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Commenting today on the release of the HIA NSW State Outlook publication for the March 2008 quarter, HIA’s NSW Executive Director Mr Graham Wolfe said that the new home building cycle was unlikely to turn up significantly until 2009/10.
“The new home building sector will be weak for some time as higher interest rates, land prices and construction costs fuel a widening gap between the level of new housing required in NSW and the volume of new stock actually being built,” Mr Wolfe said.
New dwelling starts in NSW are forecast to fall by 2 per cent to 29,000 in 2007/08 and increase by a bare 1 per cent in 2008/09. Underlying demand for new housing stock is over 40,000.
“Right now, the chronic shortage of housing stock is driving up rents and generating a real social problem due to the unprecedented level of housing stress - both rental and mortgage stress,” Mr Wolfe said.
“Policies initiated by the Rudd Government, such as the First Home Saving Accounts and Nataional Affordable Rental Scheme, will have a positive effect in reducuing housing stress.
Similarly, the NSW Government’s planning reforms will also be positive,” Mr Wolfe added.
Contrary to new construction, the renovations sector is picking up steam again.
“Total investment in renovations is expected to post a growth of 3 per cent in 2007/08 to reach a value of nearly $8.9 billion. This will be the first increase in renovation activity since 2003/04, and provide an important boost for the building material and manufacturing sector in NSW,” Mr Wolfe said.
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