The December quarter HIA Victorian Outlook, the most comprehensive report card on the state’s residential sector, points to continued housing shortages this and next financial year.
Housing starts in Victoria are forecast to fall by 8 per cent in 2008/09 to a level of 38,263, leaving our state 7000 homes short of demand.
The recent federal stimulus package and large interest rate reductions will help increase housing starts next financial year. Victorian starts are forecast to increase by 9 per cent in 2009/10 to a level of 41,863.
But, our state’s rapid population growth rate is still putting enormous pressure on availability. Underlying demand in Victoria is estimated at 48,200 dwellings next financial year, so there would still be a shortfall of over 6,300 dwellings for 2009/10.
The good news is that Victorian housing starts are forecast to increase by 5 per cent in 2010/11 to a level of 43,956.
HIA’s Acting Victorian Executive Director Robert Harding said the shortages of homes in our state highlights the need for the Victorian Government to deliver on its recent promises to fast-track building projects and release land quickly.
He said while sound policies such as the boosted federal First Home Owner’s Grant, lower interest rates, and the housing component of the Federal Government’s recent stimulus package would help deliver a moderate recovery in residential activity, housing conditions are currently weak.
“Remaining challenges in the form of a lack of adequate land supply, insufficient skilled labour, and taxation of new housing, still need to be fully tackled and remedied,” Mr Harding said.
The renovations market, which has been doing tremendously in Victoria, is forecast to continue to grow.
Renovations investment increased by 9 per cent in 2007/08. A steady 2008/09 is forecast, with some downside risk to that view. However, by 2010/11 the renovations market in Victoria is forecast to have grown by 7 per cent and be worth nearly $7.4 billion.