New analysis has revealed that 2019 was a tough year for home builders.
The Housing Industry Association has considered new data from the Australian Bureau of Statistics regarding monthly building approvals, finding that approvals across the calendar year were 18.5 per cent lower than they had been in 2018.
It caused “a significant drag on the national economy”, according to HIA economist Angela Lillicrap.
“The start of 2019 was tough for the residential building industry with the credit squeeze, falling house prices and uncertainty surrounding the federal election putting a dampener on confidence,” she outlined.
But she did indicate how the market improved in the final months of 2019, “suggesting that the building industry will not continue to constrain economic growth in 2020”.
The economist also observed that new home building has stabilised at relatively strong levels.
“Detached house approvals have a three-month annualised level of 101,240 approvals, which is a very robust level and similar to building volumes in 2018,” she outlined, while multi-unit approvals led the declines, 25 per cent lower than they were in 2018.
As 2020 continues, Ms Lillicrap expects continued growth in house prices to assist in bringing investors back to the market as well as support an increase in activity across the broader economy.
Despite this, she conceded that “we are unlikely to see the same boom of investors as experienced in the previous cycle due to restrictions on foreign investors”.
In addition, “constraints on access to credit will continue to be the biggest impediment to future growth in building approvals,” the economist concluded.