Australia’s leading group for residential builders has poured cold water on suggestions that supply is overtaking demand across the national market.
“There is no evidence to support claims that there is an oversupply in the housing sector,” said Housing Industry Association (HIA) principal economist Tim Reardon.
The most recent edition of the HIA’s National Outlook explained why prospects for the sector were better than previously anticipated, Mr Reardon said.
The spring outlook also highlighted the “positive role of solid population growth” as well as the mixed results of government interventions on the market, he said.
“In fact, we have upgraded our forecasts for new-home building activity upwards to account for the ongoing strong sales,” Mr Reardon explained.
“We have seen stronger than expected building approvals results now justify upward revisions to our forecasts. We have revised our forecast for the number of starts in 2018 up to 195,000, compared to our previous forecast of 184,000 starts in 2018.
Mr Reardon conceded that new residential building was “moving back from record highs” but described the slowdown as “very modest”.
He pointed out that dwellings under construction were down less than one per cent from the level a year ago.
“The downturn in apartment building has been much less significant than we anticipated. Strong growth in the population has kept demand for housing at elevated levels while low interest rates and a willingness to invest have enabled the supply of housing to respond,” Mr Reardon said.
“There has been resurgence in first-home buyer activity not just because of increased incentives in New South Wales and Victoria but also due to stronger demand in other states and territories. This appears to be as a consequence of the APRA changes resulting in first home buyers incurring a lower effective interest rate than investors.
“First home buyers are also likely to be benefiting from the record number of apartments that are now becoming available. The strength and longevity of the housing upturn points to the resilience of the industry given the challenges posed by the regulatory environment in an environment beset with uncertainties,” Mr Reardon concluded.
The HIA describes its quarterly national and state outlooks as Australia’s “most comprehensive housing report card, encompassing forecasts of new dwelling construction volumes and renovations activity”.
The report also includes policy updates, analysis of global and domestic economic issues as well as dedicated state and territory housing databases.
