The Master Builders Association believes there is a risk that lending restrictions and changes to foreign ownership laws will bite at the same time as interest rate hikes take some purchasing power off prospective domestic homebuyers.
It says housing demand also faces risks from the buyer side as regulators look to curtail investor activity and government policy puts foreign buyers in the crosshairs. Along with a fall in foreign investment, overall residential construction is set to fall, as the combination of high population growth, high foreign investor demand, high dwelling price growth and low interest rates that led to strong rates of residential construction in the 2015-16 period wanes.
Residential construction is “fast approaching its peak according to the MBA, as new housing commencements are expected to fall to 180,000 in the 2018-19 period from the 230,000 new dwelling commencements reported in the 2015-16 period.
However, it is important to note that the expected trough in new housing commencements in 2018-19 of 180,000 new dwellings is well above the past decade average of around 165,000, and is higher in terms of total commencements than any year before 2013-14.
New housing makes up 48% of construction while units and other dwellings constitute 40% and renovations make up 12%. Meanwhile the Domain Metro State of the Market Report, released recently, revealed that Australia’s median house price rose by 1.7 per cent to a record high of $818,416, which is 10.1 per cent higher than this time last year.
According to Domain, this was the lowest quarterly increase since March 2016. Median unit prices also rose by 1.7 per cent over the quarter to $573,064, making it the fifth quarter of growth for units in a row. So while the national median house price continues to rise, Domain’s Chief Economist, Dr Andrew Wilson says it is evident that the rate of national price growth is slowing down.
In summary – Wilson says – Sydney is rising, so too is Melbourne, Adelaide, Hobart and Darwin wile Brisbane, Perth and Canberra are declining.
With thanks to Real Estate Talk – the only place where you hear all Australasia’s leading property experts.