Industry analyst BIS Shrapnel’s latest report “Building in Australia 2014-2029” forecasts that residential building activity will reach a new high nationwide (of 190,000 new builds) over 2014/15. The report suggests that strong demand from recent population growth, along with the lowest interest rates in 50 years, are the reasons behind this outlook.
BIS Shrapnel associate director Dr Kim Hawtrey said that Australia’s rapid population growth rate of 1.7 per cent per annum was translating into strong demand for new dwellings, which was expected to continue into 2015/16.
Dr Hawtrey said that it would take the next five years to eliminate the unmet demand for housing, which meant he didn’t see the housing shortfall closing until 2018.
”In the next two years we’ll also see the recent emphasis on high-rise units continue. Currently two high-rise apartments are being built for every five detached houses, which is double the historical rate of one apartment for every five houses built.”
New South Wales with 9 per cent growth in housing starts forecast for 2014/15 and Queensland‘s 3 per cent growth forecast for 2014/15 were driving the growth.
This was thanks to strengthening local economies, underlying pressure from mounting stock deficiencies and investor demand.
Growth of 3 per cent was expected for Victoria over 2014/15.
HIA senior economist Shane Garrett said that, encouragingly, the inner Melbourne locality was ranked fourth nationally with a whopping $385.1 million worth of new dwelling approvals and population growth of 22.7 per cent.
“This augers well for the continued revitalisation of the nation’s second largest city and demonstrates the opportunities for new dwelling construction in established areas.”
Meanwhile, according to forecasting done by Master Builders Australia, the value of residential building work done is forecast to grow from $51 billion in 2013-14 to $68 billion in 2016-17.
There will be good growth in both detached houses and apartments, however the period will see the construction of detached housing making a strong comeback, said Master Builders spokesman Ben Carter.
“The strong growth in units and apartments in the last 12 months has driven the recovery and growth in this period of the residential building cycle, and that is likely to keep growing strongly,” he said.
“Up until June 2013, there were about 70,000 apartments that had been built, and that will be just over 80,000 by the end of this year. It will continue to grow strongly in the next two years, but may tail off a little bit in 2017.”
“However, the construction of detached houses which has been lagging a little bit is now playing a very strong game of catch up. In June 2013, there were about 93,000 houses that had been built but by June 2017, there is going to be about 122,000.”