Property Market Information: New building levels soar

By the resi financial blog team, 26 February 2015

Property Market Information: New building levels soar

Affordability has been the buzz word surrounding the Australian property market in past months, but these pressures look set to ease slightly with the Housing Industry Association (HIA) expecting a boom in the new home build sector. The construction industry has responded positively to demand for new builds from investors and buyer alike, with a record level of new homes in the pipeline.

This will offer some welcome relief to first time buyers in particular. There are concerns that this segment is being forced out of the market, but a fresh supply of new houses across the board will ideally offset astronomical price rises. The HIA's National Outlook for summer 2015 predicts that most states and territories will see surging construction activity over the next couple of years.

Around 50,000 new homes are expected for New South Wales alone, while Victoria, Queensland and Tasmania will see similarly strong growth. HIA Chief Economist, Harley Dale said not only will rising construction levels benefit buyers, but the Australian economy will likely reap the rewards. 

"National new home building activity is the star of the housing show with a record level of 195,936 new dwelling commencements forecast for 2014/15," he said. 

"We need to build on the lofty heights being achieved this new housing cycle and ensure that supply in coming years meets the requirements of a growing and ageing population."

However, HIA Senior Economist Shane Garrett also notes that land supply needs to keep up with demand for new builds. There are real risks that the market is running into serious supply bottlenecks, which could potentially set prices spiralling once more. Fortunately, policy makers have a part to play to ensure a sustained level of residential land supply and affordable prices. Investors especially should keep this in mind, as more affordable housing could impact capital gains over the long term. 

"It is important that land supply policy across Australia is consistent with the goal of housing affordability,"Mr Garrett said.

"It appears that shovel-ready residential land is starting to dry up against the backdrop of record new home building activity. Policymakers have to intervene in order to allow for Australia's long term housing needs to be met." 

If you would like to take advantage of this fresh supply of new homes, contact a resi loan specialist for all your housing finance needs. 

Categories: Property Investment