The residential construction industry is currently experiencing renewed growth, according to the latest Housing Industry Association research, which in turn points to a stronger overall economy for Australia. The HIA Housing Forecast Update for May found that 180,000 new dwellings were planned around the country for 2014, an increase of over 8% on the numbers reported for 2013.[i] This figure, which should be noted by anyone interested in property investment, is almost back to the highs of the building boom of the 1990s – 1994, for example, held the record for the highest number of new dwellings commenced with 187,000 recorded during that year.
The figures for this year are a substantial rebound considering the years of sluggish new home construction during and after the global financial crisis, and is to some extent helping to offset the downturn in forecasted engineering work for the coming years. According to the Housing Industry Association, the increase in new dwelling construction is being led by NSW and Western Australia, with commencement levels for new homes in both states at record levels. In Victoria high numbers of multi-unit dwellings were built during 2013, with levels unlikely to fall in 2014.
The economic and demographic factors driving the growth in these states in particular, including increasing demand for housing, is not considered likely to abate in the near future. Indeed the outlook for the residential construction industry in general is positive, with continuing record low interest rates, strong population growth and increasing house and apartment prices. As well as boosting economic growth in general, a recovery in the residential construction industry will have knock on effects for employment and for sections of the retail sector such as electronics, furnishings and fittings.
The findings mirror the increase in owner and residential property investment lending – 3.6% and 4.9% respectively – reported during the same period by the Housing Industry Association and sourced from the Australian Bureau of Statistics. During the same time there was an increase in property prices in the major capital cities such as Sydney, Melbourne and Brisbane of almost 2%, which is almost 11% higher than the same time a year ago.[ii]
Reports and research such as the forecast updates that are produced by the Economics Group within the Housing Industry Association and the information from the Australian Bureau of Statistics are an invaluable resource for investors. Property experts suggest that keeping up to date with news, trends and property investment tips from the market can help investors modify their investment strategies in line with future developments and opportunities. For more in-depth research, local market knowledge and assistance, residential property investors should consider contacting experts such as Ironfish to help them develop a successful and sustainable investment strategy for the future.