Market/Finance News: New dwelling commencements climb

By the resi financial blog team, 18 June 2014

New dwelling commencements at record highs

New dwelling commencements are set to reach levels close to the Australian record, according to the Housing Industry Association's (HIA) Autumn/Winter National Outlook report for 2014. 

The record for new dwelling commencements is 187,000, which was set in 1994. 

If new home construction activity continues at its current pace, the figure for 2013/14 is expected to reach 180,000, which would be the second-highest figure recorded.

With a 2.5 per cent cash rate allowing for some of the best variable home loan rates in Australia, plenty of buyers and investors are looking to secure property.

The latest HIA report indicates that securing an interest in the Australian property market could be perfectly possible.

During 2012/13, there was 11.7 per cent growth in new dwelling commencements, according to the HIA. If the 2013/14 dwelling commencement figure manages to hit the 180,000 mark, then growth for the year will be a favourable 10.3 per cent.

A climb in dwelling commencements is good news for Australia, and for multiple reasons.

Firstly, a boost in inventory may help alleviate the concerns of first home buyers who may struggle to secure the right first property thanks to strong demand for quality housing.

Of course, if demand shoots up and dwelling commencements can't keep up with the pace of change, it will be investors and existing homeowners, rather than first-time buyers, with sufficient financial leverage.

Strong dwelling commencement figures are good for the broader economy, too.

"Residential construction is making a vital contribution to the rebalancing of growth in the nation's economy," explained Harley Dale, chief economist for the HIA​, in a June 16 statement.

Dr Dale emphasised the importance of addressing regulatory and tax barriers that are currently affecting the home building sector in order to drive it from strength to strength.

Categories: Home Loans