Home building frenzy tipped to end: Housing Industry Association
While the Australian property market has been thriving thanks to the low interest rate environment, the Housing Industry Association has released a report which predicted the residential building boom would come to an end.
The Winter 2015 National Outlook pointed to excessive taxation as a major hindrance to providing Australians with their housing needs in the future.
According to HIA around 214,450 new dwellings commenced across Australia over 2014/15. By comparison, HIA predicted that construction on only around 175,000 new dwellings would commence per year towards the end of the decade.
HIA Senior Economist Shane Garrett explained that this “falls short of Australia’s long term requirements and emphasises the importance of reform around taxation and housing supply policy.”
Apart from excessive taxation in the form of stamp duty, Garrett said that other factors that contribute to the difficulty of fulfilling housing needs are the slow release of land and a raft of planning restrictions.
“The effect of these supply bottlenecks will become apparent over the next 12 months, with the volume of new home building projected to decline by 7.0% during 2015/16,” said Garrett.
HIA’s predictions of an end to the home building frenzy, come as Master Builders Australia has released a report around commercial construction that showed the sector has fallen back into negative territory.
Peter Jones, Chief Economist of Master Builders Australia said, “despite earlier optimism, the latest survey shows that the anticipated recovery in commercial construction has failed to materialise.”
The National Survey of Building and Construction report showed that in the June quarter the index measuring current conditions in the non-residential building sector fell to 46.1 which has reversed the confidence present in the December 2014 and March 2015 quarters.
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