The residential housing industry will not begin to recover until 2009-10, according to the Housing Industry of Australia’s new national outlook report.
The report claims that the Government’s stimulus packages, large cuts to the official interest rate, and grants to first home owners will help create conditions for new housing starts over the next year.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
The HIA expects new housing starts to fall by 17% during the 2008-09 year to just 132,190. But the group says housing starts during the 2009-10 year are forecast to grow by 13%, and then by a further 6% in 2010-11 reaching a total of 158,100.
HIA senior economist Harley Dale says current housing conditions remain weak, but further Government incentives will slowly start to lift the market.
“The first home owners boost, mortgage rates at a 40-year low, and the housing components of the Federal Government’s latest stimulus package, have the capacity to deliver a moderate recovery in residential activity,” he says.
“Current housing conditions remain very weak, notwithstanding some spark from the first home buyer market.”
The renovations sector is also expected to rebound, with activity set to grow from $30 billion in 2007-08 to over $32 billion in 2010-11. Renovations account for 47 cents out of every dollar spent in the housing industry, Dale says.
“This is a modest increase in housing starts. Remaining challenges in the form of a lack of adequate land supply, insufficient skilled labour, and taxation of new housing, still need to be fully tackled and remedied.”
- Housing affordability best in five years, mortgage stress eases
- Interest rate cuts will ignite residential property market