policy makers to ensure the housing industry can continue to be an important player in the economy on the way to meeting that goal.
“The economy will rely on strong housing construction and so it is important that the right policy settings are introduced around planning for infrastructure and tax reform to maximise the ongoing positive impact of this industry on the country’s economic wellbeing,” he said.
“We now have a federal focus from both sides of Government on liveable cities and the built environment, which supports the prospect that residential activity levels will be coordinated nationally to tackle affordability, support jobs and drive the economy.”
