Residential growth refusing to slow
New details in residential housing growth mean the economy's strength will continue in the coming year.
RP Data and the Residential Development Council (RDC), a part of the Property Council of Australia have released the Australian Residential Development Outlook, and it bodes well for people getting into home buying.
Spike for dwelling starts
While the report notes that home building needs to increase further to match the needs of Australians, there were 180,000 dwelling starts forecast for the 2015 financial year. This an increase of 30,000 homes on the average figure given for Australia over the last several years.
Nick Proud, executive director of the RDC, says anticipates that construction of new homes to stay strong for the next 12 to 18 months, but that it must continue beyond this point. It is expected that growing unemployment and a drop in trade might see dwelling commencements slow down from 2016.
The outlook for now
But for now, building growth is very positive. Tim Lawless, the national research director for RP Data, said that development of residential property is a good indicator of development in the wider economy, and there are lots of positive signs heading into 2015. These factors include:
- Low interest rates, which means lenders are actively competing with each other, decreasing interest for people taking out loans to buy property.
- Household wealth increasing in the 2014 financial year, which happened due to a boost in share prices and home values.
- Strong population growth driving home building, especially in Victoria and West Australia. The nationwide population growth is expected to remain at 1.7 per cent.
Australia's housing market has an estimated value of $5.4 trillion, according to the report, making it the largest asset class in the nation. Its value is more than three times that of the total Australian GDP, so growth in this sector is very important for the country.
Mr Proud has suggested that to keep this home development growth going steady, state governments would need to intervene on policy surrounding stamp duty and planning systems, which can experience delays.
Mr Lawless noted that strong demand for lending would be sustained for some time. If lending remains competitive, now may be a good time to look at real estate options in your area, whether for investment or your own long-term living. National building approvals across al types are at a 30-year high currently, showing Australians are keener than ever to get involved in the property market.