After a residential ‘building recession’ seen over the last couple of years, an upturn is on the horizon, according to a leading research, analysis and forecasting provider.
After peaking in 2009/2010, residential building has fallen 17 per cent over the year to June 2012, BIS Shrapnel noted yesterday, at their September Building Industry Prospects conference.
This fall is expected to continue, moderately, until the end of the year with a climb expected in 2013/2014.
This is a cautious outlook, managing director and director of building and construction, Robert Mellor, said, having previously predicted increases over the last months that did not occur.
“Signs are there of improvement coming through,” Mr Mellor said.
“Twelve months ago we would have expected a strong recovery to have come through by now.”
With poor consumer sentiment continuing to be the main factor reducing the chances of any upturn, Mr Mellor asked ‘has monetary policy lost its potency?’ pointing to a lack-lustre response to interest rate cuts.
However, it is still ‘too early’ to say with potential cuts in the near future.
Other changes, such as the NSW First Home Owners Grant for new builds, commencing October 1, should prove positive for the market and will grow the number of first time buyers significantly.
“It will be a great driver of further construction, not just to Sydney but also regional areas of New South Wales,” he explained, pointing to similar results where the same initiative is being rolled out.
These changes will see the start of the recovery in the March/June quarter of 2013, which will be in an unusual ‘W’ shape, associate director, Kim Hawtrey, advised.
“Watch for this W-shaped recovery over the next 18 months to two years,” explained Mr Hawtrey.
This is an unusual ‘black-swan’ growth-decline pattern, he said, characterised by two recessionary periods and two subsequent upturns.
We are currently waiting for the second upturn that will be most noticeably the case in New South Wales, Queensland, Western Australia and, to an extent, the Northern Territory.
However, “in Victoria it is a different story … almost a mirror image,” Mr Hawtrey said, pointing to soft conditions for the next three to four years.