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Housing shortages are set to worsen this financial year, putting further pressure on first home buyer affordability, with a new HIA report showing Victoria will be more than 6000 short of the homes needed to sustain its growing population in 2008-09.
HIA, Australia’s largest building industry association, today released Victoria’s most comprehensive report card on the residential sector.
The June 2008 quarter HIA Victoria Outlook finds the state will struggle to build 40,000 new homes in 2008/09, well below the 46,000 being built per year earlier in the decade.
High interest rates and poor economic and housing conditions have forced HIA to revise its forecasts for residential construction. New dwelling starts are forecast to drop 4 per cent in 2008/09, well below the previous quarter’s forecasts of 2 per cent growth.
“This is bad news particularly for those searching for affordable rental housing,” HIA Executive Director, Victoria, Mr Robert Harding said.
“A substantial gap is developing between home building and the level of underlying demand, with demand increasing in recent years as a result of record population growth.
“Interest rate reductions will, in time, boost confidence and then construction activity, but that’s a 2009/10 story. We expect a modest recovery over 2009/10 – 2010/11 given the lack of skilled labour in the industry and the long road ahead in lifting housing affordability to reasonable levels,” said Mr Harding.
“The dire forecasts are also presuming the State Government still delivers its promise to fast track land release in growth areas. In March, Premier John Brumby announced the Government would fast track 90,000 blocks over the next five years, but we are yet to see any come on to the market.”
On a positive note, the renovations sector has been strong over the past 2 years, growing by 16 per cent.
HIA expects total investment in renovations increased by a strong 7 per cent in 2007-08, hitting a new record value of $7 billion. The renovations boom is expected to continue over the next three years, approaching $8 billion by 2010-11.
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