New home building is set to fall by 15 per cent in 2011, placing increasing pressure on Australia’s already stretched housing supply.
According to the Housing Industry Association’s National Outlook for residential building, housing starts are set to fall by 15 per cent this year to 143,430, wiping out a majority of the stimulus driven gains of 2010.
“The fate of residential building in 2011 has been all but sealed by higher interest rates, continuing tight credit conditions, and a complete lack of progress on policy reform to reduce excessive new housing costs,” said HIA chief economist Harley Dale.
Mr Dale said housing starts had only increased in two of the past 10 years.
“This fact delivers a very poor scorecard on new home and rental market affordability which especially hurts aspiring first home buyers and lower income households.”
The HIA is calling on the federal government to urgently re-engage in housing policy reform including an immediate introduction of stimulus measures to boost new housing and an examination of how to decrease taxes, charges and fees levied on new housing.
Meanwhile, renovations activity is contrastingly strong, with $31 billion worth of work conducted in 2010, the highest level in four years, Mr Dale said.
“We expect activity in the renovations sector to hold largely steady this financial year, which would be a good outcome. Growth of two per cent is forecast in 2011/12 and five per cent in 2012/13, taking renovations activity to a worth of over $33 billion, close to a record high.”