Australia’s housing industry is hinting at a soft residential building market for next year, according to the quarterly report card HIA National Outlook.
The Housing Industry Association (HIA) said there are indications that the recovery in new home building will reverse next year.
“The door is being slammed shut on residential building in 2011 through the triple negatives of rising interest rates, tight credit conditions, and a stalled housing policy reform programme,” said Dr Harley Dale, chief economist at HIA.
“The combined weight of these adverse influences means Australia is likely to again endure a substantial weakness in new home building conditions. This will have flow-on effects across the whole economy.”
HIA Economics has updated its forecasts of the underlying demand for housing, and the results show that with about 161,780 units completed in 2009/10, the country fell short of the underlying demand for over 184,000 units. Australia fell short by over 22,000 units in 2009/10 alone, and the annual shortfall is estimated at 16,800 units and 21,000 units in 2010/11 and 2011/12, respectively.
“Over the medium to longer term, the undersupply of new housing will contribute to a further deterioration in housing affordability for aspiring home buyers and for those in the rental market,” said Mr. Dale.
“The COAG reform agenda may deliver future benefits, but the supply crisis is upon us now. HIA is calling on the Federal Government to urgently re-engage in housing policy reform.”
“A pressing concern is the on-going dire lack of finance available for residential projects. The credit crunch is a major constraint on new home building activity.”
“Given that new housing is one of the most heavily and inequitably taxed industries in Australia it is essential that the upcoming taxation summit delivers bold and effective policy reform,” he added.