Residential construction to regain momentum

By webmaster 25 March 2011 | 1 minute read

New residential housing commitments will pick up in 2011/12, facilitating price growth in the property market, according to industry researcher and analyst BIS Shrapnel.

New residential activity softened throughout calendar year 2010, BIS Shrapnel’s Building Industry Prospects shows, as a result of the ‘pull forward’ effect of the First Home Owner’s Grant Boost Scheme for new dwellings, which provided enticing incentives for first home buyers building their first home.

The scheme, along with various state government incentives, helped drive a national rise in private house commencements of 20 per cent in 2009/10.

As a result there has been a significant drop off in first home buyer numbers which has also flowed through to upgrader demand for new houses.

But it appears the drop off in first home buyer numbers has finally bottomed out according to BIS Shrapnel.

Data for the month of December 2010 showed first home buyer loan numbers reached their highest level since 2009.

“The rise in first home buyer demand is expected to result in increased turnover across the board as upgraders will have a stronger market to sell their existing dwelling into,” the research house wrote.

Many of these will trade up to a new dwelling, facilitating growth in new house commencements in 2011/12.

BIS Shrapnel forecasts total dwelling commencements for 2011/12 to be 171,000 – an annual rise of six per cent.

This higher turnover should also work to foster price growth, BIS said, although this would face dampening effects from rising interest rates.

Residential construction to regain momentum
spi logo

Get the latest news & updates

Join a community of over 100,000 property investors.

Check this box to receive podcast updates

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.