However a recovery is projected eventually, as positive housing sentiment translates into action.
Over the past decade new home building in Australia hit record highs especially for units and apartment buildings, largely due to inward migration and low interest rates.
But the recent slowdown in new home building is largely down to “microeconomic factors” according to Master Builders Australia Chief Economist Shane Garrett.
These include tighter credit conditions, tougher financial regulations and the imposition of heavy stamp duty surcharges on foreign buyers by a number of state governments.
“Underlying demand for new housing is still very strong with large numbers of new jobs still being created and interest rates now even lower than before. The pace of population growth remains brisk,” Shane Garrett said.
“Consumer and builder confidence is the critical factor and it will take time for this to return, especially with house prices still falling in most markets. “
Master Builders forecasts predict that new home building commencements will bottom out during 2020/21 at 167,444.
This would represent a 28.3% drop on the 233,872 peak back in 2015/16.
By the end of their forecast horizon in 2023/24, new home starts have been anticipated to recover to 187,658.
This would be an 11.9% increase on the low point of the cycle expected in 2020/21.
Master Builders forecasts project that the market for major home renovations will grow from $8.97 billion in 2018/19 $9.38 billion in 2023/24 which represents a gain of 4.6%.
A record volume of detached houses approaching their thirtieth birthdays is positive for home renovations work, as is the availability of very low borrowing costs.
Images courtesy of Unsplash.
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