Commenting today on the release of the September 2008 quarter HIA New South Wales State Outlook publication, HIA Executive Director of NSW, Mr Graham Wolfe, said that big reductions in interest rates and large fiscal stimulus will help stabilise activity, but 2008/09 is going to be a challenging period for the industry.
“Housing starts will be significantly weaker in 2008/09, reflecting the lagged impact of higher interest rates last year running head on into the global credit crisis and a sustained lack of household and business confidence in NSW,” Graham Wolfe said.
The number of housing starts in NSW is forecast to fall by 5 per cent in 2008/09 to a level of 29,280, largely due to a very weak second half of 2008.
“We do expect to see a moderate recovery in new home building over 2009/10 – 2010/11 and this will be very important in bolstering overall activity in the NSW economy,” said Graham Wolfe.
Housing starts are forecast to grow by 7 per cent in 2009/10 and 8 per cent in 2010/11, reaching a level of 33,836.
“Lower interest rates and increased government spending needs to boost confidence and we need the NSW state government and local governments to do more in removing the many barriers faced by residential construction,” said Mr Wolfe.
“Without reform of red tape and taxation then there is a real possibility that the industry will not see any pick up in activity before 2010,” Mr Wolfe added.
The outlook is brighter for the renovations sector.
“A flat year for renovations in 2008/09 is expected to be replaced by an increase in investment over the following two years,” said Graham Wolfe.
“Having reached a value of nearly $8.6 billion in 2007/08, total investment in renovations is forecast to approach the $9.3 billion mark in 2010/11,” Mr Wolfe added.