New home building will soar over the coming year while renovations activity climbs out of its current slump, according to a new prediction from the Housing Industry Association (HIA).
“New home building is forecast to reach its second highest level on record in 2014, while renovations activity will begin recovering from a 10-year low,” said HIA chief economist Dr Harley Dale.
According to an analysis released by the HIA, new dwelling commencements will rise by 7.1 per cent over the year, reaching a peak of 180,000.
However, this activity is likely to ease over 2015 and 2016, to just under 170,000.
Dr Dale predicted a strong construction sector would be a boon for the Australian economy.
“Residential construction investment will make strong contributions to Australia’s economic growth this year and next, and will boost demand across significant parts of the manufacturing, retail and supply/distribution sectors,” he said.
Renovations hit rock bottom in 2013, dropping to a decade-low of 28,298.
By comparison, 31,012 renovations were recorded in 2012.
However, over the coming three years, this activity is expected to begin rising again, to hit a high of 29,583 in the 2016 period.
Dr Dale said renovations had “huge upside potential”.
“Two consecutive quarters of growth through to March 2014 provides confidence for our forecast of one per cent growth in the total value of renovations investment in 2013/2014,” he said.
“Momentum in renovations activity is forecast to build in coming years with growth of 1.2 per cent, 2.3 per cent, and 2.5 per cent over the three years to 2016/2017.”