By now we’ve all heard over and over again about the boom in the Australian housing construction sector and we’ve also seen predictions that this growth is ongoing. There have now even been predictions by economists that the boom will be sustained for at least 5 years, further good news for those in the construction sector.
Forecaster BIS Shrapnel released its latest industry report which claims that the building upturn which started about six months ago is now at the top of its cycle and will continue for the next half a decade.
Certain states and territories will be more active than others in terms of housing construction. An article on news website News.com.au detailed the report from BIS Shrapnel, speaking about the sustained growth:
The news for Queensland is buoyant, with Brisbane vacancy rates low and RP Data figures showing the overall Brisbane property market is gathering momentum, having underperformed the combined capitals average since 2008.
Queensland’s overall number of sales were up 14.8 per cent for the year ending June 2014.
According to BIS Associate director Kim Hawtrey the national market is going through a rare occasion in the nation’s economic history, a time when the boom is sustainable because of the shortage of housing and high demand for dwellings.
Hawtrey said that across Oz there was a possible shortage of 100,000 houses and in Queensland alone the shortage is at least 20,000 houses. He was quoted as saying:
“Residential construction in Australia is in a really sweet spot,” Mr Hawtrey said. “We have a tail wind behind us, we’ve got the wind at our backs for a change after many years of struggling since the GFC.
“I can’t emphasise enough how extraordinary this moment is in Australia’s home building history.”
Hawtrey explained that the demand for housing for the growing population in most major cities was underpinning the shortage and the need for housing. This in turn was fuelling the construction sector and also creating employment, which we are likely to see happening for a number of years to come. He went on to say:
“So if you look at he deficiency of dwellings and the underlying population growth, the dwelling building boom, we believe, is very sustainable indeed.
“Consistent with that is the vacancy rate figures. Brisbane is at 2.3 per cent – significantly below the 3 per cent balanced rate so that is also consistent with our underlying demand reading suggesting there is a long way to go in this dwelling construction recovery.”
Those entering the property market for the first time are battling to compete for high in demand housing in many states. Experts say that a combination of smaller land lot sizes and rising property prices are expected to continue, bad news for first time homeowners but good news for members of the construction industry.
The article on News.com.au went on to detail the experiences of first time home buyers who are finding it difficult to break into the market within their budget,
First-home buyers Rob Burnham and Kelly Teesdale, both aged 26, are discovering the heat in the market as they battle other couples to secure a house in the $450,000 to $500,000 price range.
Looking for a three-bedroom house in Brisbane’s inner-northern suburbs, the couple would like to secure a block with enough room to extend the house later.
“Everyone is out there trying to do the same thing as us,” Mr Burnham said. “Particularly in this price range. It’s a good time to buy because interest rates are low, but nobody wants to overextend themselves (financially).”
Builders involved in housing construction aren’t the only ones benefiting from the boom as housing renovation activity also rose in the last year.
According to BIS Shrapnel Building Industry Prospects Report for September, an increase in house prices and residential building activity in 2014/15, is accompanied by an 8 per cent increase in renovation activity.
Queensland’s residential building activity has been driven up overall with the demand for high rise apartments particularly high. Detached housing is also in demand but has not grown much, it has experienced on 2 per cent growth in the year ended March 2014.