The report highlights on-going weak conditions for home building activity that will see the shortage of housing stock in New South Wales blow out to 18,000 dwellings in 2008/09 alone.
Commenting today on the release of the June 2008 quarter HIA NSW State Outlook publication, HIA Executive Director, NSW, Mr Graham Wolfe said that housing starts would languish below the 30,000 mark for the third year in a row in 2008/09.
“Sharply higher borrowing rates and building materials prices, together with hefty statutory costs to building, mean a recovery in new home building remains some way off,” said Graham Wolfe.
“The time for navel gazing has long past, this is not a cyclical trend that will correct itself,” said Mr Wolfe.
New dwelling starts are forecast to hold steady in 2008/09, marking an unprecedented sixth year in a row when new home building will have failed to mount a sustainable recovery.
“Interest rate reductions will, in time, boost confidence and then construction activity, but that’s a 2009/10 story. We have a relatively inelastic supply side, so no immediate bounce is expected and this is bad news particularly for those searching for affordable rental
housing,” Mr Wolfe said.
“We expect the recovery to be modest 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 Graham Wolfe.
On a brighter note, the renovations sector appears relatively resilient.
“It’s hard to see renovations activity growing in the current economic climate, but even a largely flat year will see the sector worth around $8.8 billion in 2008/09 and the down cycle hasn’t been as savage as that evident for new construction,” added Mr Wolfe.
Total investment in renovations is forecast to reach around $9.7 billion by 2010/11.